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Covid: Surviving the Second Wave as a Wholesale Supplier
Navigating this new world as a wholesale supplier. With the potential for a second wave of COVID-19 we reflect back to see how we can grow and learn...
As the return to school is underway, so is the anxiety and anticipation of the second wave of COVID. While we can’t predict the effects or severity of the pending second wave, we can reflect on the first round and extract some key learnings from the business impact.
If you are in 2 of the industries we are closely engaged with, Garden as well as Lumber and Building Materials, you have experienced unprecedented sales and demand for products. The stress this would have put on your supply chain, sales reps, and order desk could not have been predicted. There was no ability to slow down and collect your thoughts on how to get through the pandemic, your only option was to go full tilt and serve your retail customers any way you could.
As things started to normalize in August, your ability to breath and step back to take a look at what just happened would have been eye opening. Nobody was prepared for what they went through. But, now you have a choice as well as the ability to plan ahead.
What are the three key things for a wholesale business to survive the second wave of COVID?
- Enable technology for order management
- Source more suppliers and sellers within your geographic area and country
- Develop a workforce strategy
Enable Technology for Order Management
Within the Forbes article in June 2020, “COVID-19 Accelerated E-Commerce Growth ‘4 To 6 Years’” the author stated “COVID-19 has massively accelerated the growth of eCommerce, according to an Adobe report released today. Total online spending in May hit $82.5 billion, up 77% year-over-year.”. This is no surprise as I am sure you felt the impact in your business.
Technology and people have both begun to adapt to the new way of doing business, the technology awakening has happened, there is no going back to a pre-Covid state.
For wholesale businesses and retailers, the emergence and concept of consolidating eProcurement and eCommerce is the next logical step for making the move from analog processes to completely digital processes.
What’s this look like? Bringing buyer and seller platforms together creating true B2B2C automation.
The majority of wholesale suppliers have systems in place to manage their business internally. This most likely is in the form of an ERP system. ERP systems really started coming to the forefront back in 1990, when the term was officially coined by Gartner. The rate of evolution of technology has rapidly increased since 1990 and highly relevant software solutions from back then are now experiencing difficulties adapting to modern business complexities. At the same time, these systems are so embedded into businesses that the cost and effort to rip them out and replace them outweighs the benefit of doing so.
In 1990, the World Wide Web, now known as the Internet, emerged which opened the gateway to modern eCommerce. WIth the emergence of online stores like Amazon and eBay in the mid ‘90’s and worldwide payment processing of PayPal in 1998, the brick and mortar walls started coming down. Hundreds of ways to sell to consumers emerged online and there were also hundreds of ways for B2B transactions to take place, but the one thing that has consistently been missing is a way to connect the data between wholesale and retail.
The result, new technology that can act as “middleware” to bridge the gaps these existing systems are not capable of managing or processing due to their older framework. This type of technology provides processes for information to move seamlessly between buyer and seller, allowing each to manage the process on their preferred platform without wasteful and error-prone manual data entry.
Not only does technology that facilitates this type of data exchange provide the ability to reduce manual processes and errors, it provides visibility to data in real time that was not previously available. This type of data allows businesses to operate more efficiently and effectively.
Why has this not been realized prior to Covid?
B2B ordering and catalog management for a lot of wholesale companies has been a largely complex process. It’s not as cut and dry as B2C transactions and setting up an eCommerce store such as Shopify or WooCommerce.
There are many considerations that need to be factored into a technology that can handle B2B transactions such as:
- Multiple catalogs
- Pricing tiers and complexities with tiers
- Special pricing negotiations with select retailers
- Product access limited to specific companies such as white labelled products
- Product access limited to specific geographic areas
- Multiple distribution hubs
- Sales rep attribution
- Ability to connect with ERP or EDI
- Ability to convert PDFs into digital orders
Aside from the ability to manage all of this product information, pricing, images, and inventory, the complexities of shipping to locations also needs to be factored into the equation. Both consumers and retailers are looking for improved experiences including:
- Drop shipping capabilities
- Direct to consumer shipping
- Ship to store
- eCommerce and POS integration with automatic product information push into the systems
Sales and Operations Planning (S&OP)
As identified in the graph below taken from “Sales & Operations Planning: A Guide For the Supply Chain Leader. Avoiding the Pitfalls and Potholes of S&OP Implementation During the Pandemic” by Supply Chain Insights, two of the top challenges are 1) Difficulty getting to the right data in a timely fashion, and 2) Not having technologies that support the process.
Covid has further exposed these challenges as a lot of the workforce have gone remote and data becomes more difficult to access. As a result, visibility across departments as well as between suppliers and buyers becomes even more critical.
The Models For B2B Commerce Ordering Transactions
Traditionally, B2B orders have been done via fax, phone and email (see Diagram 1 below). This model costs both the retailer and the wholesaler time and money. Since the initial introduction of ERP systems, the demand to become digital has grown exponentially. With this, some wholesale companies offer the capabilities of online ordering through a back end ordering portal that is often slow and difficult to navigate, or they have developed a B2B commerce site on one of the many platforms available in the market such as Shopify Plus, Unilog etc. (See Diagram 2 below)
The problem with this….if a retailer has multiple wholesalers, it still remains a time consuming and painful process to log into multiple different accounts. Plus, there is a lack of visibility to high level ordering from multiple suppliers. This reduces the retailer’s incentive to use the digital platform to place orders and they continue to revert back to phone, fax and email, which for the wholesaler like you, ends up in manual order entry to get orders into your system.
Diagram 1: Traditional B2B Commerce
Diagram 2: Partially Enabled B2B Digital Commerce
In essence, this model works ok for the wholesaler, but it is not ideal for their independent retailers.
The ideal model, which seems complex upon initial examination, but proves to be simple upon execution is the “many-to-many” model where the source of truth, product information, lies in a central hub where information is pushed back and forth between wholesaler and retailer. This information can both be pushed into retailer POS and eCommerce systems as well as into wholesale ERP and other systems.
Many-to-Many Digital Commerce Model:
This type of model solves the S&OP challenge, identified earlier in this article, of being able to access the right data in a timely fashion as well as having the technology to support the process.
When approaching the planning process to be prepared for the second wave of Covid, it’s important to take into consideration how your digital transformation is going to play out. Are you doing it to serve your business or are you doing it to both serve your business AND your customers? In a competitive market, the businesses who come out ahead are those who provide the most value, especially while in a state of uncertainty within the health of the world.
Source suppliers and sellers within your geographic area and country
During the initial month of the pandemic, the gaps in supply chain systems became very obvious. International trade and material sourcing was considered good business practice in order to get the best price for the customer as well as reduce manufacturing costs to increase margins. This model doesn’t work in a pandemic when international transportation sources are shut down or extremely limited.
Products that were once manufactured off-shore have now been brought back to local manufacturers in order to meet demand. Manufacturers became agile and shifted their production from things like car parts to making face shields. It was a truly unique experience and possibly a good wake up call to show how valuable the local workforce is to maintain the operation of supply to the local economy.
In order to undertake this process, as a wholesale supplier, you first need to complete an assessment of your current raw material suppliers and manufacturers, determine where they are located and even go as deep to determine who supplies them. The objective is to ensure your supply chain is not dependent on any one geographic region.
Once you have this initial assessment of your existing suppliers, you then need to source alternative suppliers, ideally from your country, and better yet, close to your distribution location.
Surprisingly, a significant portion of companies don’t have a comprehensive list and details of their existing suppliers. There are bits and pieces of lists kept within each different department but there is no aggregation of supplier information...a source of truth. By going through this activity, you will be better able to act and make quick decisions in the event of a second wave of Covid.
As stated by Matt Palackdharry, Vice President of Sales and Commercial Strategy of Tealbook in the article “Severe Business Consequences Stem from Poor Supplier Data, Survey Shows”,
“The need for trusted supplier information will only continue to increase over time. The whole world is feeling the effects of COVID-19, and geopolitical issues will force us to rethink regional economic structures. Without trusted supplier information, making informed decisions during this time is impossible.” The results from the study conducted and reported within the article can be found below:
Develop a Workforce Strategy
Once the pandemic hit North America in March, it was evident there was a significant impact to the workforce. Companies found themselves in difficult situations, quickly trying to determine who stays, who goes, how to meet business needs while fearing the unknown for revenue.
Nobody was prepared for what happened and there were no precedents to follow for decision making. As an outcome, CIPD (Chartered Institute of Personnel and Development), based out of the UK, has developed a high level interactive workforce planning tool to assist with workforce planning decisions specifically addressing complexities associated with Covid.
Having a useful tool accessible such as the planning tool above is great, however there is an underlying need and now awareness to develop a workforce strategy. Instead of dealing with the next surprise and having to either lay off or be in the position where you need to hire more people for your workforce, you will be better prepared.
Prior to entering stage 2, if it occurs, a good starting point for your workforce strategy is to leverage what you have learned from the first experience. Some questions you will be asking yourself and organisation are:
- Will you need to use a contingent workforce agency?
- Should you already advertise for job openings to collect a pool of resumes?
- Should you list your current workforce and pre-determine where layoffs may be required?
- Is there opportunity to cross-train existing employees to increase their value?
PriceWaterhouseCooper (PWC) has developed this “Workforce Strategy Diagnostic” tool. It’s designed to help gauge and prepare an organization's workforce for the future. Within the diagnostic tool, their model assesses preparedness for:
An additional resource CIPD has developed is a “Workplace Planning Fact Sheet” which can be utilized to provide the foundational information to understand the various stages of workforce planning, implementation and key action points.
What does the future look like for wholesale suppliers?
There is no better time than now to prepare your business for digital transformation, regardless of whether a second wave of Covid emerges or not.
Each business is unique so of course there will be additional elements within the business to review and assess outside of what was discussed in this article, but this serves as a starting point to address the immediate gaps and issues that were exposed.
At OrderEase, our middleware order management integration solution, which serves as the hub that holds the source of truth for product information, is a unique solution in the marketplace. We are able to serve wholesalers and retailers at a level no other platform has done in the space. To learn more about solutions unique for your business, contact us today.