With all the uncertainty and disruption of 2020, everyone is hoping for better days in 2021. By using concrete data and creating a plan for your business, you can set yourself up for a successful 2021. Here are some steps you can take now that will give you the vision to plan for a better 2021:
Evaluate Your Market
What are the challenges your industry is facing? Is demand for your product down due to the pandemic and the changes it’s made to lifestyles? For example, due to the shift to working from home and mask mandates, the demand for lipstick has decreased. Beauty industry manufacturers and retailers have had to shift their focus to skincare and hand sanitizers. Will this trend continue? Now is the time to create contingency plans for the future.
The demand for dress clothes and dress shoes has shifted to leisure and athletic wear, as people are working from home and staying home more. Manufacturers of dresswear have had to reevaluate their strategies and many have opted to shift their focus to casualwear.
There was an unprecedented surge in toilet paper sales. Unless another shutdown occurs, we are unlikely to see a surge like this again. Desks, laptops and printers are also in short supply, due to the shift to working and attending school from home.
- Planners and business analysts who have used sales curves in the past to plan their business, may have to do things a little bit differently. Due to the shutdowns in 2020, many categories of merchandise did not follow the normal curve. For many businesses, it will make sense to disregard the sales curve from 2020 and use sales history from previous years to create a curve for 2021. There are many important learnings from 2020 and these learnings can be used if there is another shutdown.
- If demand for a particular product line has decreased and shifted to another, be creative about what you can do to fill that need for your customers. Get early reads on demand and shift production if possible.
- If your product has been in short-supply, there is likely pent-up demand, so there will be a surge when the product is finally available. To estimate what the demand will be when the product is available, you can use historical sales curves and base the estimated demand on the sales that occurred prior to the stockouts. Of course, you will not realize all your missed sales, but could plan for a portion. Consider extending your lead times.
Plan Ahead for Chinese New Year
Chinese New Year occurs each year in late January and February. Often, Chinese workers travel to different regions to celebrate the New Year and do not return to work for a month, sometimes not at all. For companies that rely on Chinese imports, it is imperative to plan for this disruption in production.
- The lead time for Chinese imports is often 120 days (depending on the type of product being manufactured), so orders must be placed by September to ensure early spring deliveries are received on time.
- If feasible, front-load your spring deliveries to provide some safety stock in case the delay from Chinese New Year is longer than anticipated.
Stay on Top of Supply Chain Delays and Disruptions
The entire supply chain has been disrupted by the global pandemic. Imports from overseas have been delayed due to factory closures and the inability to get raw materials. There have been severe port delays due to labor shortages. Transportation costs have sky-rocketed as demand for rail and trucks have reached unprecedented levels while industries try to transport the backlogs. It is becoming increasingly difficult for low-priced items to be profitable due to increases in freight costs. There is a shortage of railcars, trucks and employees. Trucks are backed up at the warehouses due to a labor shortage. Retailers are missing sales because the shelves are empty due to supply chain delays.
- Work closely with your Logistics Department, 3PL, Warehouses and Carriers. Keep close tabs on the location of your merchandise. If you are a supplier, communicate regularly with your customers and be upfront. They will appreciate that you are on top of the situation and keeping them in the loop.
- Port delays can be unpredictable – you may not know when your merchandise will be ready for pick up. Communicate any delays to your customers.
- Carriers may be booked, but fail to show up for their appointments. While this is frustrating, it is happening regularly and it is necessary to stay on top of the proper procedures for re-routing.
- Backups at the retailers’ warehouses are also causing delays. Communicate with the customers about the merchandise that is in their yards – they may be able to expedite receiving.
Organize Your Data
The pandemic has brought with it many challenges for manufacturers, wholesalers and retailers. It has made a difficult job even more difficult. Now more than ever, it is imperative that your data is clean and organized. By having organized data, you can have answers concerning sales and inventory levels and future forecasts at the click of a button.
Gain Vision into your Business
The challenges of 2020 have put unprecedented pressure on businesses to come up with creative solutions to their problems. To come up with these solutions, businesses must have a clear vision into their business. A robust forecasting and data analytics platform will provide the vision for strategic business decisions during these times. For help with gaining this vision, contact the industry experts at SAFIO Solutions.