Overcome Pandemic Supply Chain Drain
The 2020 pandemic has transformed the way America shops. Fear has turned minimalists into hoarders. It’s as if consumers collectively believed that the pandemic was about to create some dystopian, Walking Dead-like society experiencing all manner of supply chain shortages. In particular? Toilet paper, bleach wipes and…aluminum?!? And no, it’s not from a preponderance of tinfoil hat wearers. Rather, it’s the millions of stay-at-home families craving more carbonated beverages than any of us would ordinarily drink at work or school. (This has also fomented thicker waistlines and a shortage of fitness equipment–I waited 6 months for my 20-pound dumb bells ordered through Amazon.) Molson Coors spokesperson Adam Collins confessed to CNN Business,
Everyone who makes anything that goes into a 12-ounce can is being challenged to some respect.
The tin shortage is an issue as canned soups, meats and vegetables fly off grocer’s shelves. James Kwon, CEO of Technology and Logistics at ePallet said,
Especially in ready-to-eat meals like chili, soups and prepared meats, the cans are in short supply.
Other supply chain shortages include swimming pools–a friend received hers at season’s end because she was the squeakiest wheel on the pool company’s Facebook page. A relative in New Mexico reports there’s a 2-year-wait on in-ground pool installations. Another relative in Indiana reports new pontoon boats are backlogged for at least 2 years. Even an RV sales spike created a demand greater than their supply, resulting in a whopping 650% increase in rentals this year, according to a popular rental company, RVShare. And then there’s the on- and off-road bike shortage–with Peloton subscriptions up 113% this year. As the gyms closed down, the company couldn’t fulfill the demand.
To what do we owe some of these shortages? A couple of factors. As far back as November of 2019, we were already experiencing the pain of the tariffs from the China trade wars. And then there’s Just-In-Time (JIT) manufacturing. This lean inventory production strategy is smart and cost efficient under normal circumstances, but disastrous during a once-in-a-century (that is, fingers crossed) pandemic. Car manufacturer Toyota is credited with inventing the JIT model back in the 1970s, when they timed their automotive parts to arrive at their manufacturing plant right at the precise moment of assembly.
No manufacturer’s predictive analytics software factored in the China trade wars plus Covid-19. For example, to address the tariffs issue, 1 in 5 electronics companies are now moving manufacturing outside of China, and 51% report they are already sourcing products outside of China.
4 Ways to Address Wholesale Supply Chain Shortages
Michigan bottle and can distributors pushed to revamp the state’s bottle deposit law to boost the funds going into their recycling infrastructure. While the 10-cent deposit law has been on the books since 1976, no funding has gone back into Michigan’s recycling infrastructure since 1987, which is necessary to handle the smelting down of glass and aluminum. This service and its supply of cans and bottles had slowed to a halt when the pandemic blocked people’s ability to return bottles and cans. It wasn’t until June 15th that Michiganders’ bottle and can returns were allowed to resume.
Form New Partnerships
Food distributor Sysco, impacted by travel destinations, colleges and restaurants closing, formed an ad hoc partnership with the International Foodservice Distributors Association and the FMI-Food Industry Association retail grocery organization. Foodservice distributors with excess capacity can now fulfill grocery stores directly. Solid contract management software can simplify this process.
A recent industry survey found that post-pandemic, 56% of B2B deals are being renegotiated; distributors must be prepared to exploit that willingness and identify the rebate deals they need to achieve the margins they need to thrive. Rebate management support is a viable solution.
Lean on Software
Visibility means profitability. End the reliance on time-consuming, manual systems that conjure nothing in the way of intelligence. Distributors need to exploit real-time data management that identifies inventory needs and fast-changing consumer buying trends, as well as automates your deal management to know your winning products, reps, retailers, and zip codes. This is how you can quickly recalibrate and redesign the right incentive programs to achieve your recovery, and ultimately, profitability.
Author and Stanford educator Tina Seelig could have been describing 2020 when she said,
Uncertainty is the essence of life, and it fuels opportunity. I think you’d agree, this past year has provided us with plentiful fuel.