How SMEs can adjust to current supply chain challenges

Logistics providers and suppliers are integral parts to businesses, and the lockdown period has created an incredibly challenging time for all retailers.

The current wave of events from protests and strikes, seems to be symptomatic of a society growing extremely fatigued from not being able to return to “normal”. Australia Post announcing pauses in parcel pickups in Melbourne is a sign that even logistic giants like them are struggling with the situation; more packages being put through the system and the inability to protect a workforce that could be struck down from COVID-19.

To add fuel to the fire, the recent strikes could not have come at a worse time – as it dampens any positivity retailers were having about when businesses would open again. At the same time, I have anecdotally observed from our client base:

• Increased exasperation with lack of commitment to an environment that allows retail to reopen and use all their channels;
• Demand, from an e-commerce perspective, is still showing strong signs leading up this year’s Christmas (using forecasts from organisations like Power Retail); and
• Logistics operators will no doubt do their best to overcome and provide coverage for retailers, but the perception and impact always lies with the retail brand. When it comes to being successful in retail, you need the following to fundamentals to build trust in their brand:
  • Delivering on the promise of their product or service (i.e. meeting the customer’s needs and wants)
  • Being able to fulfill anytime the customer wants it (stock availability)
  • Making sure they get what they want when they want it (fulfillment).

When a supplier partner fails to follow through, the customer blames the business

The focus on being “digital” has heightened almost every business to focus on creating a holistic customer experience. This means that a brand now takes responsibility for every aspect of a customer’s experience, including quality from a supplier through to delivery timing from a logistics partner.

I recently placed an online order from an extremely large e-commerce company that never arrived. This experience was made even more acute because I had intentionally placed the order eight weeks before I needed the product (car roof rails to transport large items). While the online experience was seamless, it was the logistics provider that “dropped the ball” — not being able to locate where the item was in transit (let alone deliver it).

Interestingly, whilst the e-commerce player explained it was the fault of the logistics partner they used – it was my perception of the e-commerce brand that was negatively affected. Ultimately, retailers take responsibility for the end-to-end experience, which includes making the right choices to partner with someone that can fulfill deliveries on time and reliably. This has been the challenge of retail — the brand has made a promise of an “easy and seamless” customer experience and has not ultimately delivered on it.

This has left unintended consequences on the brand’s own reputation.

Retailers need to adjust

The world is still working through all these challenges and more and continuing to adapt to what can only be described as a highly volatile and unpredictable environment. This may mean a variety of business decisions that most businesses would not typically take but are required these days. Some of the decisions that SMEs can consider include:

• Managing and reducing their inventory levels this time around, so as to limit working capital commitments, especially if you have a business that is product focused. This can help protect being stuck with too much product should further failures in the supply chain system continue;
• Refocus on their most valuable customers and specifically targeting them to ensure their needs are met first. This means building closer and more engaging customer relationships, and encouraging them to take up products or services earlier to avoid being disappointed during peak demand times; and
• Finding other opportunities outside of traditional markets. While the situation may look like this in parts of Australia, things may be quite different in other markets around the world. If there are opportunities to sell your product or services into new markets, especially international ones, now is as good as any other time to evaluate and design what they could look like.