The biggest learning from this pandemic is that every company must recognize that it is in the business of supply
During the past few months, supply chain leader Blue Yonder has spoken to dozens of heads of businesses at major grocery chains, pharmacy giants, third-party logistics companies, clothing and apparel providers, perishable goods producers and manufacturers. Each of them talked about how their teams have had to respond but also on the aspects that are here to stay and will remain in a post-COVID-19 phase.
There are 10 themes that emerged for the new normal in supply chain:
E-commerce, amplified: Dig deeper and you find some important structural changes afoot that will make e-commerce more sustainable and simply more than an “Amazon” thing. This will lead to permanent shifts in workforce, distribution centers and retail centers.
Logistics, reimagined: There will be multiple new distribution points to get products to consumers, including pop-up locations for seasonal items (like the current Christmas tree sites) and distribution depots (consumer pickup) or a major warehouse-retailer for pickup only.
SKUs, rationalized: Categories of products and large numbers of SKUs are draining the enterprise of its ability to scale. As a result, categories will get consolidated and SKUs will get rationalized.
Promotions, analyzed: Category and SKU rationalization, distributed via newly laid out channels due to Covid-19, and what role promotions take is an area of speculation. Increased online buying will force companies to make e-commerce more efficient on cost structure and in turn promotions will be an area of work.
Seasonality, eclipsed: Overreliance on anticipated seasonal tastes will be eclipsed with real-time demand signals on fewer SKUs driving shorter lead times, emphasizing profitability.
Humans, augmented: The multitude of parallel processing of tasks and events during the Covid-19 pandemic is inspiring manufacturers and retailers to seek autonomous input.
Visibility, upended: The visibility for shipments of parts upstream or downstream is still a goal for most organizations. Visibility will be further extended to genealogy of finished goods and the ability to track who handled them and when.
Sourcing, transformed: The globalization model of high-cost labor designing a product and low-cost labor thousands of miles away producing it is under challenge. The result, a spread of supply chains by the industry reducing its dependency on a singular, faraway geography cluster.
IoT, surge: Surge of highly automated “internet of things”-based factories to improve regional balance, as well as cost differential in labor. The day when a robot is walking next to you in a retail aisle is here — now.
Silos, synchronized: Peacetime (pre-Covid-19) drove islands of automation bridging other islands over bespoke country pathways. End-to-end visibility is the facilitator or the “how to” in this monumental transformation.
The biggest learning from this pandemic is that every company must recognize that it is in the business of supply. Consumer experience is increasingly solely based on a supply chain experience. The responsibility of viable, robust and resilient business continuity planning is an absolutely pivotal task that merits an ongoing process guided by business measures and winning scenarios.
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