As you navigate the fallout from the Coronavirus, you must consider the most efficient ways they can be planning for and responding to shifts in the supply chain in order to protect themselves from market disruptions.
Lightning fast communications, a global supply chain, and faster time to market are hallmarks of today's interconnected business world. But like a pebble thrown into a pond, ripples spread out and affect other areas of the water. A problem in one area may have serious repercussions in another.
To weather these storms, keep these critical strategies in mind:
Diversify your supply chain.
Suppliers face many risks, from economic shifts to natural disasters, pandemics, cyber threats and more. Supply chain diversification helps protect your business during these challenging times, and for that reason should be a part of your overall business plan on an ongoing basis--not just when disaster strikes.
Being without a robust supply chain at the ready can impact everything from operations to customer deliveries, causing time and money-costing disruptions. You can alleviate risk by exploring alternate resources in the event a problem arises with your primary supplier.
It's not always about securing the items you need at the lowest cost. More important is sustaining the continued receipt of goods. Breaking away from the norm by exploring whether you can source the products you need somewhere else can also yield fresh opportunities. For example, you might get the added benefit of finding new products to sell. Consider sourcing materials from local suppliers, too. Proximity comes with a host of potential advantages including reducing minimum buys, more control over your materials, reduced overall costs, and faster speed to market.
Proactively manage customer expectations.
Supply chain disruptions or modifications to import processes may impact the products you can offer, as well as create shipment delays and unanticipated costs. This won't just affect your overall sales, but how you time and manage product promotions. If such an interruption is likely to, or will affect your customers, communicate how they may be impacted quickly, clearly, and responsibly. In the era of transparency, this level of communication is valued and expected, and can increase your company's credibility.
Messaging should also be consistent across whatever platforms you choose to communicate through. Many reports identify email as the preferred method of communication from brands. Dotcom Distribution's annual eCommerce survey substantiates that reality for shipping notifications; however, the numbers are decreasing year over year, shifting toward text messages and in-app notifications. Further supporting this trend, a report on mobile consumer engagement in 2020 found 40 percent of consumers say they have at least 50 unread emails in their inbox, but only four percent report having 50 or more unread mobile messages.
Earning the attention of customers can be a hurdle on its own, one remedy for which is earning trust. Coming full circle, this can be accomplished by establishing a pattern of good communication. In a 2019 brand trust study of more than 25,000 respondents across eight major global markets, 76 percent of consumers reported paying attention to communications from a brand they trust, valuing it almost as much as quality and value.
An abundance of communication and trust is just as urgent between brands and suppliers. Keep an open channel with your vendors. Being plugged into what's going on throughout the supply chain betters equips you to set accurate, timely expectations for your customers about shipping delays, SKU availability, product changes, and more.
Identify when to adjust pricing, cost, or both.
Global responses to Coronavirus have already impacted the supply chain, and that may ultimately affect landed costs. Before determining when or whether to pass costs along to your clients, carefully consider what you can sell, how much you can sell, and what the associated costs are. Also evaluate different ways to reduce costs.
Think about focusing first on packing and shipping costs, as these may be the easiest areas to control or change. At my company, we help eCommerce brands optimize interior packaging and deliver--literally and figuratively--a specific customer experience. So, the first challenges we address are figuring out if and how we can we change the experience and find less expensive or slower shipping methods.
Other cost reduction tactics include changing your product mix, switching vendors, introducing promotions, and ramping up marketing. If you have market share, you may need to maintain cost to retain your position and live with a smaller revenue stream. Your goal should be to mitigate overall costs in ways that don't necessarily affect bottom lines.
Position your business so that you're always prepared to make adjustments. Best case scenario, you'll never have to implement an emergency or backup plan, but being unprepared for the worst-case scenario is not a risk any business should take.