Retailers can take some immediate actions to improve their supply chains during the pandemic, to create a rapid response capability.
Some of those actions include overriding algorithms to redirect inventory to high-density areas, daily meetings with suppliers, suppliers delivering directly to stores, a reduction in product variety, and a relaxation of same-day/next-day delivery requirements.
See the Supply Chain Digital article for additional recommendations by McKinsey & Company that focus on suppliers, merchandising, distribution, logistics, and fulfillment.
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This post is based on the Supply Chain Digital article, COVID-19: five priorities for retail supply chain, by Georgia Wilson, April 3, 2020, and the YouTube videos in the Spotlight. Image source: Travel mania/Shutterstock
1. Why does the Supply Chain Digital article mention a focus on reducing product variety for suppliers?
Guidance: Guide students thru the model in the article by highlighting that fewer products means faster response throughout the system. This is primarily caused by a shortage of inventory being produced by suppliers coupled with transportation deliveries being slowed substantially.
Ask students to consider a grocery store. Which items should be kept in stock and which items can be removed from the supply chain for now? For example, consider the dairy section. Milk is important for nutrition but perhaps 30 different types of cheese is not. The goal is to get students to recognize that necessary items are far fewer in a grocery store. By focusing on limited inventory, grocers can improve restocking the shelves much faster.
2. With limited transportation available, what options do retailers have to improve the flow of materials to store shelves?
Guidance: Have students review the article and focus on all the items related to transportation. The move away from just-in-time deliveries should be noted. Consider the logistics recommendation to stage products at strategic hub stores to feed smaller stores. What does this concept depend upon? The answer is storage space available at the hub store. With just-in-time, many stores are not large enough to handle excess inventory storage.
Ask students to search the web for potential public or private warehouse operations in a city near their university that could handle extra inventory. Answers will vary, but students should recognize that storage capacity might be available via this option.