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Resource scarcity during a crisis can derail productivity for a warehouse or manufacturer. Companies may need to cope with things like power outages, fuel shortages, or lack of internet services that occur as a result of the emergency. While these may be largely out of their control, with other resources, there may be more that can be done to lessen the negative impact.
We discussed problems with workforce resources in Dealing with Staff Shortages in Critical Times. Now, let’s turn our attention to the supply chain and what happens when it is disrupted in a time of crisis.
Just as a business’s productivity can be impacted by a national emergency or natural disaster, so can any other companies that grow, produce, distribute, or ship their products. Stop the flow of these essential resources, and that business stops too. How management responds to the challenge will make a difference.
Some companies will see a spike in volume for certain products during a crisis. With high demand pushing production to its limits, some features of a company’s warehouse management software will become indispensable. Businesses need robust warehouse management software that is being used properly and to its full potential. Some modules of a warehouse management system may be able to be turned on in case of an emergency. But companies already using them will have the advantage by avoiding a steep learning curve of trying to implement a new software feature on the fly.
Automatic ordering to replenish supplies and raw materials is one essential component. By tracking inventory and production data, WMS can tell when supplies are running low and automatically initiate an order with the vendor.
As things speed up on the production line for a manufacturer or warehouse and its vendors, re-order alerts will need to be tweaked to accommodate product lead-times. Placing an order sooner will move a buyer ahead in the line of companies waiting for scarce materials, reducing the chance of depleting their inventory.
Not only can WMS provide information about what’s going on in a manager’s own company, but WMS that is integrated across the supply chain can give a view of what’s happening with everyone else too. Integration can be the key to uninterrupted production in critical times.
A manager’s WMS can provide reports showing exactly which materials are needed to fulfill upcoming orders, and in what quantities. Having access to real-time data from the vendors of those materials is an invaluable piece of the puzzle. Maybe, for example, a vendor can only supply half of what they will need for the coming weeks. This gives them the ability to make strategic decisions as they choose what action they’re going to take.
When faced with reduced resources, there are a few different options that a manufacturer or warehouse can take. Obviously, accepting delays and allowing production to lag isn’t ideal: That would force backorders, or possibly the cancelation of orders altogether. The result is unhappy customers who will go elsewhere for products.
If a supplier can meet some but not all of a company’s demand, it may be as simple as finding another provider to pick up the slack. This is easiest when the product is a common one, as there are probably many sources to which a distributor can turn.
Things get a little trickier if there is something special or proprietary about a particular material. Even so, a company can probably find something comparable. It might mean switching to a similar product from a preferred vendor or buying from an alternative vendor.
Let’s say that after extensive research, a food manufacturer has chosen to buy a certain type of container for its products from a specific vendor. In addition to a favorable price, the decision was based on the high-grade plastic used, the shapes and sizes available, and the company’s use of recycled materials. If that company can no longer provide the volume of containers the manufacturer needs, they have some choices to make.
The vendor may offer another product that is even cheaper, but the quality may not be the same. Or, they may have to agree to a higher price from the vendor’s competitor to get a product comparable to the original. A compromise in quality or price might need to be made, at least temporarily, in order to keep fulfilling orders.
Care must be taken with these decisions, making sure any short-term sacrifices are worth it in the long run. WMS metrics and key performance indicators that analyze things like customer satisfaction and returns can help identify the highest acceptable price, or the price point at which choosing a lesser product does more harm than good.
While a strong relationship with a vendor is a good thing, it is always wise to be aware of what else is on the market and keep track of alternative sources. Having a roster of reliable suppliers that can be called upon to step in when needed can keep things going on the production line in critical times.
When faced with a lack of resources, finding alternative suppliers can get a manufacturer or warehouse out of a jam. The same can be said about shipping partners.
Goods can’t be stacked up in the shipping area, waiting for trucks to arrive and take them to retailers or customers. And the receiving area will be expecting a steady flow of deliveries to keep inventory up and production humming. If a crisis makes it hard for current shipping partners to keep up the flow of products coming and going, alternative or additional transportation methods might be necessary.
Just like with vendors who provide raw materials and supplies, shippers may be spread thin and unable to promise delivery according to their usual timeframe. Warehouse management software can use a company’s production and order fulfillment data to determine when it’s necessary to find an alternate carrier and help choose the best one.
When production spikes, there could be a marked increase in deliveries and vehicles into and out of a warehouse. WMS can help to coordinate and schedule pickups and deliveries in the most efficient way. To prepare for critical times, it is also a good idea to examine the design of the receiving and shipping space. Sticking to best practices for the layout of these areas and maximizing their efficiency will help during an emergency. A well-planned receiving and shipping area can easily accommodate more traffic.
During critical times, businesses may rethink how customers can buy their products. Sales traffic may switch from brick-and-mortar stores to online, or vice versa. Companies without an e-commerce presence will be scrambling to catch up.
How a company must pivot will depend on the type of crisis they find themselves coping with. For example, a widespread cyber-attack that disrupted the internet could make it necessary for customers to shop in stores for things they might otherwise buy online. The same might be true if a strike by delivery drivers or exorbitant fuel costs made deliveries difficult or too expensive.
On the flip-side, a natural disaster or pandemic keeps people at home and increases online ordering. During the COVID-19 crisis in 2020, some companies had to create e-commerce sites on the fly. Restaurants, for example, found ways to quickly set up online ordering and payment processes. Retailers like Walmart, Target, and some grocery store chains that already sold products online saw a huge shift as people stayed home and opted for delivery or pickup options.
The more channels a company uses, the more important real-time inventory tracking becomes. It is the only way to know exactly what is on hand when selling in multiple ways.
Companies are wise to explore how they can sell their products across all sales channels. They may have preferred methods under normal circumstances, but it pays to be ready should an abrupt change need to happen.
Even if a company has orders, and the ability to fulfill them, during an emergency, limited resources can get in the way. If manufacturers and warehouses can’t get their hands on the supplies, raw materials, and other products or services from their supply chain partners, they may have trouble surviving the crisis.
Here are things for warehouse managers to consider when facing resource scarcity in an emergency:
Expanding WMS capabilities or setting up new sales channels can be challenging, especially when it needs to be done quickly. And adding additional resource providers, or switching temporarily to new ones, may mean paying higher prices or accepting slower delivery times.
If demand is up, the additional time and costs will hopefully be offset by additional sales volume. But a true emergency is often an all-hands-on-deck situation. Many companies will be willing to accept a temporary reduction in margins if it means keeping customers and staying afloat.
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