supply chain during the coronavirus pandemic

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“Interest in restaurants has fallen by 54% and for nightlife businesses by 69%,” according to Yelp’s Data Science Editor, Carl Bialik. “Pizzarias, (+44%), fast food restaurants (+64%), grocery stores (+160%) and fruits and veggies shops (+102%) are all grabbing a much bigger share of the pie,” he added.  Apptopia reported that March 15 set new records for Instacart (+218%), Walmart Grocery (+160%), Shipt (+124%) and Target (+98%) over their average number of daily downloads in February.  What does all this mean for the supply chain during the coronavirus pandemic?

“We’ve never seen anything like this in terms of threats to the supply chains,” says Jim Yarbrough, global intelligence program manager for the British Standards Institution.  The rapid shifts in demand patterns is impacting retailers, logistics systems, distribution facilities and supplier networks.  Retooling almost every aspect of their supply chain during the coronavirus pandemic has become essential.

Demand

It was predictable that medical supplies would see a huge increase in demand, but only after the pandemic was known.  Demand for toilet paper was something that was much harder to predict.  Hand sanitizer demand increase made sense, but not the level of hoarding and impact of organized crime.  Dr. Kurt Jetta, Chief CPG Analyst for Tabs Analytics, said “The fact that prices can’t adjust to the market demand is bizarre.  If they could price what the market demands, there wouldn’t be shortages.”  Raising prices has led to complaints and even legal action for what is perceived as price gouging.

Suppliers are simplifying SKUs to reduce variety and boost quantities as well as easing payment terms and widening delivery appointment windows to secure demand with their customers.  Retailers are taking money earmarked for in-store marketing and using it to build the operational flexibility to improve on-shelf availability.

Distribution and Logistics

The question becomes how to add capacity at distribution facilities and keep the workers healthy.  Some stores are being converted from retail to distribution (dark stores) where workers just pick orders.  Some firms are bypassing distribution centers completely and shipping directly to stores.  Trucking demand increased by 150% year over year in March as stores try to balance agility and flexibility with lines at borders miles long.

With most people’s focus exclusively on sheltering-at-home and having enough food in the larder to do so, supply chains during the coronavirus pandemic are adapting.  How long that will be necessary is still unclear.

Smith Hanley Associates continues to recruit for clients and candidates as they are faced with the market changes thrust on us by the pandemic.  Interested in talking about your analytical hiring needs or career?  Contact Data Science and Analytics Recruiter, Nancy Darian at [email protected].

 


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