This new decade has given us a lot to contend with. Most recently, our busy, normal lives have been suddenly and irrevocably changed by the global pandemic. Now is a time of real adversity, with most people in self-isolation, we should steady our nerves and re-focus on the positive that we can create out of this situation.
“In life our first job is this, to divide and distinguish things into two categories: external I cannot control, but the choices I make with regard to them I do control.” – Epictetus
As this global pandemic has dominated the start of every conference call and meeting over the last few weeks and months, I started to think about the impact of COVID-19 on companies that are faced with this external issue that is unprecedented, unpredictable and completely out of their control. One thing that is apparent is that everyone is braced for challenges within their marketing supply chain. So, when we take a step back to view the obstacle objectively, what opportunities can we see within it. How can companies leverage this situation to experiment with different solutions and strategies, to help carve a new landscape to thrive within?
What key trends are we seeing and hearing?
- Upsurge Automation: Packaged goods will play a critical social role over the coming weeks and months, as companies need to establish how they maintain productivity to keep up with consumer demand. As companies struggle with the labour shortages & social distancing for the population is paramount, we will start to see an upsurge in investment for development & implementation of automation solutions to bridge these gaps. Companies like Amway are already investing in automation to alleviate stresses in manufacturing operations from labour shortages.
- Emergence of ‘New’ Retail: As people look to minimise social contact, it is unsurprising that we are seeing accelerated growth in e-commerce. This shift is not a new trend but as a reaction to this pandemic, we will likely see exponential change in how consumers shop, as people start to establish new habits that will set the pace for e-commerce moving forward. “There is an emergence of a new retail environment. Consumers who might have been hesitant to embrace online shopping previously, older generation consumers or fresh purchasers have now trialled it and experienced the benefits so will unlikely revert to their old patterns” – Ryan Zhou, Vice President CPG, Neilson Connect China1. Grocery stores & online retailers in China claim that the number of grocery orders placed by users born in 1960s was four times higher than normal and in some cases, its users aged 40 years and older have risen by 237% during the COVID-19 period2. Companies should not only re-focus to meet these new demands, now and in the future, but should address their entire content eco-system to ensure efficiencies & consistencies are gained.
- Technology Forward: With the increasing shift to online, companies have an opportunity to leverage technology to assist consumers with every-day tasks like shopping – enabling seamless interactions and enhancing consumers experience – this creates an opportunity to earn consumer loyalty after concerns subside. We are also seeing an increased desire for product & supply chain transparency as safety concerns are paramount. Using technology solutions to promote visibility from product origin to distribution will go a long way to assuage consumer concerns and build brand trust & loyalty. In China, where populations are emerging from mass quarantines and widespread concerns prevail, couriers from online food retailers Meituan and Eleme present customers with a reassurance guarantee slip. In other words, consumers are becoming used to this high level of transparency. They are likely to expect it in everything they buy, but especially when it comes to food products.3
- Strategic Prioritization: As consumer demand peaks due to the self-isolation guidance & mandates, companies could potentially see a challenge with unavailability of materials, as well as capacity & ability to move goods. This will likely force companies to re-strategize and prioritise their initiatives during this time. Having a strong grasp on short to long term forecasting, capacity planning and proactively engaging with your supply chain partners to drive early visibility will be key to ensuring demand is met.
- NEW! Supply Chains: We are starting to see a trend in companies leaning on contract manufacturers & additional vendors to support with gaps in the supply chain. This is a great short-term fix but will likely result in a lot of additional cost, time and in-efficiencies, if not established correctly at the outset. Understandably, this is a reaction to an adverse situation, but should be monitored and addressed to ensure this added cost and time does to stay within your supply chain, once the dust settles.
- Sustainability Impact: Consumer priorities are starting to shift from a preference of ‘packaging free/eco-friendly’ consumption to single-use packaging, due to a newfound appreciation of the role this plays in maintaining the safety & integrity of products. We are already seeing states like New York postpone sustainability initiatives and food chains like Starbucks and Wholefoods have halted the use of single use cups, as well as apply increased packaging to their ‘fast food’ products. We need to ensure that we do not lose momentum on sustainability goals and brand owners should continue to have sustainability as a core focus.
- Importance of Trapped Capital: Companies, such as Apple, Disney and Accenture are cutting revenue forecasts due to the impact that COVID-19 is having on earning potential. This could impact future budgets & spend relating to branded content, which means companies are going to have to find new ways to free up trapped capital within their operations to re-invest spend.
Although we are seeing some trends emerge, we still find ourselves in the midst of an unpredictable challenge which will result in a great deal of unexpected change. As companies continue to prepare for the disruption to normal purchasing trends, there are some immediate areas of focus, in an attempt to stabilize their supply chain:
- Increased supplier engagement to drive proactive communication, risk mitigation, order management and activation of new suppliers
- Inventory management to proactively prevent consumers switching stores and brands to get the products they need
- Production capacity optimisation to meet consumer demands
- Demand management relating to sales, SKU’s, production & sourcing plans
- Continuous assessment to monitor the landscape to support the flux of change and identify short and long term opportunities to protect earning potential and drive future growth
“A good person dyes events with his own colour… and turns whatever happens to his own benefit” – Seneca
There will no doubt be companies that are negatively impacted but those who are able to see through the negative and into the positive will identify opportunities, pivot quickly and come out ahead, changing the landscape and creating new norms. This is a defining moment.
During this adverse time, please keep safe and follow respective government guidelines to help flatten the curve.
Hope Massey, Director, Consulting, SGK: Hope graduated Law and is a Prince2 Practitioner, Lean Six Sigma qualified and Change Practitioner. Most recently, Hope has served Bayer, J&J & SCJ to deliver efficiencies within their global graphic supply chains. Hope has also worked on key projects including a major business change initiative incorporating Asia outsourcing, process improvement, financial analysis & modelling, cost reduction & business restructuring.