The COVID-19 pandemic has disrupted the worldwide economy previously unseen in living memory, and its GDP impact on the economy is yet to be fully realized.
While we don’t yet know when the pandemic will be fully behind us, it’s clear that the normal of tomorrow won’t be quite like the one we left behind. However, there are some steps you can take to prepare.
History is (Ambiguously) Encouraging
After the flu epidemic in 1918, the stock market rebounded quickly, and economic growth resumed surprisingly quickly once the disease had run its course. While many individual businesses failed under circumstantial pressure, those that survived were able to prosper. Major consulting firms have stepped up to provide businesses with ongoing analysis and guidance in this unsettled situation. McKinsey & Company, for example, projects the journey to “the next normal” as a sequence of five responses to the crisis: Resolve, Resilience, Return, Reimagination, and Reform. It’s a valuable framework for considering how to move forward as restrictions ease and the economy begins to recover.
A New Beginning
The Resolve and Resilience stages of the process are the ones you’re likely in the midst of now, so we’ll move ahead to what McKinsey calls the Return stage.
On a macro level, reassembling your supply chain will be necessary. Some of your existing suppliers may be unable to return to total production immediately, and you may need to find other sources in less-affected geographic areas. There will also be high demand for transportation and warehousing, which could impose delays or increase costs as you try to rebuild.
On a practical note, if much of the work you do at this stage will consist of un-doing your responses to the crisis:
- If you’ve relaxed your on-time requirements with suppliers, you’ll need to gradually re-implement them.
- Customers who grudgingly accept longer delivery times during the crisis will quickly expect them to return to normal once restrictions ease.
- If you’ve narrowed your product line during the crisis, you’ll need to re-introduce those lower-priority items back to your supply chain.
- Laid-off employees will need to be rehired or replaced, or short-term hires may need to be released.
Anticipating the New Business Environment
Over the past several years, retail consumer trends have shown brick-and-mortar retail retaining the lion’s share of sales but losing ground steadily to e-commerce. The COVID-19 crisis sharply accelerated the e-commerce momentum, at least temporarily.
If you prospered during the virus-related lockdown, holding onto as many of your new customers as possible will be a priority. Moving to quicker order fulfillment as the crisis eases is one obvious strategy. If you’ve eased your requirements for returns, consider leaving the relaxed guidelines in place for the time being. It’s an added incentive for your buyers to settle into their new e-commerce routine instead of reverting to their previous shopping habits.
You may also find opportunities for some bargain shopping. Suppose you have the warehouse capacity at your disposal. In that case, you may be able to acquire liquidated or “orphaned” goods from companies that have failed during the crisis or were stuck with too-high inventory levels. Similarly, many laid-off workers from other industries gained valuable warehouse and logistics experience during the crisis. As their temporary employers release them, you’ll have an opportunity to acquire them to bolster your fulfillment centers.
Learning From Experience
The Reform stage, in McKinsey’s analysis, takes place at the public-policy level. It takes a more straightforward and pragmatic form for individual businesses and entrepreneurs: What lessons can be drawn from the crisis? What worked well, what did you struggle with, and what changes should you make to be better prepared for disruptions in the future?
One obvious lesson is the value of resilience along your supply chain. You may need to diversify your suppliers across multiple geographic regions to protect against future disruption or address suppliers whom themselves have far-flung production facilities. After decades of focus on lower inventories and just-in-time ordering, some companies might opt to keep slightly higher inventory levels in the system as a cushion against shortages.
How well did your order picking and fulfillment teams cope with the sudden spike in business? Did you have enough warehouse and transportation capacity in your system, or did you find yourself battling logistical bottlenecks? These are all issues your company will face again as it continues to grow, so now is the time to address them. Your best answer might be to partner with a third-party logistics (3PL) provider that already has the infrastructure in place to scale seamlessly in pace with your growth.
Future-Proof Your Fulfillment Strategy
Shocks, crises, and disruptions will always be part of the business environment, and your fulfillment strategy must be robust enough to weather good times and bad. To be genuinely future-proof, you’ll need an agile 3PL partner with the systems and capacity required to scale up seamlessly at a moment’s notice.
If you faced challenges in accommodating your customers during the COVID-19 crisis, contact Taylored Fulfillment Services and ask for a consultation. We’d be happy to help you prepare for whatever your next challenge might be.