COVID-19: Distributors Work to Keep Pace with Demand - Modern Distribution Management

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COVID-19: Distributors Work to Keep Pace with Demand

Distributors are responding to customer concerns and increased demand on staff in a variety of ways, including limiting new business to meet existing customer demand; open communication on shortages and supplier allocations, and discouraging panic by not accepting returns beyond normal usage patterns. Face the crisis with a sense of flexibility and resilience, experts say.

Distributors are responding to customer concerns and increased demand on staff in a variety of ways, including limiting new business to meet existing customer demand; open communication on shortages and supplier allocations, and discouraging panic by not accepting returns beyond normal usage patterns. Face the crisis with a sense of flexibility and resilience, experts say.

Industrial distributor W.W. Grainger typically stocks personal protective equipment to well exceed customer need, even in significant emergencies. But like others across the globe, the company is experiencing shortages nonetheless. Grainger is “leveraging our supplier relationships to quickly obtain available merchandise, but in some cases, shipment timing is still undefined,” says Joe Micucci, senior director of external affairs. As a result, the company is prioritizing orders for government, first responders and hospitals. Other customer orders are arranged based on internal inventory management commitments, contract obligations and order timing, Micucci says.

Janitorial, paper, packaging and industrial supply distributor Schilling Supply says that its customer service team is flooded with calls from customers with questions about product availability and alternative solutions. Behind manufacturer and distribution supply, health care is its second largest customer segment. “Some of our customers are stressed. They can’t run out of product, so we have to be proactive because we’re being counted on to be proactive,” says Chip Schilling, president.

That means having a knowledgeable sales staff in place to offer solutions; walking away from new business to satisfy existing customer demand; providing helpful informational links about COVID-19 online; being upfront about shortages and supplier allocations and even discouraging panic by not accepting returns on anything beyond normal usage patterns.

Policies such as these protect Schilling and the customer, says Amber Kaiser, marketing leader. “We’ve seen similar policies with the manufacturers and suppliers we work with,” she says. “It’s a balancing act to support the short-term needs of our customers while keeping their long-term care in mind.”

Survive Shocks to the Supply Chain

Supply chain management expert Ananth Iyer points to the need for resilience as a means to surviving COVID-19 setbacks and future disruptions. “The two words that a lot of supply chain managers are looking at in the face of this crisis are flexibility and resilience,” says Iyer, senior associate dean of the Krannert School of Management at Purdue University and director of the Global Supply Chain Management Initiative. “If you have flexible ways to run the system, you’re more resilient when you’re faced with various shocks. Change happens; things you can’t control happen. When you have a Plan B and a Plan C and you can continue operating, you’re resilient.”

For example, not having everyone cross-trained to take over a colleague’s role should they become incapacitated is a source of risk, says Iyer. “It doesn’t mean that your replacement has to be equally efficient,” he says. “They just have to be able to keep the lights on and keep the process moving.”

Iyer recommends creating a management team to think through worst-case scenarios related to staffing issues, e.g., the number of employees needed to get high-profit items out the door. “What if you need 25 people and 20 people don’t show up because they are ill?” he says. “The solution might be that you use the remaining five to move your core set of products and call a third-party fulfillment company [such as a master distributor] to help with non-core products.”

There are multiple ways to survive shocks to the supply chains, such as building a buffer inventory, prioritizing orders and exploring alternative sources to compensate for gaps in supply. Both Iyer and Schilling also say keep in mind employee morale, which can influence performance. At Schilling Supply, customer service and outside sales workloads increased within the last few weeks. In response, the distributor brought in extra help for its warehouse to handle the rise in order quantities.

Outside of routinely thanking their staff for managing the increased workload, management is vigilant about communicating updates. They also have a contingency plan in place to provide direction as COVID-19 continues to spread. “Communication is so important,” says Schilling. “There is so much disruption, which can cause people to panic or stress. But when they have good information in front of them — as far as numbers or procedures or policies — it helps keep everyone calm and lets them know they’re being supported.”

How is COVID-19 Affecting Your Business?

Distributors share firsthand accounts about how the coronavirus is impacting their companies:

  • We’re trying to use it as an opportunity to pivot our services, consult with our clients and make the best out of a scary situation. Our team is small so, thankfully, we don’t need to let   go of anyone at this time — for the next 6-8 months.”
  • “Customers have restricted most visits other than vending support — locked doors, won’t allow visitors without appointments.”
  • “Sales are actually up, along with employee anxiety and uncertainty.”
  • “Our manufacturer-suppliers are running out of component parts to assemble equipment we distribute.”
  • “Way too many unknowns with things changing daily.”

Source: MDM survey

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