Insights

Creating Supply Chain Value in the Era of COVID-19

Value_In_Supplychain_Covid_Blog

There are few things as inflexible as an outdated supply chain. They’re heavy systems focused on super-efficiency, production, and provision, and they do very little to meet the needs of modern consumers. Their place has been marked on the endangered species list, and COVID-19 is shaping up to be their final extinction event.

Retail in the era of COVID-19 has required a lot of flexibility. Everything has had to pivot to meet change — change in consumer behavior, change in dominant sales channels, and change in marketplace policies. Any system that can’t bend to meet these changes will break or be rendered useless.

Still, there’s a bright side to some of these challenges. This is an opportunity to re-evaluate current supply chain practices and make changes that will create value moving forward.

Here’s what some of those changes look like:

 

Leaning into e-commerce

COVID-19 accelerated the growth of e-commerce 4-to-5 years into the future. Consumers are flooding marketplaces and DTC websites in record numbers. Many of them are experimenting with new brands and new sales channels, which means there’s a lot of opportunities for brands to stand out and win new customers. To take advantage of those opportunities, brands need to meet their customers online, predominantly via DTC and Amazon.

 

Becoming more efficient with DTC

One of the biggest supply chain challenges of DTC is adaptation. Picking a single unit and sending it directly to a customer is an entirely different process than shipping pallets of product to a brick-and-mortar store. It’s difficult to do while simultaneously meeting consumer expectations, such as low-cost shipping and speedy delivery.

In most cases, it’s inefficient and costly for brands to manage DTC fulfillment themselves. Instead, brands should pass this work off to either a 3PL or retail partner. Doing so will save both time and money in the long run.

 

Being able to pivot with Amazon

Now more than ever, incorporating Amazon into a supply chain is a necessary step for most brands. There are two ways to fulfill through Amazon at a Prime-eligible level, Fulfillment by Amazon and Seller-Fulfilled Prime. Moving forward, supply chains will need to be able to do both. Here’s why: when COVID-19 initially caused demand to spike on Amazon, it responded by limiting FBA eligibility to “essential items.”

It’s no longer safe for brands to assume that FBA will always be available, so supply chains need to be able to quickly pivot to SFP. That’s not as easy as it sounds. SFP is complicated, Amazon has very stringent guidelines that need to be followed to sell via SFP. One of those guidelines is that brands have to be able to meet two-day shipping deadlines, which can become very complicated.

Unless a brand has a fleet of delivery vehicles, fulfilling via SFP means relying on a third-party delivery service — USPS, FedEx, or UPS. Relying on these delivery companies adds a layer of complexity, something Netrush Chief Supply Chain Officer Brian Birch is very familiar with.

 

A lot more goes into SFP than most people realize. That two-day delivery is at the end of a hard deadline, so you have to make it happen. There’s a lot of management that takes place— quickly locating inventory, picking it, packing it, and making sure it’s all done by critical pull times for couriers. It’s pretty demanding. We have an internal team that manages this, but we also have a senior director of transportation who works very closely with FedEx, UPS, and USPS, to manage delivery windows and hold them accountable to delivery times.

Brian Birch, Netrush Chief Supply Chain Officer

 

Fully embracing flexibility and resilience

Brands need to be ready for anything. Economies will continue to reopen, demand for certain items could surge, or a new wave of COVID-19 could hit. No matter the case, brands need to be ready to embrace challenges and quickly pivot to reach shoppers and move inventory to where it needs to be.

Learn more about how our team supports partners with DTC and Amazon logistics and supply chain.