COO, Hermes UK
Record numbers of people turned to online shopping in 2020, driven by lockdown restrictions alongside the ongoing growth in the sector, and 2021 shows no signs of this changing.
As home delivery was deemed essential right from the start of the pandemic, the industry had to quickly put in strong processes to ensure the safety of their staff and customers. The challenge was that this inevitably impacted on productivity, just as volumes went sky high when shops shut.
On a positive note, the increased volumes have also enabled some organisations to invest more heavily in their supply chains. For example, at Hermes we had to implement our five year growth plan in just five months to meet demand.
Accelerating long term plans
The pandemic has also forced retailers and their delivery providers to review their processes and become more flexible and agile. Both sides have had to focus on good communication as this has been key to ensuring that capacity can meet demand.
Looking ahead, the challenge for the industry continues to be the uncertainty which makes planning and volume predictions a challenge. The key is scalability, with the ability to ramp operations up and down in response to both customer demands and government restrictions.
Some companies have turned to technology and automation as a way of building capacity, as it is often more cost effective to invest in automation rather than in new buildings.
Both sides have had to focus on good communication as this has been key to ensuring that capacity can meet demand.
Challenging traditional approaches
Some retailers have been slow to grasp the need to change, with many continuing to maintain the traditional method of using different supply chains for home delivery via a carrier, delivery to their stores and to their own warehouse.
This pandemic has proved that this is not always the best approach and, in fact, having a single supply chain that can be easily diverted to ease the strain should be considered. This should also include the ability to fulfil from store – something that is becoming increasingly common as a result of regional and national lockdowns closing shops that contain valuable and possibly time sensitive products.
It is crucial that supply chains constantly assess the scenarios of demand and how they are setting up their supply chain to have certain levers that, if required, can be used to deal with the peaks and troughs of the uncertainty. They should not forget the three most important words – scalability, flexibility and agility.