While some supply chains are moribund, many are in overdrive. From supermarkets and groceries to the NHS and the care sector, volumes have increased dramatically, even as demand signals become less reliable. Online ordering and home delivery requirements have soared, and not just among established players. Physical retailers are scrambling to create online alternatives, while local authorities and charities create support systems for the vulnerable from scratch.
The scale of the response is breath taking. Tesco alone created 120,000 new delivery slots in a fortnight, with another 100,000 planned, and this so far has involved 200 new vans, 2,500 new drivers, and 5,000 new order-pickers. Ocado has already made 3,000 new hires. The list goes on.
The availability of transport staff and assets is obviously a key constraint on the transformation of supply chains. Although the manufacturers have vans and trucks to sell, the UK is facing a challenge when it comes to drivers – before the crisis some estimates put the shortfall at around 60,000. Our calculations, at Bis Henderson Recruitment, estimate that with a 25% increase in demand for home delivery – as experienced by Tesco – a further 62,000 additional drivers will be required, on top of the 60,000 shortfall, taking the total number of drivers needed in the UK to 122,000. Relaxation of some competition laws, and the willingness of firms to lend or share staff and assets that would otherwise be idle, are creating some innovative, collaborative solutions to this.
But in a sense, laying on more drivers and vehicles is the easy part. Businesses must apply effective management of unfamiliar staff, assets and partners in what may be for them quite novel business models. Ineffective or inappropriate management, on the other hand, may make a bad situation worse – creating waste and spoilage, underutilising what should be considered national assets, and, although it feels wrong to be talking about Profit & Loss at times like this, potentially allowing costs and therefore prices to soar at a time when many consumers and users are seeing their incomes greatly reduced.
The managerial challenges are diverse. New staff, or existing redeployed staff, may need training. If assets such as trucks, warehouses and people are being moved from general merchandise to food or pharmaceuticals, for example, there are issues around safety, hygiene and compliance in its many forms. Most licensing and other regulations still have to be observed. Vehicles may need to be adapted and cleaning regimes revisited. Achieving safe distancing while working may require innovative thinking.
Of course, there are many, many routes that will need to be planned and optimised. There are decisions to be made around inventory levels, where it is held, and which facilities should be used as fulfilment hubs. Additional or alternative warehousing may be needed, not just to cope with volumes, but also to allow space for safe separation of workers.
There are also questions around distinguishing actual usage/demand from ‘panic’ ordering.
Existing replenishment routines may simply not work – Kanban, for example, isn’t designed for sudden large changes in demand. When every order is ‘urgent’, protocols may have to be agreed to prioritise deliveries and this may call for fast and improvised IT solutions. And as contracts are torn up or over-ridden, and new arrangements agreed over the phone, particular legal and financial skills may also be required.
In normal times, these major changes in transport and fulfilment will be planned, war-gamed and stress-tested over months or years. Key senior managers will be recruited, other staff trained and consultants engaged – which is our normal line of business at Bis Henderson Group. But the current situation requires speed. Organisations need to access the relevant skill sets fast and Interim Management can help supply these skills.