How Panic buying impacts the Retail Supply Chain
Modern supply chains are highly reliant on just-in-time ordering and instant inventory. In panic buying, short-term supply shortages are the obvious and noticeable impact. Panic-inducing shops may have broader and longer-term effects on supply chains for retail and e-commerce.
Difficulty in Sourcing
Goods procurement is the first and crucial step in the supply chain. Retailers typically identify client requirements, evaluate industry dynamics and schedule their sourcing requirements. In general, retailers have identified suppliers and distributors from whom they buy products.
In a situation where nations are closing down entirely, retailers find it difficult to procure vital goods and FMCG supplies. Panic buying adds only to the issue, as supply forecasts are for a toss. Acquiring materials from FMCG in bulk is a daunting process, as the whole supply chain is not full of products.
Inconsistent Inventory Management
Panic buying is also called the bullwhip effect, and in such an unpredictable and panic-driven rise in demand, it triggers stock management ups and downs. Retailers are struggling to replenish inventories and to supply the clients with enough inventory.
Whilst large retailers with proven supply chains can do well with larger storage facilities, for smaller retailers who recycle their inventories on demand in particular, this is difficult. Strategic, multi-echelon inventory management can allow businesses to sustain optimal inventory levels and easily meet these high requirements.
Higher cost of Logistics
A variety of other laws were enforced, including import, export and restricted movement of individuals across national and state borders, in addition to lock downs to prevent the spread of the deadly corona virus.
This ultimately resulted in problems in the management of both domestic and cross-border logistics operations. Therefore, because of a small amount of ground-based services, retailers face problems with their day-to-day distribution, thus rising the retail supply chain costs of logistics.
Lack of Visibility
With such fluctuating volatility in the buying behavior, managing supply chain activities and effectively predicting demand and supply rates is a challenge. The supply chain of retail companies, in particular for companies based on manual retail planning, is not secure or clear.
At the present time, there is no guarantee as to when the pandemic of COVID-19 will stop or slow and when things will return to normal. We have to come out of it together in the middle of a global crisis. The show will continue as nations around the world fight the spread of the disease through interventions such as social barriers and quarantine lock downs. Technology is going to be at the forefront, driving critical supply chain operations with accuracy and minimal human intervention.