From increased UK production to a focus on click-and-collect, SCALA’s John Perry reveals how the coronavirus crisis might reshape the supply chain
The entire world has changed irrevocably, including how products are produced, delivered and sold. While it’s impossible to predict exactly how life might look once normality resumes, it’s inevitable that business will never return to exactly how it was before. So, where is the supply chain likely to see change?
Many businesses are likely to see a re-assessment in supply chain strategies. Reliance upon global supply chains will reduce when lockdowns lift, particularly on single sourcing of components, raw materials and finished products. Subsequently, this could lead to more positive encouragement of domestic production, manufacturing and farming.
Companies are also likely to re-assess their Disaster Plans, armed with the knowledge from this crisis of just how much supply chains can be impacted at a moment’s notice.
Indeed, many are likely to see this as a dry run for what may happen if we end up with a damaging – and still worryingly realistic – no-deal Brexit. This will place greater emphasis on future contingency planning and investing in solutions to increase resilience.
Changing consumer expectations
The significant increase in home delivery and click-and-collect in all sectors will factor more heavily in consumer buying behaviour than previously. This is simply because many shoppers will have become even more accustomed to purchasing goods in this way.
This will have a knock-on effect on businesses. If these models do indeed persist, they will in turn impact both businesses’ capacity to meet changing consumer expectations and their Cost to Serve. Many home delivery services are currently being provided either for free or at a low cost, which is not a sustainable business model long-term.
Reduced consumer choice
Product lines may evolve, with the possibility of a reduction in consumer choice for products in some sectors such as food.
While consumers have had the benefit of a very wide choice of products when they previously visited major supermarkets, there are considerable benefits in reducing product ranges.
With this in mind, we’re likely to see retailers explore ways to streamline ranges to increase the resilience of the supply chain, reduce complexity and make it more efficient. This is the approach favoured by discounters such as Aldi and Lidl, and while we are not likely to see these exact models replicated, we may see moves in that direction that could increase both supply chain resilience and supply chain efficiency.