Industry TalkRegular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.
Can your business handle an eCommerce Christmas like no other?
A leading figure said recently “For the last three months it’s been like planning for Christmas, but not knowing which day Christmas will be”. But will Christmas-as-we-know-it happen at all this year?
To what extent will spending rebound? Some homeworkers are feeling cash-rich, but these are far outweighed by those who have lost their jobs or fear they will do as furlough unwinds. Some demand has been put on hold, but we may have learned to live permanently without other forms of consumption. What of Black Friday and Cyber Monday? It is hard to mount a discount event when everyone is already selling at fire-sale prices. Second spike or no, there will be ‘events’ requiring some degree of renewed lockdown – what would you do if your national Distribution Centre happened to be in Leicester?
And while the COVID-19 mother of all stress tests has starkly revealed to industrial and commercial companies exactly where the weak links in their supply chains are and where they need to invest – be that processes or planning, space, assets or people – they may not have the immediate means to do so. However, investment in people is the key without which the gain from other investments cannot be unlocked.
Importantly, logistics management faces two interlinked challenges. On the one hand, there is the strategic issue of how to support and develop eCommerce activities in a way that is sustainable and profitable for both online and remaining physical channels – and, on the other, there is the operational planning, to next Easter and beyond, for a host of events that may or may not happen. ‘The plan is the first casualty of contact with the enemy’, but planning – even for the unknowable – is essential. So is teamwork. But, critically, do our logistics and supply chain teams have the right tools, the right blend of skills, and the right style of management to deliver in a very new business environment?
One certainty is that a large part of the move by consumers to eCommerce will be permanent. Retailers who have been forced into eCommerce for the first time, or who have ‘lashed up’ ways of coping with increased volumes, now need to convert these responses to robust and profitable solutions. On the High Street, the growth in full, or part-time, home working will inevitably further decrease footfall. The last four months has seen eCommerce and final mile delivery as the high-growth areas and we have seen correspondingly high demand for people with skills such as transport network planning.
But the challenges for management, and the skills gaps they must resolve, spread far wider. Businesses need managers with an aptitude for tackling challenges, not just in eCommerce and fulfilment, but in labour resource management, in flexible and ‘smart’ contracting, in new approaches to planning and forecasting, in cost management and in the intelligent application of the physical and process automation and technologies that have proved their worth during the crisis.
ECommerce and home delivery are greedy for warehouse space and drivers respectively, both of which were already in short supply. Manning warehouses and distribution facilities may be problematic: a low-paid workforce often dependent on, but perhaps reluctant to use, public transport, a dearth of overseas workers – not because of Brexit, but simply because they don’t want to risk being trapped in the wrong country in the event of a second spike. Safe operation is challenging – particularly in low-temperature, high-humidity environments such as meat packing, which has already emerged as a high-risk activity. Managing these issues is not simply operational – the whole cost-to-serve equation looks radically different, demanding fresh intelligent responses.
Meanwhile, planning and management based on historic data and practice has become close to irrelevant. The past is a foreign country. Comparisons with the 2008/9 financial crash are void, as not only was eCommerce still in its infancy, but that shock was purely to the demand side, there were no simultaneous supply-side shutdowns.
Planning and forecasting now must be based upon immediate response to real-time activity and this will have profound implications right through the supply chain – whence goods are sourced, where they are stored, what constitutes a valid safety stock level, or an acceptable lead-time – and all this and more will have to be re-examined.
Such challenges are revealing gaps in skills and experience amongst the management team at all levels. Some of this can be resolved through training and development, if there’s time – but a lot of poor management during times of crises is sadly a case of the right job – just the wrong person doing it.
Traditionally, management is about maintaining a steady course, not letting molehills grow into mountains. Those have been and still are valuable skills. But in a time without certainty, costs can’t be adjusted fast enough to track a changing economy, and the normal tools – correcting a sales dip or an overstock through discounts or promotions, say – no longer work. Old attitudes must change. Purchasing, for example, is not a conspiracy to put a spanner into a beautifully oiled supply chain – they are our allies in adversity. Tensions within a business, concerned workforces and agitated customers all put additional pressure on managers, and suddenly it becomes clear who’s got your back and who hasn’t. The merely ‘adequate’ hire is exposed when the going gets tough.
We are in for a lengthy battle with COVID-19 and its consequences. Now is the time to review the performance of your management team. Will your good people last the course, can you retain them, and can your weaker performers step up to the mark?
As businesses, in manufacturing and retail, address all the challenges of their physical assets – their online presence, their IT, their automation – they need also to take a deep dive into the skills, attitudes and mind-sets of their supply chain leaders, and augment these in a bold and creative way.
Bis Henderson Recruitment could be a valuable resource in helping you shape the leadership teams needed during these times of great disruption and upheaval for UK supply chains.
Further information at www.bis-hendersonrecruitment.com