Re-engineering the Supply Chain Management (SCM) by the e-retailers during lockdown

Mayuri Gaur

Research Scholar

University Department of Commerce

& Business Management

Ranchi University, Ranchi

Abstract

There is only one thing that is constant in today’s world and that is CHANGE. The major inventions of the late 20^th century such as Internet, computer, mobile technology, social networking, electronic money, electronic commerce and other such developments have thrived and evolved in their finest forms in the early 21^st century. These developments have not only eased many aspects of human lives, they have now become an integral part of it.

(Organization, Modes of transmission of virus causing Covid-19: implications for IPC precaution recommendations, 2020)^[1]. The transmission was first reported to World Health Organization (WHO) in December 2019 as a cluster of pneumonia patients based out of Wuhan in China. Since then, this have been spread to millions of cases worldwide. According to WHO, the outbreak was declared as a Public Health Emergency of International Concern on 30^th January 2020. Covid 19 will have greater impact on e-commerce industry and will challenge its logistic and delivery channels in future. E-Commerce industry also had to bear heavy losses due to lockdown restrictions all over the country.

Keywords: Covid-19, Lockdown, World Health Organization, China, E-Commerce, logistic and delivery channels

1. Introduction

“In a world full of locks, be the KEY”

Worlds strictest lockdown in India due to Covid-19 began from 24^th March 2020 where every possible place human interaction (including restaurants, malls, movie theaters, showrooms, stadiums, banks, offices, ATM’s, educational institutions (schools, colleges, university, coaching centers, private educators), clubs, gym, parks, religious places (temples, mosques, churches, gurudwaras), electronic shops, liquor shops, transportation (buses, metro, airways, roadways, railways, metros, personal cars/scooter/bikes) were mandatorily locked down excluding groceries shops, hospitals and pharmaceutical shops. (Rajesh Bhatia, May 2020)In March 2020, all international and domestic flights, passenger trains and road transport with the exception of those carrying essential items were suspended. Disaster management was activated under the guidance of Prime Minister of India.

The whole world has shrunk into a tiny unit by the effect of Novel Coronavirus, there is limited human interaction; people are advised to stay homes and limit there visits outside their homes, exercise work-from-home, inter-and-intra borders closed with limited movement of vehicles on the roads.

Retailers and brands faced many challenges such as those related to health and safety, the supply chain, the workforce, cash flow, consumer demand, sales and marketing. All organizational functions are intended to prioritize and optimize spending or postpone tasks that will not bring value in the current environment. At the same time, online communication, online entertainment and online shopping are seeing unprecedented growth. (Gustafsson, 2020)

It is said that every challenge brings new opportunity, in the same way crises leads to innovation. The E-commerce retailers are investing heavily on the Research and Development (R&D) in manufacturing the products and making them delivered to their customers with utmost safety and hygiene.

2. Objectives

To study the most bought goods online during the lockdown.
To map out the safe/hygienic delivery channels used by Indian E-retailers, amidst Covid- 19 pandemic.
To know the latest Research and Development (R&D) in the supply networks from the production process till the final delivery of products.
To propose changes in the E-commerce activities to be implemented during and post-Covid-19 crisis.

3. Research Methodology

The study is carried out at the time of Covid-19 pandemic from peer reviewed journals, news articles, data sources from World Health Organization (WHO)^[2], Indian Council of Medical Research (ICMR)^[3], Wuhan Statistics, World Economic Forum (WEF)^[4], and McKinsey Reports^[5] published from March 2020 till August 2020. As the pandemic is fairly new, so not much literature could be obtained online, and therefore reports from the reliable sources mentioned above were collected and incorporated in understanding the trends and patterns of production and sale by E-commerce companies during Covid-19.

As we already know that supply chain consists of series of steps (design, plan, source, make and deliver) undertaken before the product reaches to the end customer. Every category of product requires different kinds of storage and maintenance depending whether it is consumable or non-consumable, agricultural or manufactured, and so on. So, we must first understand the kinds of goods/products ordered by masses during the pandemic, time taken by the E-retailers in supplying those immediate goods, and the readiness/preparedness of big companies to face such crises situation in future.

Below are the Major Categories of Goods

Figure: 1- Broad classification of Goods

Consumable goods

Consumable goods can be either produced as raw goods by farmers, or they can be manufactured to produce processed food and consumer items. These goods are perishable in nature, i.e. they get “used up”. Every type of good needs to be addressed while reforming the SCM logistics for online and offline deliveries.

Produced goods

Goods that have been produced by farmers such as fruits and vegetables are perishable in nature. This unprecedented situation saw a fall in bulk-buying of fruits and vegetables. On the contrary, a sharp rise was seen on the demand of the premium fruits and vegetables that are usually delivered ascertaining the hygiene of the goods. The fall in the demand of raw fruits and vegetables, in local as well as the exports, thereby resulting in deterioration of food crops need to be tackled. This calls for an improvised market for handling this situation.

Manufactured goods

Manufactured goods are the items such as processed food which comes with an expiration date. Examples of such items include bread, meat productions, cakes and other such goods. Other examples of manufactured consumable items include consumer items like soap, toothpaste and other such items that need replacement once it gets used up.

Non-consumable goods

These are the items that are manufactured for the purpose of collection and to be used by the consumer such as furniture, or by the non-consumer items such as industrial goods and so on. These goods can be reused and are hence non-perishable in nature.

In the advent of Covid-19 pandemic, a steep surge was seen in the demand of consumable manufactured goods such as sanitizers, hand-washes and masks. Their availability and hygienic delivery became the top of the priority list. Till before the pandemic, the demand for these items was only limited, which meant that the e-commerce inventories were only limitedly stocked. Once the pandemic was declared a public health emergency, these items were off the shelves in less than a week by the scared consumers who hoarded up with essential items in a state of frenzy. Shortage of supply was dealt with increasing the production and quick replenishment of the stock. People got shocked and panicked so they engaged in ‘panic buying’ and piled up all the consumable items in no time.

4. Problem Statements

E-Commerce has already reduced human (man-to-man) interaction but as far as logistics or supply chain (delivery channels) are concerned it is still dependent on people (humans).
With alarming disrupted supply chains, are the e-commerce players ready to face such types of deadly situations in future?

E-players need to re-think, re-act, re-vise and re-design their value-chain services to meet consumers demand for goods and services online.

When the brick and motor shops remained closed during lockdown, nearly all business (small, medium, large, enterprises) were shut or remained closed. They are facing absolute challenges of being extinct. Businesses dealing in travel and tourism, hospitality, business-spaces and co-working spaces faced the major threat. There is a noticeable drastic drop in the foot fall of consumers’ traffic; on the other hand online companies/e-retailers zoomed during lockdown because the Government of India (GOI) asked people to stay at home, while online stores were busy supplying groceries, healthcare products and medicines.

Medical, health-care and surgical industries have come overnight. In just three months, this industry has crossed 700 crore+ and this will continue for the rest of our lives. The demand for personal safety and hygiene, health care products like soaps, hand sanitizers, toilet rolls/paper, liquid hand wash, N-95 face-mask, gloves, floor cleaner, tissue papers, wet wipes, PPE kits increased drastically. Personal hygiene and products of health care saw the highest increase i.e 400% in hand-washes, 120% in soaps and 70% in floor cleaners. Immunity boosting items like honey, ayurvedic products like chawanprash also saw growth of 60%.

The fear of shortage of food and essential commodities like wheat, rice, pulses, cereals, processed food, spices, sugar and confectionaries led to the hoarding of these consumable items overnight. According to Economic Times, BigBasket and Grofers (online grocers) nearly doubled the deliveries of essential commodities during lockdown.

5. Uncertain Situation, Certain Panic Buying

E-commerce suppliers facing the dilemma

Consumers all through the world were introduced to a situation they had never faced before. They were left in a state of chaos and uncertainty. The moment they heard that the country was undergoing lockdown they did what they had to do and what they felt was right at that moment. The word lockdown was relatively new to them and they didn’t quite understand the true meaning of it. In a state of frenzy and total dilemma they started panic buying and hoarding up as many essential items as they could like food items and other consumable items. On the other hand, suppliers were left in a state of equal uncertainty as to how they are going to replenish the items that are leaving the shells as soon as they come in. It is mainly because they have a limited supply of those items in the first place. When the government-imposed restrictions were put on traffic movement outside the house, the consumers started buying essentials items online. This led to an increase in the demand of buying items online since January 2020. While the push on the e-commerce is rising, the demand for a hygienic and safe home delivery has become the need of the hour. A famous Pizza franchise Dominos has developed a 4-step delivery process to ensure a safe delivery experience for every customer. Other E-commerce companies need to adopt similar steps in order to thrive in today’s changing lifestyle.

Inventory issue

The e-commerce companies stock up their inventories from

Directly from the manufacturer
Inventory wholesaler
Third party wholesaler

Before the pandemic, in ideal situation the E-commerce companies kept a check on the quantity of each item along with demand and associated price in the inventories. In the advent of unprecedented times such as that of Covid-19 pandemic, this math has gone haywire. Non-essential items are left untouched while demand of essential items has increased manifolds. Irrespective of the kind of goods produced, every industry dived into producing the items whose demand was increased by 400%, i.e., masks, sanitizers and hand-washes. Every supplier, be it large scale or small scale, began stocking their inventories with these items thereby commencing its sale. Before Covid-19 pandemic, China was responsible for creating masks for half the world. But after the pandemic happened, export-imports were a part of boundary movement restrictions. Hence, it was down to the local companies to produce and supply them. The need arose for India to be self-sustainable in terms of timely and efficient production of such items along with all-time availability in the market. In the post-Covid era, it is safe to assume that habits of these consumable-manufactured items like masks, sanitizers and hand-washes is going to become an integral part of our lifestyle. There is a sharp rise in the online/digital payments like Credit Card, Debit Card, Pay tm, e-wallets, UPI, and other methods. People are avoiding using cash and also card on delivery method was being used.

6. A Well- balanced- Delivery Package must include the key points as discussed below

Figure: 2- Following key strategies during pandemic

Collaborate and align with kirana stores and local restaurants

Big online retailers have understood the importance of diversifying their business operations and supply channels during these difficult times. For example- Swiggy Company partnered with Hindustan Unilever Limited (HUL), Proctor and Gamble (P&G), Dabur, Godrej to enter expansion of grocery delivery market and Covid 19 relief efforts. The ecosystem of collaborations with emerging distribution channels becomes the mainstream in going forward in line with the principles of innovation, empathy, and pooling resources from both. Example, FMCG major ITC tied up with Dunzo; food delivery chains, consumer food apps, community e-commerce brands and direct consumer portal instrumental in providing timely supply of essential items to consumers during lockdown. ITC collaborated with Dominos, Swiggy and Zomato to open new distribution channels.

Maintain local and global sources

Due to disruption in cross border shipping, strict border controls, restricted movement of goods and services within and outside countries led to an increase in locally produced and sourced products. This has in turn the tables for the domestic market players and brands in our country. There are many difficulties which foreign brands faced during this pandemic disease. Some of them include shortage of containers, complying with lockdown norms in other countries, delay in clearance and payment, delay in delivery due to fumigation and many more.

Unmanned Aerial Vehicles (UAV)

Also known as Drones have played a crucial role during lockdown period for spraying disinfectant over remote villages, ensuring monitoring social distancing and overseeing cargo. These flying machines are also capable of supplying medicines, essential food items for quarantine families. One can say this is the future for our delivery channels to make contactless delivery through automatic robots, robo-taxi, and drones.

Click and Pick Policy

It is a combination of brick and mortar shops and e-commerce, as it allows the consumers to order the product through online mode at their leisure and pick them up from the nearby store. It saves consumers from paying for shipping or waiting for the delivery of the product. Globally, ‘Click and Pick’ is also known as ‘Buy Online Pick up in Store’ (BOPUS). (From BOPUS to MOPUS: What the rise of In-store Pickup means for Retail, 2019)

Last Mile Delivery/ Delivery Extensions

As more and more people are doing online shopping during lockdown it has put tremendous pressure on last mile delivery and logistics channels, aiming at contactless or minimum contact between people to people. A new measure on this side is ‘Leave at Door Service’ where the courier leaves the package box at the front door and takes a picture as a proof of delivery instead of requiring a signature. Companies can use coded controlled lockers, mini stations outside residential compounds to pick up and send parcels and packages. These companies must make their presence feel in tier II and tier III cities and set up their warehouses to as many cities as they can.

Supply chain Hygiene

E-commerce firms need to maintain safety of supply chain professionals by training warehouse staff about hygiene practices, cleaning the devices regularly with disinfectant sprays.

7. Proposed changes in ecommerce activities

Multiple points for stocking inventory

Pre Covid era E-commerce suppliers used to stock up their inventories using pre-defined points. But in the post-Covid era, it is time for E-commerce players not to rely on only one supplier but to have multiple points for stocking their inventories. For instance, in the months March-April 2020, when Covid pandemic was at peak, Amazon had shut down its non-essential supplies to distribution centers. An ecommerce site relying solely on Amazon for its inventory stocking would have felt the burn. It is time for Ecommerce players to start putting their eggs in separate baskets.

Health of delivery employees

In the pre Covid era, delivery boys faced an ordeal in sustaining themselves with their job. While their job was considered as just another step in the delivery process, however their working conditions, they did their jobs. With heavy bags and rushing in the traffic to make the deliveries, they received only basic benefits from their job. But this pandemic has made us realized how important they are to the society. Their job is marked as “essential” under the job profile segregation stating which workforce can step out of their house and which cannot. These employees put their health and safety at stake to make the essential deliveries. It is, therefore, an activity of utmost priority for the E-commerce employers to ensure the safety of their employees. From providing insurance cover to ensuring their fitness, it should be the responsibility of the employers to ascertain that their employees are always completely fit. E-commerce employers should also keep a buffer backup of employees as a part of their crisis management system.

Innovative delivery methods

As this pandemic has taught us how essential it is to focus on our health by adopting healthy habits, same should apply to E-commerce companies as well. Their focus should be on creating innovative delivery methods to ensure secure and hygienic delivery experience for their customers. For instance, non-consumable items can be passed through the sanitization tunnel before delivery. Other such methods can be adopted by the E-commerce companies according to the type of item that they deliver. E-commerce companies could request their Research and Development teams to automate as many steps in the process from packaging to delivery of items as possible to reduce the number of hands that touch an item before delivery.

8. Conclusion

The pandemic of the 21^st century is being dealt with firm hands and logical mindset. The new generation technology (Artificial Intelligence, Internet of Things, Robotics, Augmented Reality and more) is the next big wave hitting the world. The entry level barrier will diminish for these technologies as there is a big unexplored market. Many IT companies are working day and night to develop and collaborate on new modules, apps, features for smooth virtual interaction amongst people to carry out their work while at home. Importance of technology will be immense. So, we need to cope up with the rapid changes (technologies) happening around us as there is no alternative to this.

We have been trying to evolve into a better species with every passing day. But unprecedented times such as the Covid -19 pandemic has shown us that it is not about running the race and coming first, it is about running the race till the end. This generation has learnt their lesson the hard way that prevention is better than cure. Foresightedness into this thought makes us believe that this lifestyle will be our new “Future Usual”.

References

World Health Organization, W. H. (2020, January). Emergencies preparedness, response. Retrieved from https://www.who.int/: https://www.who.int/csr/don/05-january-2020-pneumonia-of-unkown-cause-china/en/

Organization, W. H. (2020, March 29). Modes of transmission of virus causing Covid-19: implications for IPC precaution recommendations. Retrieved from https://www.who.int/: https://www.who.int/news-room/commentaries/detail/modes-of-transmission-of-virus-causing-covid-19-implications-for-ipc-precaution-recommendations

Rajesh Bhatia, P. A. (May 2020). Lessons learnt during the first 100 days of Covid-19 pandemic in India. Indian Journal of Medical Resaerch , 387.

From BOPUS to MOPUS: What the rise of In-store Pickup means for Retail. (2019, September 10). Retrieved from https://blog.treasuredata.com/: https://blog.treasuredata.com/blog/2019/09/10/from-bopus-to-mopus-what-the-rise-of-in-store-pickup-means-for-retail/

Gustafsson, N. D. (2020, September). Effects of Covid-19 on Business and Research. Retrieved from https://www.sciencedirect.com/: https://www.sciencedirect.com/science/article/pii/S0148296320303830