Distribution will change in a post Covid-19 world – Truck News

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TORONTO, Ont. – Doors are beginning to reopen as governments lift some
of the business restrictions imposed during Covid-19. But Cyndi Brandt,
Omnitracs vice-president – sales enablement, knows distribution models have
been upended and that some operations will never re-open.

“Business is never going to be business as usual,” she said during a
company webinar about the post Covid-19 world. “You’ve got changing demand
patterns right now … Amazon, Walmart, Instacart – all companies with great
infrastructure. Every single one of them is now struggling.”

Other businesses would be happy with such struggles.

Distribution models are being upended in a Covid-19 world. (Photo: iStock)

While online shopping has surged, straining existing distribution channels, restaurants are trying to consider how they will survive in an era of restricted seating capacities.

The customers you served yesterday may not survive the shutdowns. Even where storefront businesses have introduced curbside pickup services, they aren’t processing as many customers, Brandt said.

David Palle, senior director – product management, referred to massive shifts from on-premise purchases to direct-to-home deliveries.

Some companies have successfully leveraged telematics tools such as proactive
alerts, communicated ETAs, and live tracking to support such business opportunities,
he said. Signatures are not always needed, either, supporting the idea of
contactless deliveries. (“There’s still probably an opportunity to better
leverage this type of technology.”)

But he identified particular challenges for food service distributors
who have traditionally seen independent on-premise establishments as their “bread
and butter”. Chain restaurants tend to have their own established supply
chains, after all. Even beer wholesalers, while finding new sales channels, haven’t
been able to offset the losses connected to bars and restaurants.

Waste and recycling collection volumes have been affected as well, he
said. Commercial accounts have dropped 80-90%, while residential collection
volumes are up 25%.

There are challenges at both ends of the distribution spectrum. Some
businesses are struggling because of massive drops in volumes, others are
unable to keep up with demand – especially in the case of fast-moving items.

“Inventory takes up room in warehouses and trucks,” Palle said, noting
how businesses will need to take a hard look at the SKUs that are selling, and remove
low-velocity products.

A look at the products being delivered can also have a significant influence
on the number of customers to be served. He referred to a retailer in the
United Kingdom that is able to serve 6,000 additional households per week by
eliminating flowers and bottled water from deliveries.

Even newly required personal protective equipment will play a role in
delivery times. The protocols introduced at the beginning and end of a shift
are just one consideration. Each stop might require another 30 seconds or so to
put the PPE in place. It doesn’t seem like much, but it can make a difference
over the course of a day.

“Every minute counts, and sometimes that adds up to not being able to
get to another stop,” he said.

As businesses prepare for the shifts to come, Palle recommends planning
models that consider what the transition from restricted activities to a “new
normal” will look like, how long that transition might take, and what would
happen if restrictions are reintroduced.

Modeling like this will require more than routing tools that focus on daily orders, volumes and stops, however. The data needed for this additional layer of planning will need to consider multiple days and weeks.

“A tactical, dynamic routing tool by no means allow you to do that,” he said.

Today’s reality also requires a different mindset, unlike the
traditional planning approaches that involve looking at six to 12 months of
historical data and making adjustments accordingly.

“The last six to 12 months may not be indicative of what we need to do
in the short term,” he explained.

Businesses tend to plan for predictability and don’t consider contingency plans for events such as the 2007 housing crash, mergers and acquisitions, or suddenly shifting consumer trends, he added. “We tend to wait until something happens.”

 But in doing so, they end up
losing precious time.

“There’s going to be wildly different increases or decreases in demand
when you’re doing this contingency planning,” Brandt said. Questions might need
to consider consolidating routes, or looking at M&A opportunities – whether
as a buyer or a seller.

“What happens if you immediately have a surplus or a huge shortage in labor,” she asked, referring to another consideration.

It will all be part of the new normal.

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