Denys Prykhodov -

A Covid-19 response to supply chain fragility

The global pandemic, lockdowns and local lockdowns have required organisations to operate agile supply chains

While protecting staff during the Covid-19 pandemic has been a priority for business chiefs, alongside putting safety measures in place, more practical conversations were being had about how businesses – particularly those in retail – could survive multiple periods of lockdown and restrictions at a local level.

At the very beginning of the crisis, as country after country went into lockdown, we saw the supply chain start to dry up and major retailers and delivery services admitting that stock availability was limited or had run out completely – an almost unprecedented situation in peacetime.

Even now, as national lockdowns are – in the main – giving way to more localised control methods, it is still difficult for businesses to predict demand effectively and control stock – especially in the run-up to Christmas, traditionally the busiest time for retail.

Coupled with this, as a response to the pandemic, many businesses have switched to a truly multi-channel approach in order to survive and thrive. However, running a successful omnichannel strategy requires a change in mindset for most businesses – as well as being underpinned by the right technologies.

Disparate teams must gain an understanding of each other’s value propositions and strategies, which can allow companies to reduce operational costs, improve productivity and boost efficiency, as well as being able to predict demand and control stock more effectively.

Digitising the connections in business

Of course, nurturing any inter-departmental collaboration is easier said than done. It is challenging to integrate different domains. However, adopting a service-oriented architecture and microservices architecture approach, based on established best practice, can bring a wealth of benefits. These include creating company-wide connections with digital mid-end services, which help to pool resources, infrastructure and services, based on business insights and integrated data-modelling.

Also, using a digital mid-end service can provide companies with unified resource management, intuitive interfaces and user-friendly open protocols, so they can manage their systems and applications in a straightforward and efficient way. Once disparate data silos are bridged, enterprise-wide views are presented to business leaders to make timely decisions based on digital intelligence, in order to respond to consumer demands quickly and stay ahead of the competition.

Peak, unpredictable demand

This requirement – to meet customer demand – has been accelerated during the pandemic. In the early days, products such as hand sanitisers, soap, facemasks and toilet rolls faced unmatched demand and the supply chain struggled to keep stores supplied. The information provided by detailed digital intelligence could have helped to restore the supply chain “back to normal” far sooner than it did.

Although that is an extreme scenario, the principle holds true for other peaks in consumer demand. From barbecues and sun cream when the weather suddenly heats up, to hats, gloves and raincoats when temperatures plummet, digital intelligence gives retailers the insights they need to respond ahead of demand peaking, rather than playing catch-up and losing sales to retailers who were better prepared.  

In addition to understanding the demands, using a cloud-native infrastructure approach also ensures high reliability and supports scale-out capabilities in the case of net traffic bursts and rapid business innovation. What is more, it provides users with a container-based cloud management platform for flexible scheduling, decoupling their microservices, and providing automated operation and maintenance capabilities.

Read more about agile supply chains

  • Cost-cutting habits have left supply chains chasing their tails in the wake of the pandemic. We take a look at how they’re coping.

  • Supply chain management seems to be changing profoundly as the coronavirus pandemic unfolds, possibly shifting from an economy of efficiency to resilience, harnessing trading networks, machine learning and robotic process automation.

The effectiveness of this approach was proved recently in China with the world’s largest shopping festival – 11.11 Global Shopping Festival, which generated RMB498.2bn (US$74.1bn) in gross merchandise volume over 11 days in November 2020. Supporting 800 million consumers and 250,000 brands, just 26 seconds into 11 November, peak orders hit 583,000 per second – 1,400 times peak volume at the festival’s debut 12 years ago – supported by Alibaba Cloud Infrastructure.

Systems can also include a standardised, closed-loop, procurement system that covers supplier lifecycle management, requisitions management, request for information and request for quotation management, contract management, supply executive management, and settlement and reconciliation management. This allows an omnichannel operation that enables a multi-channel inventory system, commodity system and order system to improve overall operational efficiency, increase inventory turnover, and improve the user experience.

By connecting sales and procurement departments, organisations can create a unified value proposition, strategies and proposals to realise operational cost reductions, productivity savings and increased efficiencies – as well as being able to better predict demand, and order accordingly.

And this isn’t limited to retail. Businesses from a broad range of industries – retail, energy, hotels, entertainment, fast-moving consumer goods and catering – can also achieve this level of consistency and collaboration, providing them with a competitive advantage to boost both their top and bottom lines, especially in these current uncertain times.

Selina Yuan is a vice-president of Alibaba Group and president of Alibaba Cloud Intelligence International

Next Steps

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