Distribution Disruptions in World of COVID-19

In March, the Institute of Supply Chain Management conducted the first phase of a survey that investigated what impact COVID-19 would have on businesses and supply chains. The results were staggering, with nearly 75% of companies reporting supply chain disruptions in some capacity due to transportation restrictions, and more than 80% who believed their organisation would experience some impact because of COVID-19 disruptions.

While this survey was conducted in the United States, there is no doubt the results can be seen as a global trend. Companies across the world are experiencing massive restrictions and challenges.

The national lockdown instituted by the South African government towards the end of March has created a unique set of challenges for local businesses and consumers alike. With massive restrictions placed on the movement of people and goods, the distribution industry has felt the fallout quite keenly.

Some of the major challenges the sector has faced are staff and customer safety and radically shifting demand trends (unprecedented demand for essential goods/services and a complete lack of demand for others). These fluctuations at a time of uncertainty are hard to plan for.

Thankfully, there are technologies available that can dramatically improve efficiencies and support companies’ ability to weather these shocks.

The wholesale and distribution marketplace has traditionally been highly competitive, leaving companies with little room to manoeuvre. In the past, in order for businesses to succeed, they had to differentiate themselves by excelling at customer service and keeping prices competitive.

However, this global crisis is creating unprecedented challenges and businesses are being forced to innovate and optimise beyond the usual in order to navigate their unexpected vulnerabilities. This is likely to accelerate digital transformation with tech-led businesses emerging as industry leaders.

Says Managing Director of Seidor Africa, Heinrich de Leeuw: “In order to effectively digitise your business and create a competitive advantage in a currently ‘disrupted supply chain’, it will be important to ensure that your enterprise resource planning system is on par with the latest technology innovation to enable synchronisation between your physical supply chain of goods and your digital supply chain of information.”

Digital transformation and end-to-end information management are going to be key to future-proofing distribution businesses. With a leading ERP tool such as SAP Business One, what would this look like?

Streamlined order-to-cash process. An automated supply and distribution chain will allow for efficient order management, which means no sales opportunities are lost. The shortened cycle will also improve cash-flow and inventory turnaround.

Improved gross profit. Now more than ever businesses should be maximising profit and reducing wastage. This means flexible, date/volume/customer specific price lists, and GP approval processes, efficient quoting and improved decision-making through greater visibility into the true costs of orders.

Greater visibility. To adapt to shifting demands related to COVID-19 consumer behaviour and constantly changing government legislation, the visibility of stock, sales, opportunities, fulfilment, commissions, profits across ranges and areas allows for real-time measurement, reaction and improved forecasting.

Optimised inventory management. Reducing costs and wastage by having a handle on excess supply or waste, paperwork and costly shipping errors is key right now. This includes reduced stock-outs, shrinkage and costs as well as improved Pick and Pack management and delivery performance. Real-time access to “available-to-promise”, combined with “alternative items” information will add to efficient order management and assist in ensuring no sales opportunities are lost.

Automation. With staff shortages and more people working remotely, automation of systems are key. This could include integration with third-party logistics providers and major retailers.

Improved traceability in the returns, warranty or recall processes means greater efficiency and better service delivery. The ability to trace products to their origin easily and quickly will add to this.

Supplier management. Reduced risk by adding alternative approved suppliers to the preferred vendor list, which meet the same product quality standards with the added benefit of being able to easily switch between them during procurement planning.

Now, more than ever, wholesalers and distributors must be optimising their stock holding and making their internal processes, from sales to shipping, purchasing to warehouse management, as streamlined, responsive and effective as possible, using the best digital technology available to them.