COVID-19 caused unforeseen supply chain issues both globally and domestically, and presented unexpected barriers to productivity and profitability for businesses and industries the world over.
With many organisations feeling the effects of pandemic-induced supply chain disruption, and some not bouncing back in the way they anticipated, businesses are having to find new ways to manage their supply chains in this new and turbulent environment.
Let’s dig a little deeper…
How did this all start?
Even pre-pandemic, global and domestic supply chains weren’t without their issues. They can be extremely complicated, with each of the many moving parts in play subject to their own disruptions and challenges.
But the very first COVID lockdown in March 2020 set off an unprecedented chain of events, the effects of which were felt at every point in the supply chain:
1. Things slowed to a standstill…
Companies were powerless to the near-overnight halt in activity; forecasts for countless retailers and suppliers of consumer goods and services became redundant as no one knew what lay ahead or how long dormancy would last.
2. …but not entirely.
Worldwide lockdown measures incited a huge surge in e-Commerce sales, increasing the import demand for raw materials and manufactured consumer goods. But here’s the thing: the demand for container shipping also increased (contrary to initial expectations) as ocean freight, which is normally responsible for the bulk of world goods trade, compensated for reductions in air freight capacity.
The implementation of health and safety measures at shipping ports and the ensuing staff shortages further meant that there was neither the manpower nor the container space to keep up with the demand. Insufficient shipping capacity and an unprecedented shortage of empty or available containers hinted at the disruption to come.
3. The stop-start of global recovery
International trade benefited from recovering economies through retail sales and industrial production, so much so that global trade’s recovery outpaced that of global GDP (Gross Domestic Product). But while you could be forgiven for thinking a staggered return to normalcy is a good idea, the differing recovery timelines of global economies actually caused huge disruptions at different points in already faltering supply chains. The very few empty containers that were available weren’t where they needed to be, creating even greater backlogs and becoming an uncomfortable pinch point in international trade, despite the economic boom.
But what does this mean for your business?
- Materials shortages
- Shipping delays
- Price increases
- Difficult demand forecasting
From factory to warehouse, Creative customer Bishop Sports & Leisure, a retailer and wholesaler of sports and leisure equipment, has experienced supply chain issues at every juncture in the process.
As suppliers struggled to source raw materials for products, the delays began and product prices increased. Where an order would usually be shipped in 3 months, it took 5 months just to leave the factory. A global shortage of both containers and staff then delayed arrival even further. One order has been waiting for a spot on a ship for weeks.
Here’s what you can do about it
With that being said, Bishop Sports & Leisure have been able to continue operating much like they did before while reaping the benefits of the post-lockdown boom. This is why…
As much as companies are crying out for things to “get back to normal”, the simple fact of the matter is supply chain management is complicated, imperfect and beyond your control – and has been that way long before Corona was anything more than a bottle of beer.
But here’s what you can do: be more Bishop and…
1. Operate Conservatively
Bishop Sporting & Leisure are operating now much as they did 15 years ago, and that’s largely down to their conservative style of business. Firstly, by purchasing in foreign currency and working to one rate for each currency in 12 month periods, they’re able to cost their catalogue and quote in a way that ensures there’s always a buffer, mitigating the risk of natural fluctuations.
Secondly, they work up to 12 months ahead, buying foreign currency for the year at a higher rate than what they’re costing at, providing them with yardstick to work towards and some level of certainty to plan ahead.
And finally, they hold up to two years worth of stock- particularly the stock that they know will sell well. This forward-thinking has meant that when the post-lockdown surge of purchases came in, they had enough stock to meet demand and looked far enough ahead to replenish where necessary before depleting their stock reserves.
2. Embrace Digital Transformation
From Big Data and analytics to automation and AI, digital transformation is revolutionising supply chain management and blurring the boundaries between the physical and digital world. These exciting technologies are removing historic barriers to effective and flexible supply chain management, while unprecedented connectivity helps to better manage changing consumer behaviours and improve relationships between suppliers and customers.
Digital transformation is one of the ways that Bishop Sports & Leisure endures the unsettled supply chain ecosystem. Installing Navision in 2007, the now Microsoft Dynamics 365 Business Central software has grown with them and adapted to their conservative style of operation.
With the help of Creative, they’ve fully harnessed the customisable features within their existing solution to reflect the static yearly rate for each currency they work in. Their sales team also has access to this software, making quoting quick and simple and the entire costing process efficient.
They have further standardised other aspects of their costing, such as the general supplier value and freight percentage of each order, to make the process even simpler. Now, when inputting an item into Microsoft Dynamics 365, the software looks at the supplier, looks at freight percentage and tells you the price.
3. Increase your resilience
Increasing real-time visibility of every part of the value chain can assist with more accurate forecasting and reveal potential risks before they become an issue.
The digital supply chain isn’t just about risk mitigation and resilience, though. This intelligence gathered at every touchpoint in the supply chain can offer competitive advantages and be leveraged to better inform your customers and not only uncover, but provide the scope for new opportunities.
Until next time,
Has your business experienced some of these supply chain issues, whether directly or indirectly?
Creative has been streamlining business processes for more than 30 years: from the TV & film industry to distribution, to the Not for Profit sector and beyond, we’ve formed lasting relationships with our clients by supporting them on their digital transformation journeys.
To learn more about our services and solutions that could help to transform your business, contact us today.