Gartner: Three steps to mitigate supply chain disruption from COVID-19
Retail chief supply chain officers (CSCOs) should combine an effective near-term response to the impact of COVID-19 with a plan for longer-term recovery.
Gartner has identified three actions retail CSCOs can undertake to mitigate initial disruption and set up their business for future success.
Leverage available data
Retail CSCOs can use available internal and external data, whether internal or external, from the markets first impacted, including China, Italy and South Korea, as they look to forecast consumer responses to the virus. For example, there was a clear peak in sales in Italy during the week beginning March 1, 2020, when many Italians were ordered to self-quarantine. In the same week, e-commerce sales were reportedly 81% higher than the comparative week in 2019.
A surge in groceries and household staples has occurred in other markets. However, other product categories, such as apparel, have reported severe losses. Gartner also expects a negative impact of COVID-19 on seasonal sales periods, such as Easter and back-to-school.
Work closely with suppliers
Many retailers that source from China already experience challenges caused by constrained raw material as well as limited availability of goods. As the virus spreads, similar situations are already occurring on a global scale.
For retail CSCOs, prioritization is key. They must know where demand increases are taking form and work to meet that demand. CSCOs should work closely with suppliers to focus on smaller pack sizes to ensure a broader array of products, so consumers have access to high-demand products, and investigate the setup of temporary distribution facilities to support replenishment.
Run a smart workforce
When it comes to workforce, retail supply chains face two issues. On the one hand, the dynamic demand environment necessitates large increases or decreases in workers required. On the other hand, sick employees must stay home; stores, warehouses or other facilities might be closed due to quarantine restrictions.
Retail CSCOs who can’t sustain their workforce could reach out to businesses with increased demand and try to temporarily redeploy staff. However, the most important thing is for retailers to ensure the safety of every member of the workforce, such as by providing protective equipment or guaranteeing paid leave in the case of infection.
“The global outbreak of COVID-19 is creating a very dynamic environment in retail supply chains,” said Thomas O’Connor, senior director analyst with the Gartner supply chain practice. “Demand is shifting from physical to online channels as consumers seek to avoid public places due to fear of infection or government restrictions. Whether you’re a CSCO dealing with increased or declining demand – this is a unique challenge for everyone.”