How to Tackle Supply Chain Disruption

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Managing supply chain & logistics is a complex balancing act. You need to ensure you don’t have a huge mis-match of supply versus demand, and that you’re pacing inventory to keep sales flowing smoothly while not having too much product taking up space on the shelf or your balance sheet. Customer trust and loyalty are tied to reliability, so trying to avoid out-of-stock situations and being able to proactively message and take action when they inevitably occur are critical to reducing the impact of a disruption.

When disruptions do happen that are out of your control — whether it’s a global pandemic with its ancillary labor & logistical challenges, or an enormous container ship plugging up a key waterway like the Suez Canal — what can you do to prepare or manage around it? We chatted with one of Narvar’s resident supply chain experts about some of the current events dominating the news and their impact on retail, plus actionable insights that brands & retailers can take away to prepare a more resilient supply chain.

Robyn Bodajla is Narvar’s Program Manager of Transportation Innovation. She earned her Master’s degree from Maine Maritime Academy in Global Supply Chain Management and undergraduate degree in Transportation Management from Bridgewater State University. Over the past 14 years she has managed container operations at one of the largest shipping companies at the Port of Long Beach, managed warehouse fulfillment, and store operations at Kraft Foods and Amazon. She has a love for all things logistics.

Some highlights:

• Look to returns management to help fill a supply gap. When there is a disruption to inbound supply chain, most people immediately look for new sources of inventory. But what about tapping into returned inventory that’s already in the system? We discuss some ideas for making returns an efficient cyclical process.
• Proactive communication makes happier customers. The proving grounds of 2020 have demonstrated that consumers can be patient with disruptions as long as they are kept well-informed. Looking at our platform data, we found that brands who provided more messaging during the Holiday season saw a significantly higher average feedback score of 3.23 stars (out of 5) compared to just 2.72 for those who didn’t.
• Contingency planning makes a more resilient supply chain: Identify critical areas in your supply chain that would be high risk if disrupted and find alternative solutions that can be activated when needed. For example, some larger retailers were able to leverage air freight as an emergency measure to circumvent the Suez Canal blockage - expensive, but a short-term fix to maintain supply.
  

Enjoy this meaty conversation, and we’d love to hear your feedback on Twitter or LinkedIn.

Also available on audio platforms like Spotify, Google Podcasts, Apple Podcast and more:

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FULL TRANSCRIPTION:

Andria Tay:

Hi, I'm Andria with Narvar and I'm here today with Robyn Bodajla, also from Narvar. She works on our operations team and we wanted to talk a little bit today about some of the current news, what's going on in logistics and supply chain. And Robyn is a bit of a logistics nerd if you don't mind my saying so. Do you want to introduce yourself?

Robyn Bodajla:

Sure. Thanks, Andria. So happy for you to have me. I'm really looking forward to this discussion. I started off my logistics career working for a shipping company based in Long Beach, California. And over the years I've worked in different warehouses and in retail, setting up retail stores for large firms across the country and globally. And I've been working at Narvar for the last few months and loving the company and what we have to offer for our customers and consumers, and really looking forward to our discussion today.

Andria Tay:

Absolutely. Thanks for joining me. And it's great to have you at Narvar by the way.

Andria Tay:

So the thing that's on top of everybody's mind, we're starting to see the memes already, of course, is the Suez Canal blockage. So can you talk just a little bit about that?

Robyn Bodajla:

Yeah, absolutely. So on March 23rd, a mega ship about three and a half football fields long got stuck in the Suez Canal and it took them several days to be able to unlodge the ship from the canal. And what that did is it actually backed up approximately 369 ships that were trying to migrate across the country to deliver goods and resources that we depend on. And what that has done is it's created quite a bit of a backlog in multiple fields of the supply chain.

Robyn Bodajla:

One of the big areas that we're seeing — not just goods being delayed to stores — we're also seeing that shipping containers, there's a shortage across all of the ports and that's preventing additional goods from being moved around the world. We're also seeing, because of COVID, some labor issues as well. And so ports aren't able to allocate the original labor that they were going to put towards unloading and loading containers, and it's impacted the business quite a bit.

Robyn Bodajla:

And what that does is it's changed the way we have unloaded containers and the process that we unload containers. Typically, what will happen is when a container comes into port, all the containers get discharged in a very sequential order, and then they get reloaded and the ship goes on its way to its next port. But what we're seeing with COVID and the Suez Canal is that we have to really think strategically about what containers are being offloaded and what containers are being unloaded.

Robyn Bodajla:

So what's happening right now, there are ships coming into ports, they're cherry-picking specific containers onto land, and then they're pushing the ships back out into the sea, in a holding pattern. And when space allows the bringing that ship that they discharged back in to reload and send on its way. So it's really been an interesting time with how we load and unload containers, and it's really impacted retailers lately in the industry.

Andria Tay:

Well, so how much of this... I was reading a little bit about the containerization issue and basically the fact that because there is this backlog, there aren't enough empty containers going back to where they need to go. So this is where this cascading effect is happening. But how much of this really is because of this issue with the Suez Canal, which obviously was a big impact versus what's been going on for the last year, especially when it comes to labor?

Robyn Bodajla:

That's a great question, Andria. And one thing that we're seeing is that from the canal itself, experts are saying that it can take about six days to three weeks, depending on the shipment methods that retailers and brokers have been using to basically get us back on track. So some ships were actually given a different route, so they didn't go through the Suez Canal. They went further down South around Africa and continued on their journeys while others have gone and picked different shipping methods.

Robyn Bodajla:

So people have been focusing on air as a primary method to ship their belongings and their goods to the destination. But what we've seen is a huge increase in rates and capacity. So we've not been able to meet everyone's demand in the air cargo space that we would have hoped to. But I think based on the situation, the dredging that took place in the canal and the additional tugs that were used to move the ship basically about a six to three week delay is the average that we're seeing.

Andria Tay:

That's not horrible actually, when you really think about it. I mean, we looked a lot at, there are obviously labor issues in just retailer fulfillment during the pandemic at the worst of it, we saw times double. And that was really just in that time between when somebody places an order to when the retailer is able to hand it off to a carrier. Obviously there were downstream issues there as well with carrier capacity. We didn't see the shippageddon we were expecting at holiday, but there definitely were delays in certain spots.

Andria Tay:

As retailers, we've all heard this over the last year, is how do you make your supply chain more resilient for exactly this kind of thing? And nobody expects a pandemic, to misquote Monty Python but what are some of the things that you think retailers should be maybe trying to do to mitigate some of these unexpected impacts in the future?

Robyn Bodajla:

When retailers are planning, we really try to strive to get that just-in-time demand so that we don't have backup in warehouses, it's really costly to store products that are really not needed in a warehouse or might be needed in a few months time. And COVID really put a wrench into the planning. So no one really took into account that we would have a COVID outbreak and not only did it affect purchasing of goods and timelines of when things would get to warehouses, or get to stores, or locations, but labor has been a huge impact. So we can't predict if people are going to get sick, we take every precaution that we can to implement proper hygiene and wearing your masks and those types of protocols, but at the end of the day, it's still an unpredictable number.

Robyn Bodajla:

And so what we're recommending retailers really focus on is being really clear in our communication. If there is a delay, use our products that we currently offer at Narvar, like our tracking features and preemptive emailing customers so that people aren't caught off guard and they know what's going on. I think people are pretty realistic with COVID, but being really clear with your communication is probably the first step that I would take, and really the first focal point that I would give retailers to spend a lot of attention and time on.

Robyn Bodajla:

The second piece is really focusing in on tracking. So where is your product currently located? There are a bunch of different resources available, a lot of them are free for retailers to go and look at. You can see where ships are via satellite across the entire world. You can look at FAA tracking devices that have planes and their scheduled locations. And then retailers are working with brokers and other carriers to really track where their goods are and be able to help with the planning process of when they're actually expected to be dropped off at stores or at warehouses. So having that tracking capability is essential to being able to communicate clearly to customers.

Andria Tay:

That makes a lot of sense, because we did see obviously, with those fulfillment times taking so much longer, is people get more impatient as to what's going on and being able to fill that gap with at least a status of, "Hey, this is taking a little longer than expected, it'll show up next week," or something like that. The other thing that I think we're talking about a little bit as well is on the return side, there's obviously a lot that retailers probably should be doing as far as diversifying their inbound supply chain, looking for alternatives when something like this happens. One thing which is related, I think about that time that Chipotle decided, “we can no longer work with this one supplier of pork for ethical reasons”, and they were without carnitas for like six months.

Andria Tay:

So being able to figure out what are some of the alternative suppliers, but also, with returns, we know that people bracket all the time, they're buying multiple versions of items with the intention of sending back what doesn't work. How do retailers maybe get that inventory back faster and back into circulation because instead of just continually trying to bring in new, how do they better utilize what they already have? Do you have any thoughts on that? Because you're one of our product specialists on the return side.

Robyn Bodajla:

Yeah. We actually have been doing a lot of testing with this with retailers. During trying times you have to be resilient and you have to be creative and think of new solutions. And one thing we've been doing a lot at Narvar is partnering with retailers to really optimize the returns flow. So although we're having trouble receiving inbound products and items and being able to distribute them quickly to stores and to warehouses, what we're doing is being proactive. And when there's returns that are in good condition or never have been used, we're trying to figure out where in the supply chain would it make sense to send those returns on behalf of the retailers, the specific locations that might need that demand or that supply?

Robyn Bodajla:

So what we do is we've been working closely with retailers to help them with their returns process. We are able to distribute those returns to very specific locations that meet those retailer needs, and then they can resell the product without relying on inbound shipment that might be delayed from overseas potentially, because that's one thing that's been working really well. We're seeing a lot of appetite for this method and really hope others might be interested, and we're always here to help retailers with these types of solutions.

Robyn Bodajla:

The other thing that I think has also been super creative has been stores thinking through quantity limits. So when toilet paper was really an issue, we saw stores get really creative and put limit quantities on how many folks could buy potential products. So like for some folks could only buy two rolls of toilet paper or two packages of toilet paper at a time until that supply and demand started increasing again and product was available. So that's another creative solution that could be a potential help during these trying times.

Andria Tay:

I like that. It's sort of, can you use watermarking or again, just right at the front end of things, be able to limit how many things people can buy so that you still have supply for other customers without having to use the price lever — because in any market, that would be the obvious thing. It's like, as demand goes up and your supply goes down, you could go with pricing changes, and maybe it is that you're not discounting as much as you might've, but nobody wants to be a price gouger, so that is one interesting lever.

Andria Tay:

One of the others that we've started to see retailers use more is, again, on the return side, is how do you incentivize people to get product back faster? And so I know I was talking to our head of customer success the other day, and he was saying that we had a retailer who normally charge for return shipping of mailed-back packages, but they don't do that within the first 14 days. So you are welcome to return it up to a year from the time you bought it, but if you return it within that first 14 days, they'll also cover the shipping and that helps them to get stuff back in the system faster.

Robyn Bodajla:

And with that too, Andria, we've really spent a lot of time increasing our capacity with carriers and making sure that we're working with a variety of carriers all over the world to offer these types of services and programs to retailers, so that retailers don't feel like they're on their own having to do this by themselves and come up with these solutions. We're here to partner with retailers and help them develop a solution that works well for them. Similar to what you just mentioned, something we've been testing back and forth has been working with carriers to go directly to folks' homes and picking up the item at no charge. And that's something that we can negotiate for retailers as well.

Andria Tay:

And even, we have been doing printerless returns for quite a while. It's where users don't have to print the label at home, but they also don't get the label in the box because the retailers want that data and they want to be able to route that inventory properly. So you don't want to label in the box, people don't want to print a label, so give them a QR code and they can take that in. And so being able to do that across all of the domestic carriers here and a number overseas as well has been good. And we actually do see that that encourages people to return faster, along with offering a lot more locations. So being able to return to the Walgreens that's right down the street, they are more likely to get that done as opposed to having to go to wherever else or a store. So other levers.

Robyn Bodajla:

Exactly. Consumers want convenience and retailers want to provide that convenience to their consumers. And so it's really a perfect marriage between working with carriers, working with vendors that are accepting packages and getting returns back to retailers so that they can be integrated back into the pipeline quickly and ready for demand again.

Andria Tay:

Well, so do you have any last key takeaways for retailers when they're thinking about this whole struggle?

Robyn Bodajla:

Yeah. I'm really big on planning. I know you can't plan for everything, but really coming up with a strategy and being proactive would be my number one piece of advice. So if it is taking six days to three week delays because of the Suez Canal, thinking through how are you building that into your plan, do we need to pre-order things faster for the holiday season? I know the National Retail Federation saw an 8.3% increase in holiday shopping over Christmas this past year, and really being prepared for this Christmas, now's the time to start the planning and preparation.

Robyn Bodajla:

The second key takeaway, I know I mentioned it already, but really tracking where all of the packages are or where your product is located and being really proactive and sharing that with consumers is something that's going to really help make sure that people just are in the know, and know what's going on and help them set expectations of when they might receive their items.

Robyn Bodajla:

And then three, that proactive communication. So if something is being delayed, leverage Narvar's email communication platform to be able to communicate that proactively so that everyone is kept in the know and can understand when things are coming down the pipeline.

Andria Tay:

Cool. Well, thank you so much, Robyn. It was great to get an insider view of how these things are impacting all the rest of us.

Robyn Bodajla:

Thanks, Andria. Love chatting with you. Happy to join anytime. Thanks for having me.