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7 Supply Chain Lessons of the COVID-19 Crisis

by Anna Ngo
One way or another, every business has been affected by the COVID-19 pandemic. But because we’re all in this together, we at Cin7 reached out to some of our customers to learn how they are coping with the current situation.

Founder and Chief Innovation Officer Danny Ing sat down in one-on-one conversations with Ram Prashanth, Supply Chain Manager for cooking device brand Anova Culinary, and David Dodd, Director of Operations for Shields of Strength, a faith-based jewelry provider.  

(Click the links to watch the full conversations with David Dodd and Ram Prashanth.)

The conversations focused on how each company is dealing with the challenges of this ongoing crisis. Here are some of the key takeaways:

1. Build up backup inventory and supply chain resilience.
Don’t wait for disaster to strike. Build resilience into the structure of your supply chain so that you don’t run out of stock. Put your inventory in multiple locations when you can, to support regional sales.

For example, Anova had run out of stock in one of its major warehouses in February due to production delays in China. Fortunately, they had stock in a second warehouse that could serve as backup. “That is what we primarily want to do: have multiple sources in every region where we sell,” Ram said. 

As this pandemic has taught us, you never know what’s going to happen, so don’t put all your eggs in one basket. “That’s why I back myself up,” said Ram. “I never depend on one source.” 

Building resilience into your supply chain can include the ability to quickly pivot to alternative channels. Integrating with multiple sales channels gives you the opportunity to focus on one channel when another is closed to you. 

For example, while Amazon prioritized selling essential products and stopped accepting other items in its warehouses, Anova could still focus on its retail customers. While consumers stay in isolation, retailers like Target and Best Buy continue to sell through their eCommerce stores. 

“Target and Best Buy are seeing increased sales in general because Amazon has reduced fulfillment speeds for nonessential products,” Ram said. “So that is a shift that we’ve seen in the regional market.”

2. Ration inventory in the short term.
Wholesalers should ration their inventory to prioritize fulfilling orders from key partners. This will maintain good business relationships in the long run. Keep inventory in balance by minimizing promotions and slowing down sales through other channels as you wait for production and supply chain conditions to recover.

In hindsight, Ram said, he would have made SKU planning more agile and responsive to changing circumstances. 

“Rather than push out production later in the year, I would have pulled them in earlier,” Ram said. “Not the entire lot of SKUs that we have, just a few SKUs that we are seeing an uptick higher than we expected. We couldn’t adapt that fast, which is what I would change in the future, adapting to the change of market faster than we did this time.”

3. Diversify your products to appeal to different market segments.
Diversify your range, offering products at different price points. Anova, for example, markets its sous vide appliances to both professional and consumer markets. 

“It’s difficult with lower-than-expected inventory for our best-selling product [the Nano] because that’s where we go to the mass market,” said Ram. “Right now, people are conservative due to the market situation and they prefer to buy our mass-market product [the Nano] rather than our high-end, high-quality product [the Pro].”

Anova planned for this market diversification four years ago and, thankfully, implemented its strategy last year. “We’re going to try to improve that over the next two years.”

When can hungry homebound chefs expect to be able to get a Nano? “We currently do have the inventory to support sales, so they can get it right away. Additional inventory started shipping in early March out of China."

4. Anticipate your suppliers’ calendar and monitor current events.
Annual holidays and current events (such as a labor strike) will affect your overseas suppliers’ ability to fulfill orders. Plan your purchases ahead of anticipated drops in production and be prepared to source from alternative suppliers. 

The rise of COVID-19 happened to coincide with the Lunar New Year, a date familiar to many brands sourcing products from suppliers in China and other markets in Asia.

“Factories normally shut down for about 30 days, so we put in early orders,” said David from Shield of Strength. “They had been delayed with getting the product, but we were in good shape because we planned ahead. I frontloaded it, and I even padded that.”

To stock up for the first six months of 2020, David ordered twice the amount that his company sold in its busy fourth quarter. 

“We’re actually up for March, based on sales figures for last year,” David said. “Everything we make, we put a Bible verse on it, and our mission is to share the Gospel. Right now, a lot of people are starting to look for something that’s bigger than themselves and they’re turning to their faith.” 

Anova, which has a warehouse in China, makes it a rule to increase production orders before the Chinese New Year to prepare for a month in which factories and logistics in China slow way down. 

5. Plan for the rebound as much as possible.
Orders through some sales channels will increase when things rebound. “Amazon might see a big uptick in sales because of not buying stock for nonessential products for a while,” said Ram. “That is definitely something we should expect, so we have to build stock for that.”

Ram foresees an increase in orders from Amazon when it returns to selling nonessential products and seeks to build up its inventory again. He adds, however, that consumer appetite may be limited in light of a slowing economy. 

“[Amazon] stopped buying [nonessential] products, they’re not promoting them and they’re not offering expedited shipping like they used to, which is a good thing in disguise, because our potential sales in the future will be higher,” Ram said. “But it also means that customers will reduce buying because of the recession-like situation right now. That’s to be played out, I think.”

6. Master your technology and take inventory more often.
Maintaining accurate stock counts and proficiency in your inventory management software can help brands be prepared for, and respond quickly to, changing circumstances.

David said that Shields of Strength does more than just regular stock takes. Adapting a procedure from his military experience, the company does a monthly stock take of 10% of its total inventory. This, combined with increasing proficiency in Cin7, has helped the company in its effort to achieve 100% total inventory accuracy.

“We’re getting better and better at it. We’re making immediate changes to database stock adjustments, and I’m starting to use some of the standard reports as well,” David said. “We’ll put a lot more thought into having our inventory be 100 percent as close to accurate as we can and really make informed decisions—be proactive, anticipate, use the tools that are in the system to forecast and make sure that we’ve got our best-selling items in stock.” 

7. Stay sane, stay positive, look after yourself and your team.
This is a stressful time, to say the least. It’s important for companies to help themselves and their teams working in isolation and to boost morale.   

Ram recommends getting face time with coworkers rather than relying solely text-based messaging and email. 

“Getting a FaceTime does lift your mood,” Ram said “We have seen that in our company. Everybody, every day, we see each other at least once…to ensure that everybody is keeping positive.” From virtual lunches to online bingo, Ram said it’s important to foster a sense of team spirit.

David, on the other hand, finds personal time therapeutic. Living right next to a Civil War battlefield, the Battle of Kennesaw Mountain, David has 40 miles of woodland trails at his disposal. 

“I get out of my office every day, so I hike, and then I’ve got a gym in my basement, so I’ll work out down there.” 

As a military man, David has seen his share of hard times but knows this, too, shall pass. 

“We’re going to get through this, and we’re going to be a whole lot stronger than we were going into it. We’ve been through world wars. We’ve been through major terrorist attacks. We’ve been through the Great Depression, and this is a cycle we’re going through. Everything’s gonna be okay; we’re gonna be fine.”