It’s pretty safe to say that COVID-19 and the subsequent lockdown has affected virtually all industries in terms of logistics and supply chain efficiency. Cross nation relationships, communication and management have been drastically altered due to the immediacy of the virus which has brought many aspects of business to a halt. This has resulted in many sectors crumbling almost overnight as a result of the pandemic, with the vast majority having to alter their strategies to stay afloat.
As many predicted once the scale of the global crisis became apparent, online distributors on the whole saw a significant rise in sales. Whilst positive for those seeing an opportunity to acquire more customers, this has come with challenges due to the exponential increase in demand. Supply chain gaps have almost become a standard procedure amidst the global chaos, but there are ways to navigate them.
Whilst a number of firms may assemble their products domestically, a large proportion of raw materials still come from further abroad – in particular China and India. This has meant that many companies in Europe and the USA have struggled to produce finished items as both the Chinese and Indian governments have imposed restrictions in a bid to stop the spread of COVID which of course have prevented exporters from continuing as usual.
Furthermore many manufacturers have been reorienting their components and capacity to produce supplies necessary for combating the pandemic, which has led to further supply chain issues. For example, the COVID-19 global push to produce a greater volume of hand sanitiser has led to a shortage of plastic bottles. Companies which needed similar bottles therefore lost out as a result of this and the lead times on purchases increased from around 1 week to 4+ weeks.
Dealing with stock issues
To coincide with this, the competition aspect of making sure stock is at a healthy premium can be cutthroat, which is especially relevant in retail where domestic competition is pretty much guaranteed. To tackle this, suppliers should always be looking at alternative sourcing options.
One option is for retailers to start dealing directly with brand manufacturers, so they aren’t reliant on the purchasing flow of UK suppliers. Going direct to the source does have its challenges, such as the aforementioned import costs, as well as processes which require additional research and work to understand if this isn’t the usual method. There’s also other things to consider such as currency fluctuations and freight times which all can heavily impact cash flow.
With direct to supplier relationships, there’s always the expectation to purchase higher numbers of stock or to only order in retail outers or master cases. This again can not only affect cash flow, but also potentially even storage space which at present times needs to be managed with constant attention to detail no matter what product is being sold.
The importance of personal relationships
Recent events have served to illustrate the importance of personal relationships between purchasers and suppliers. Skype, WhatsApp and the like offer many opportunities to connect with suppliers. It’s also imperative to have good business social media presence both professionally and personally, with many suppliers using networks such as LinkedIn for outreach and relationship management.’
It’s predicted that e-commerce growth has accelerated by 4-6 years during the COVID-19 pandemic, and due to this many distributors have had to develop new relationships with suppliers and manufacturers who they haven’t dealt with before. In order to maintain a relationship, honesty, transparency, good personal relationships and regular communication are fundamental. Many suppliers understand that in order for them to succeed, their partners need to thrive. The more both sides understand each other, the more likely success will be achieved long term. It’s not about the profit made today, but the profit that will be made in 12 months time.
Trust is perhaps the most crucial facet in progressing as a business and knowing when to instill that trust is a very understated skill. Often it’s a case of doing the basics and protecting yourself contractually. Supplier contracts which state the terms of business, and more importantly how problems are resolved and who is liable, are great to have. In most cases, an email exchange outlining the terms of the relationship can save a lot of hassle in the future, providing a form of documentation which can be reverted back to.
Despite the realisation that COVID-19 may be winding down, the repercussions are expected to be felt for years to come. Fine-tuning logistics and assessing your business is a necessity in these troubling times and can bring to light issues which weren’t visible before the pandemic. The unpredictability ahead is daunting, but it can be used to further business accruement and in turn achieve increased success if managed correctly.
This article was written by Vlad Vassilev, Director and CEO of the UK eliquid retailer Vape Club
Supply chain stock photo by Zapp2Photo/Shutterstock
