The coronavirus crisis has altered supply chains beyond recognition. And as we embark towards The New Normal, now is the time to revise and optimize your supply chain network’s performance. In this article, we look at the five steps that manufacturers need to take now to assess, re-evaluate and get their channel strategy ready to be best equipped to meet new demand and sourcing patterns.
1. Look for future revenue potentials
During COVID-19, even when production recommenced in China, supply kept being interrupted by quarantine measures, border controls and lockdowns. As those are eased across Europe, we’re seeing the first signs that reopened shops are selling the very same items that restricted consumers bought online. Only this time, they are purchasing them in-store. This suggests that to some extent at least, shoppers will return to pre-crisis buying habits and patterns in the “new normal”.
If that is the case, then the sales trends, replacement cycles and seasonal spikes that retailers and resellers are used to will return – gradually. To maximize future revenue opportunities as a manufacturer, you need to find opportunities to get your channel strategy ready and learn where your partners see the potential for growth in the immediate and longer-term. What do they consider the most promising products by the market? Now more than ever, it’s essential for manufacturers to know which categories and trends will expand in the near future to prepare for anticipated demand. In our Distribution Radar survey retailers and resellers share their take on future revenue sources.
2. Understand what matters most to your partners
It takes more than a future-ready product assortment to be successful. Partners in the supply chain also need support and service. Manufacturers are an important ally for distributors, retailers, and resellers. And COVID-19 has intensified this need. To emerge from the crisis successful all partners must steer the situation together. Now payment terms, product availability, speed and cost of delivery, and online ordering are more relevant for retailers and resellers. As a manufacturer, you need to insights on how your distributors have performed on these criteria and others. This allows you to efficiently use your resources and identify where your support is needed today and tomorrow.
3. Choose the right partners based on performance
To secure a fast recovery from this crisis, you need to cooperate with the right partners. You need intelligence on which distributors are important by market, and drill down into their individual performance on the criteria that matter most, e.g. customer care, delivery costs, payment terms, minimum order quantities, assortment etc. You will also want to research their customer base and identify overlaps. A thorough understanding of these factors enables you to form the right partnerships and build strong business relationships to master the crisis.
4. Evaluate sourcing behaviour, dependencies and loyalties
To get your distribution channel strategy ready for the future and maintain a competitive advantage, you need reliable insights on the sourcing behaviour, and therefore the dependencies, of retailers and resellers:
- Which distributors do they use, and to which extent?
- How many do they use and how loyal are they?
- Why do they change distributors?
As a result of COVID-19, distributors have played a crucial part in tackling shortages and challenges in the speed of delivery. Many retailers and resellers have been forced to change their usual habits to secure supply. The frequency of changing distributors has increased. Now, moving towards the “new normal”, it is key for manufacturers to get a clear understanding of regular sourcing habits, the number of distributors needed to ensure sufficient supply and ways to help tackling issues and obstacles to stabilize your supply chain. And in countries where loyalty is low, you probably should consider extending your distribution network.
5. Plan for future expectations
Generating new business will be linked to new challenges that need to be faced on our road towards the ‘new normal’. Future success depends as much on having the right product assortment, as on providing the right services to partners. Manufactures need to anticipate which services will be valued and needed most by resellers and retailers in the future. Only then can they retain them as customers and have them play an essential part in generating new business.