The coronavirus pandemic has changed how supply chains, particularly those pertaining to retail and the consumer products goods companies that supply them, function. It heightened the need for supply assurance, meeting customers’ needs and improving logistical challenges. It changed the focus to the end-to-end supply chain, says Meagan Kinmonth Bowman, CEO of solutions provider Stonehenge Technology Labs in Bentonville, Arkansas.
Before the coronavirus pandemic, companies tended to manage the supply chain by focusing on the later stages, like optimization and transactional dynamics, because that’s where they felt they could most impact costs, she says. Their operating premise was based on getting products on time and in full, she says.
But having greater visibility across all the layers of the ecosystem has become imperative — and along with that has come a need to glean the right data and insights to be able to make informed and quicker decisions.
Managing All Links in the Chain
“The pandemic hit right in the part of the supply chain that’s far up in the cost of goods — the raw materials area — and wiped us out,” Bowman says. The later stages of the supply chain become less important, she says, as companies sought to manage all the challenges occurring upstream.
“Unfortunately, the part of the supply chain we haven't paid a lot of attention to — because we've just assumed (the products) keep coming, just like trees keep growing — is the early part of the supply chain,” she says.
While many organizations realized problems existed in other areas, “they didn’t have the technology developed enough to be able to do anything about it,” Bowman says.
Also at issue: Only a few people at most organizations know how to use technology systems for better visibility into what they need. “Then there’s everybody else in the organization who has been dealing with what they thought was relevant data and what they thought was relevant technology,” she says. But it wasn’t pertinent to pandemic challenges.
“What I kept hearing over and over again from executives … is that they couldn’t see (the problem.) They would say, ‘I can see everything else that's happening, but the one section where I'm having the biggest problems is a complete dark hole.’ ”
Suddenly, organizations became concerned about such real-time and immediate dynamics as:
- Where should they store inventory?
- How many units do they have on the shelves?
- What type of consumer is buying the product or shopping at the store?
- Is the delivery system working smoothly? Is a truck stuck?
Companies realized they needed to be able to track goods, match production with need, and assure supply, among other factors, to enable better and quicker decision-making, Bowman says.
Another realization by companies: It was critical to accommodate customers and consumers.
Before COVID-19, consumers made only about 2 percent of their purchases online, Bowman says. But since then, the percentage has jumped to as much as 50 percent — and much of their spending, especially during the pandemic’s initial stages, has gone for basics, like groceries, she says.
Changes in customer buying behavior have contributed to the need for retailers to rethink their end-to-end supply chains, including what they order, who they source it from, and who their suppliers source materials from. Gaining visibility into all that requires data — and being able to extract insights from that data, she says.
“When a large retailer buys product like toothpaste from a manufacturer, it buys it in a case,” Bowman says. The toothpaste travels on a container ship, then through other logistics and distribution channels before it’s placed on a store shelf, Bowman says. The identifiers associated with an individual tube of toothpaste bought by a consumer are hard to trace across the supply chain, she says: “It's millions of lines of data — and a long and layered supply chain.”
Silos Can Limit Visibility
Those companies that developed visibility into that data and their end-to-end supply chains fared better during the pandemic, Bowman says. But all too often, organizational silos impede that ability, she says.
For example, let’s say Cheryl orders raw materials. “She doesn't know anything beyond that; she just knows she has to have X number of raw materials in the warehouse at Y time. That’s her view,” she says. “Move one layer up, where Sandy knows that once Cheryl orders those materials, you’ve triggered to put them on a boat and assign a boat time. Then, someone else sits on the U.S. receipt side.” Likewise, sales and warehousing also have been siloed — and all employees have generally worried only about their piece of it.
But being siloed slowed companies down during the pandemic. “Once companies realized that Cheryl and Juan in the warehouse were seeing the same thing, those were the companies that outperformed,” she says. “Why would Juan have to know how many raw goods were coming? He doesn’t in his real job, but when it became imperative to get more creative and faster, he had a lot of impact because he could give real-time updates about what was really in the warehouse.”
Transforming from a siloed to a more collaborative and aligned organization, Bowman says, consists of two parts: people and technology.
It’s important to have leaders who support such a transformation and who know what to do, she says. However, “the challenge is that no matter how good of a leader you are and that you create a new anti-silo environment, if your technology doesn't back it up, then people are going to fall back into their silos just by nature of expediency,” she says.
Another consideration is that collaboration can be difficult to accomplish and sustain, she says. “You can be gung ho for a couple months and then over time, you’ll think, ‘This is way too hard’ and fall back into what has worked in the past. And I think that’s just human nature.”
Therefore, it’s critical that leaders support getting the right technology and solutions, Bowman says.
Retail Versus Supplier Responsiveness
Bowman, whose company is the provider of Stopwatch unifed commerce software, feels that retailers, more so than some of their suppliers, have been more responsive to the need for change, visibility and addressing what their customers (consumers) want. “The retailers got smarter, better and quicker, and the suppliers were on the laggard end,” she says.
Not only has the pandemic been a contributing factor, but large retailers like Amazon have pushed the envelope, forcing retailers to step up their game, she notes. Additionally, retailers realize that consumers have many e-commerce choices, so they must be responsive, she says.
To continue being responsive, however, they need more granular data from suppliers. In addition to providing that data, Bowman says, suppliers also must be more responsive, and must learn new skills, spend more on such measures as deep database connection points and visualization tools, and celebrate bottom-line profitability, not top-line revenue.