Retail supply chain expert BearingPoint, which advises many of the top 10 retailers in the UK on their supply chain, logistics and operations has published a new insight, which puts forward a set of proposals to help grocers adapt and maintain service and availability during the Coronavirus outbreak.
The insight is jointly authored by Emile Naus and Stuart Higgins, both Partner’s at management and technology consultancy, BearingPoint. Below are key proposals from the insight – focusing specifically on increasing grocery delivery capacity and keeping stores stocked.
The demand for Home Delivery of groceries has maxed out current capacity – it’s estimated that 2019 saw ~7% of grocery sales delivered direct to customers. Let’s assume the market can cope with a 20% uplift in demand, which gives a capacity of ~8.4%. Given the potential demand for grocery home delivery over the next few months there is a significant capacity gap.
Potential solutions to increase grocery delivery capacity:
- Currently customers choose their slots; adjusting this to be postcode-led would enable home delivery to reach more customers more efficiently and is more feasible given the numbers of people who are now working remotely; alternatively, giving flexibility for neighbours to receive could further help
- Assuming vehicle flexibility, temporarily utilise non-temperature-controlled vehicles to deliver ambient goods while utilising the chill and frozen capability of ‘normal’ fleet
- Vehicles could be sent to different postcodes pre-stocked with essentials enabling maximum utilisation of space and time while giving maximum customer coverage potential with payments made via apps or other digital methods
- Prioritise where appropriate, whether it be demographic driven or those with delivery subscriptions – supporting those most vulnerable and rewarding loyalty is the right thing to do
- With other areas of retail and hospitality industries struggling, explore opportunities with partners to create additional delivery or collection points using now closed property
- Encourage and incentivise customers to co-ordinate with neighbours to consolidate orders and maximise vehicle fill and time utilisation
- Collaborate with providers such as Uber Eats or Deliveroo to create additional capacity or even Royal Mail for mailable-appropriate products
- Collaborate with commercial food suppliers who normally support bars, restaurants and hotels to utilise their now quiet fleets
Keeping stores stocked
Stores are also seeing unprecedented levels of footfall and demand, higher than those seen at the traditional annual peak of Christmas which in turn is driving demand through to distribution centres:
- Focus energy on priority products through segmentation techniques (for example top 20% of products that generate 80% of volume) and ensure flow and availability of staple products – this will maximise the probability of maintaining availability for customers with those products also being most likely to have stronger more robust supply chain flows, facilitate that prioritisation throughout the supply chain
- Centralise decision-making to minimise localised over-riding of stock allocation decisions to ensure holistic availability and service across the store network
- With security of supply at one end, managing and controlling the quantities customers can buy across selected product categories can create greater access and smoothen purchasing patterns at the other end
- Aim to keep colleagues safe and well across shifts by adapting shift changeovers and physical routines; for example, introduce a 15-minute gap between shifts to minimise risk of viral spread
- Protect drivers by introducing ‘stay-in-cab’ routines when on supplier, logistics or store sites
- Remove higher-risk, higher-effort activities, such as delicatessens and foreign currency counters and prioritise colleagues onto core grocery replenishment activity
- Maximise customer opportunity to self-serve; this could be through incentivising customers towards ‘scan as you shop’ using hand-held (maybe personal) devices, flowing cash-only customers to dedicated check-outs with extra precautionary measures in place or adding additional self-checkout technology to manned check-outs – all of these reduce risk and free up colleague capacity
- If not required immediately because all colleagues are still available, cease the less critical activities to channel resource and focus into primary activities such as inbound receiving, stock replenishment and check-outs
- Colleagues need the right level of information to feed their actions and to relay to customers as required; ensure these channels are open and are being fed to drive clarity
Grocers are facing a set of short-term end-to-end supply chain challenges, some of which they can control, some of which they can influence, and some of which are out of their control. While grocers can, and are, adapting to remove supply bottlenecks, customer behaviour also needs to adapt to enable safety and efficiency opportunities to be realised. Whether this means accepting there won’t be as broad a product range available, only buying what you actually need or actively changing your own customer journey by engaging with new ways of transacting. Grocers will adapt to serve the nation, the nation needs to adapt to let them.