The coronavirus pandemic is infecting thousands of people and has shut down hundreds of thousands of businesses. Many ecommerce companies are trying to stay open and service customers while keeping their employees and customers safe. Others have temporarily shut down and are thinking about how and when they can reopen.
As consultants to wholesale distributors, retailers and ecommerce companies, we are working with a number of “essential” companies remaining operational, as well as retailers implementing local curbside pickup. Like you, our hope is to get through this and move on to the “new normal.” Meanwhile, here are some things to keep in mind:
Adhere to CDC, OHSA, Government Guidelines
We are not advocating violation of any directives or proclamations by health and safety agencies like the CDC and OSHA, local, state or federal government. We all agree that the number-one priority is employee and customer safety.
CDC and OSHA have laid out clear procedures for operations in this coronavirus crisis. As we work with companies that are remaining open, we found the CDC has published some very clear guides for employee and facility safety. It is also publishing daily and weekly updates to keep you informed. Contrary to government’s typical long, jargon-filled procedures, these are clear and can be a great resource to inform your policy, procedures and training materials.
In this link some of the topics covered are:
- Educating employees to recognize the symptoms of coronavirus and what to do sick.
- Disinfecting various work area surfaces. For several of our clients, this means shutting down production several times per day to disinfect
- Develop policies for worker protection, availability of personal protection equipment and training
We know keeping your employees and customers safe is of utmost importance.
A recent blog post of ours provides additional guidance on the impact of coronavirus on your supply chain.
Order Fulfillment and Customer Service
Your customers know these are difficult and trying times, but that doesn’t mean they’ll be patient with slower or erratic performance. Each business needs to determine how it can perform and the service levels it can provide. Here are two examples out of our recent experience with grocery shopping using curbside pickup:
A specialty foods company we shop with only a couple hundred prepared entrée and side food items has a very streamlined process: You call in the order; they check item availability on their POS; they credit authorize the purchase; they pick the order and place it in a cooler for immediate pickup. For small stores this may serve as a model.
Crafts store Michael’s with thousands of SKUs is operating curbside pickup during the pandemic. Many major retailers offer this service as well, including Kohl’s, Petco, Home Depot, Best Buy, Target, DSW, GameStop and Dick’s Sporting Goods.
We have shopped three major grocery chains including Walmart, which gave us the best experience. The industry never expected curbside pickup to face this kind of volume, stressing retailers’ people, processes and systems.
With one large chain, we could not successfully cancel three days in advance of curbside pickup. The local store had no way to cancel. A customer service chat failed to answer in a five-hour period. And the customer service IVR said we’d be on hold for 254 minutes! As the local store started picking, we received an email and could cancel the order. From a customer perspective, some simple things to consider:
- Communicate product availability; receipt of order; whether you allow order modification; communicate when ready for pickup;
- How will you accomplish these functions? Productivity for many businesses is lower than normal. They have added additional shifts.
- How flexible can your customer service be on order modification? Certainly, you don’t want to have every customer and order being an exception which is a nightmare.
Sales and Inventory Strategy
Many of our customers have massive product assortments. Tracking and potentially reordering all items throughout the supply chain may not be possible. As a possible inventory and sales strategy, what if you take care of key items only – the 80/20 in your assortment? Pareto’s Law (20% of products gives you 80% of sales) applies to many retail and ecommerce merchandise assortments. If this doesn’t hold for your business, what key items will stay in stock to maximize sales?
- How are offshore suppliers affected by coronavirus? Are they at full production, reduced hours or closed?
- Are key distributors, either domestic or offshore, in lock down?
- When you project sales on key items and compare in transit and in stock times, how long will inventories last? Are their alternate suppliers? Can you place larger purchase orders for key items to maximize sales?
- Is your staff (buyers and transportation personnel) continually looking to expedite shipments and keeping tabs on key items? How can you be more proactive to avoid surprises when products don’t ship on time or at all?
- Have you budgeted for higher freight costs? How will gross margin be affected?
- Given the reality of significant sales decreases and higher costs, how is cash flow affected? Can you increase lines of credit? We hope you applied for the Cares Act and the Payroll Protection Plan through the Small Business Administration.
Being temporarily shut down is devastating. You need to consider the risks of continuing operations on the future of your business and your customer relationships. This means complying with CDC and OSHA requirements, and adapting quickly to changing conditions. We pray that God will restore your families and business soon.
Brian Barry is President of F. Curtis Barry & Company