The COVID-19 pandemic has impacted countless businesses around the world, causing significant challenges for companies big and small. National lockdown measures and working restrictions have unfortunately left many companies having to pause their operations. But during this difficult time, some manufacturers have discovered a silver lining: By quickly evolving their business models, they have been able to continue trading.
Traditionally, the dominant route to market for manufacturers is to sell their goods in bulk to third-party distributors and retailers. There are various advantages to this model, including cost savings through economies of scale, working to slower order fulfillment times and the potential for sizable long-term contracts. But due to COVID-19, orders from third-party vendors will inevitably have slowed down – if not stopped all together. As lockdown restrictions throttle the retail industry, there is little to no demand for many non-essential goods. To overcome this barrier, producers that once thrived in a B2B capacity are now switching gears and focusing their sights on the consumer. A recent survey conducted by Episerver found that 41% of B2B professionals believe selling directly to their customers online would be the most significant opportunity during the next year.
But this new strategy comes with its own set of challenges. Shifting your business model is no easy feat and requires thorough planning and deliberation. If you’re considering this as an option for your business, you'll want to be mindful of these factors:
Greater marketing costs – Before you can supply your customers directly, you’ll have to find and reach them. This will involve exploring new marketing channels and extending the ones you already use. You’ll also need to re-evaluate your budget as the cost of B2C marketing is likely to be much higher.
Changes to sales orders – Once you start selling to the general public, your sales volumes and order sizes will change markedly. Your current processes will be set up to cater for bulk orders from distributors, so you’ll have to adapt quickly. As you shift your warehouse activities, make sure long-term efficiency is your core focus; efficiency will dictate how quickly you can ship your orders and how well you can satisfy your customers.
Strained processes – If you’re not prepared, switching to a B2C business model will catch you off-guard and cause errors on the shop floor. Having to suddenly manage an influx of orders will be tricky for your team to navigate; this is especially true for manufacturers that employ new staff during seasonal peaks. Ensure that your team has accurate visibility of your inventory data so that they can correctly pick, pack and ship your orders with minimal mistakes.
Work Smarter, Not Harder
Here are some tangible ways in which you can modify your warehouse processes to make them more B2C friendly. It goes without saying that every business is different, and so if you’d like to discuss your particular needs with our team in more detail, just let us know.
Re-think picking – When selling to distributors and retailers that order large quantities of items at a time, it makes sense to bulk pick using pallets. But this isn’t suitable when you have a high volume of small orders to fulfill. Start by evaluating different picking methods like tote, multi-order and wave picking. Decide which methods would be most appropriate for your warehouse layout and business model. You can use a Pick Manager or Pick Planner tool for NetSuite to help you carry this out.
Know your inventory – Maintaining high inventory accuracy and visibility will be essential for getting your orders out correctly. If your processes are manual and paper-based, there is a significantly higher chance of incurring human error as your workers manually enter data into NetSuite. One way of mitigating this is by switching to a mobile inventory management system. After replacing their manual processes with RF-SMART, US manufacturer Palmetto State Armory was able to increase their inventory accuracy to 98%. This is because RF-SMART is built directly into NetSuite and provides you with real-time inventory data.
Streamline your processes – Evaluate your supply chain to see if there are any activities you can streamline to gain efficiencies and save costs. For example, if you’re using disparate systems in your warehouse, you’re probably paying separate license fees for each one. You’ll also be leaking efficiency as you work to pool all of your data together. Consider replacing these systems with a central cloud-based platform that’s fully integrated with NetSuite. In doing so, you’ll become more agile and equipped to handle larger order volumes.
NetSuite Customer Shifts to B2C
A Netherlands-based manufacturer of watch and jewelry products recently switched their focus to B2C due to a sudden drop in B2B orders during COVID-19. Global lock down restrictions meant that within a 2-week period, their sales levels dropped, calling for a pivot in their strategy. Luckily, the business already had an e-commerce website in place and their warehouse staff were trained to fulfill all order types. By also having a mobile scanning solution in place, they were able to minimize any loss of efficiency and potential for errors during the switch. The business has maintained a high level of sales order accuracy and visibility with the help of RF-SMART.
“RF-SMART is seamless. We know it’s an application on its own, but it feels like an extension of NetSuite.” - Business Process Manager
It's reasonable to say that most businesses will have to work to overcome the challenges brought on by COVID-19. While many countries are now relaxing lock down rules and trading restrictions, things are still far from business as usual. So it’s no surprise that many are seeking new routes to market, and alternative strategies to work around the circumstances. As you plan for the future of your business, do your best to stay focused on long-term efficiency - even while you implement reactive measures today.
If you’re a NetSuite user and would like to learn more about RF-SMART, get in touch with our team today.
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