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Impact of Covid-19 on supply chain business in retail sector

Covid-19 continues to impact the economies worldwide, severely hitting the businesses and services. As several cities and countries observe absolute lockdown, its strong ripple effects are jolting the supply chain business.

Impact of Covid-19 on supply chain business in retail sector

Coronavirus took the world by surprise, and the full impact of the pandemic on supply chains is still hard to predict. However, one of the biggest challenges in hand is the availability of personnel across supply-chain & stores and clarity on regulations/norms on movement of goods/people in various states,” says Siddharth Jain, Partner, Kearney.

“While that needs to be solved on priority, retailers have other levers to tap. Ability of retailers to minimize stock-outs of critical SKUs, pivot to home-delivery, drive innovation in last mile fulfilment, adopt more automation & mechanization and finally ensure adequate sanitization of personnel & products is critical to respond adequately to the demand in such a time of restricted customer mobility,” Jain adds.

“Managing retail and CPG supply chain in times of COVID-19 requires some creativity and visionary leadership. The conventional wisdom regarding just-in-time inventory and flow through replenishment works in times of business-as-usual. But as everyone is finding out the hard way, such models cannot handle significant supply chain disruptions. Maintaining higher inventory levels may cost 0.3–0.7 percent more; yet in a crisis, the higher inventory levels pay off in terms of customer satisfaction and competitive positioning,” says Jain.

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