Corona: From reactive to proactive

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Turn Corona from threat to opportunity!
A Buyer's & #039; s Guide in Volatile Times

Here are some things to consider in your Corona plan

All companies that make, buy and sell goods now face major challenges related to the Corona virus. 

A recently published survey from IBF showed that the entire 44% of the companies had no plan to handle this. We think you should have a plan. And not least that you have one good plan. We would like to contribute with some tips to your planning in this article.

Don't wait and see - create your plan and get started!

Our experience is that the crisis affects companies very differently - and it depends a lot on which industry your company operates.

You may experience that sales are plummeting, or you are afraid the sales drop will hit "sooner or later." And if that isn't enough, deliveries will be delayed or missing. And you often have to swap suppliers - maybe to suppliers on other continents.

In some industries, there is - at least for the time being - a huge increase in sales - and the problem then is more to get access to people that can help - and who are still healthy!

Proactive vs. Reactive

What can I as a Supply Chain Planner do?

It is not for anyone to know the exact outcome of this crisis on beforehand. But here are some of the measures that we see our user community have taken or are planning to undertaking.

The perhaps most important thing is not to seek absolute perfection, but that you try your best to think through different scenarios and then implement the plan to the best of your ability.

We should mention that many of the experiences have been gained by our customers using the functionality in our solutions and therefore have been able to turn around very quickly.

But this is a living matter and new approaches and experiences are constantly emerging.

If you are wondering how we actually do these things, just contact us, and we will happily explain this more in detail.

Buyer at Work

Here are some of the measures our customers have used/are considering:

  • Use of Event: Adding an Event to an item or group of items will filter out demand beyond the normal for that period. Thus, extraordinary fluctuations beyond normal demand will not be allowed to affect the forecast for future periods.
  • Change the forecast to freeze it: For many, it has been appropriate to change the forecast to a lower level and possibly freeze it for a given period. This can be done for individual goods, but for many it has been relevant to do so at group level. Then you can manage a lit of SKUs at the same time. When changing the forecast, it may be advisable to save the forecast value you now have, for example in a user-defined field, so that you can re-apply this value when you return to the "normal situation".
  • Changing the forecast may not be necessary. Remember that when you sell less, it will take longer for you to reach the SKU re-order point. In our solutions, the order logic automatically handles this. And if you have very long lead times, one of the evaluations is whether you think the situation may have normalized before you receive the goods.
  • Change from 4-weekly/monthly forecast periodicity to weekly forecasting: Weekly forecasts are more responsive than e.g. 4-weekly forecasts. In some industries, like food retail, one typically do weekly forecasting, whilst one in hard goods - e.g. building materials, typically do 4-weekly forecasting. You may want to switch to weekly forecasting for the time being for some of your product categories so that you get a quicker adjustment of the forecast. 
  • What if you expect a dramatic drop in sales? Then you may benefot from being proactive. The system helps to adjust the forecasts, but there are limits to how quickly and much the system will adjust the forecast. Therefore: Where you "know" that there is a need for drastic reductions, do manual adjustments. This can be done on individual items or on the category or grouping you want.
  •  These are some of the things we heard:
    • If restaurants close down, FoodService / HoReCa will be affected, but will probably be substitured by private consumption (food / dinner / drinks) from food grocery
    • If the lead times are long, changes should be withheld (given that the current changes in demand are temporary)
    • Supplier lead times may be more uncertain - it may hene be necessary to build extra safety stock for a period of time - even if expected demand is prone to decline. Applies especially when having long lead times
    • Some items may be suitable for extra branding, due to increased demand in the coming period
    • For some, it may be appropriate to reassess the service level goals in the future. Here you can benefit from an automatic update plan of the service level goals in our solution. 
    • For some, it may be appropriate to make significant reductions of the stock levels to free up cash. Here we have already posted an article on our blog. There are further opportunities to reduce inventory, including by adjusting cost parameters. Contact us, and we will happily explain.
    • For some, making Forward Buys may be a golden opportunity. At the moment the Norwegian Krone has weakened against both Dollar and Euro. Many believe that the Krone will continue to weaken and makes Foreward Buying appear even more attractive. It has been reported that several suppliers are slow on registering the new exchange rates in their systems and that, by acting quickly, one can do even more profitable buying at literally "old" prices.

These were some of the measures and experiences we see that our customers are doing right now. There are several other things that may be relevant - and as you can see, it is possible to implement several of these measures without necessarily having the Blue Ridge solutions. But we see that many are enjoying the invaluable benefits of our solutions now. Do contact us if you have other challenges that you want to discuss.

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Sverre Rosmo

Sverre Rosmo

Sverre has worked with supply chains, transport and purchasing for over 20 years. For the past 10 years, Sverre has worked as a project manager, consultant and in sales-oriented activities, mainly to Nordic wholesalers, distributors and retailers. Sverre is passionate about the logistics industry and not least purchasing and inventory management. He has for a long time been engaged as a lecturer at BI Norwegian Business School and Logistics College. He has previously published professional articles. Sverre is currently a member of the board of LOGMA.

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