Coronavirus and Supply Chains: What Have We Learned so Far?

Rui Marques, Managing Director, Supply Chain – Iberia | May 5, 2020

The coronavirus crisis has put supply chains under the spotlight. Like elsewhere in the world, some retailers in Spain have seen demand for their products such as groceries, electronics and children’s toys dramatically increase, while others such as fashion retailers have seen demand reduce significantly. Following are my thoughts on the challenges that retailers face and what we as supply chain partners can learn from the situation.

Supply chains must be more flexible and more adaptable

Our customers include one of the country’s biggest supermarket retailers, so we needed to quickly adapt our operations right from the start. At first, it was much more urgent – during the first 10 days after government-imposed restrictions were introduced in mid-March, panic buying meant demand for food increased by as much as 70%. We needed to make decisions fast, always with the safety of employees as our priority. We redeployed some employees to distribution centres in high-demand areas to manage the peaks. Everyone in the organisation, from site managers and distribution centre employees to human resources and IT support, has adapted to find solutions quickly and effectively.

Retailers need to move to e-commerce where possible

This crisis has highlighted to retailers, big and small, that it’s important to move to e-commerce to futureproof their businesses. In Spain alone, there has been a change in the demographics of online shoppers. Before, many people, especially those older than say 60, were sceptical about buying goods online. Now they have been forced into this situation, many of them have seen how the process is really quite straightforward. Where possible, some smaller retailers have been selling online to capitalise on the situation, so retailers who are brick-and-mortar are having to pivot to e-commerce as part of their future business strategy. Supply chain partners like XPO must be ready to help those retailers to survive and succeed.

Supply chains of the future must be better connected, in real time

The challenge for the future is to continue making the most of what we have learned. I believe the new physical distancing rules we have introduced will stay in place, at least to some degree. Perhaps this will change the way we design future processes and sites, and automation will play an even greater role in our operations. Overall, this experience has shown that we – every partner in a retailer’s supply chain – must stay better connected, in real time, to achieve greater synchronisation across our operations. We wouldn’t have achieved what we have during lockdown were it not for communication, collaboration and quick decision-making. Now more than ever, flexibility, transparency and trust between supply chain partners is essential.