Dealing with operating during the Coronavirus disruption

 

If you’re a retailer, coronavirus has impacted your business.  You’re challenged with a business that is dramatically different that it was just days before. A business that still demands answers to questions and good decisions in spite of a little data reflecting current circumstances.  And no decision is, in fact, a decision.

At Invent we’ve been busy working with clients to meet these challenges. Developing strategies to cope with these challenges. Turning those strategies into operational execution.  Ramping creative analytic approaches that meld historical data with the little data that exists since the onset of Covid-19 to create forecasts.   Leveraging those forecasts to drive intelligent decisions driven by available information.  Creating on-going processes to re-calibrate those decisions as we collect more marketplace and environmental data.

By adapting our partnership with our retail clients to the current environment, we’re helping them meet the challenges of the Coronavirus induced business disruption.  We’ve developed a framework with three key components – adapt, operate and emerge – that helps retailers structure activities, prioritize and navigate through the crisis.

Adapt:  We quickly dug in with our clients as coronavirus impacted their business to quickly identify, AT A ITEM – STORE level, what was selling more and what was selling less. We worked with clients to implement operational changes that modified inventory levels for every store-item combination that feeds the demand patterns we’re seeing for items that we’re strongly selling, reduce inbound inventory for items with reduced demand.

We worked with clients to switch financial goals as necessary for each retailer.  For those who valued liquidity, we changed the objective of our financial function that drives inventory from profit to cash.  For replenishment items, we focused on ensuring a fast cash-to-cash cycle.  And for seasonal goods, we worked quickly to implement quick response markdown solutions that work within the context of current demand patterns to sell though inventory and free cash as best as possible.

Altogether, we quickly re-oriented underlying business analytics to align with what was happening in the business. Ensuring we fed inventory to satisfy customer demand while generating cash while simultaneously identifying inbound commitments that should be either scaled back or canceled (if possible). Rather than shutdown the business, our clients are able to support the business, as it is today, effectively.

Operate:  After implementing the adaption to the current situation, our clients are now operating an operational platform aligned to the new environment.   As stores align with changing local regulation, they are limiting hours and implementing curbside delivery.  And to satisfy e-commerce demands, some have shifted e-com orders to stores either making up for DC limitations or liquidating unnecessary store safety stock while maintaining more flexible inventory in DCs.  Throughout all these changes,  Invent continues to adjust and align analytics in the platform to both the demand pattern and the environmental situation.

Emerge:  Today’s fire makes it hard to even think about returning to “normal” operations.  But, with long lead times and “perishable” seasonal inventory, even now, in the midst of coping with Covid-19, retailers need good analytics that connect differing re-start scenarios to key granular operational decisions that align inventory needs.  And, by evaluating the different inventory investment portfolios for different re-start scenarios, retailers can start optimizing their existing inventory and buying strategies for the re-start.

This blog talks specifically to retail challenges associated with Covid-19 and how to operate within that environment. These are clearly challenging times but, in spite of the challenges, there are opportunities.  In a few days, we’ll post a blog on why operating effectively DURING the Coronavirus crisis can be a key to realizing substantial strategic opportunities for a retailer.


Author: Jiri Nechleba

Invent Analytics


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