The hard truth about the Coronavirus is that extreme, unexpected events are becoming an essential new requirement of effective supply chain planning. In the current crisis, distributors are doing the crucial work of delivering critical products to essential businesses. As the virus peaks, distributors will play a leading role in rebooting our economy. As industries recover, a new normal will set it. It will be one where customers judge supply chain performance not only on efficiency, but on the ability to predict and mitigate risk.

Distributors can help usher in new supply chain practices, and several key findings from Innovate to Dominate: The 12th Edition in the Forces of Change® Series point the way:

  • Redefine what it means to be local in the digital age. Gone are the days when the core value of a distributor revolved around predicting and stocking inventory to meet local demand. To help mitigate risk, being local requires systems that watch for early warnings and take proactive measures to support customers where they work and live.
  • Work with customers as communities, not segments. Customers don’t care about supplier sales objectives, but they will reward partners that are “here to help.” A shift from segments to communities starts with business processes and culture that make a genuine effort to understand and enable customer business needs and personal aspirations.
  • Invest equally in transparency and trust. Digital transformation and disruption are creating extreme transparency around prices, inventory availability, delivery performance and more. But without careful planning, transparency will diminish loyalty. In business markets, loyalty is ultimately about trust. Trust starts with everyday performance, but the strongest loyalties are earned by being there when the going gets tough.

Distributors must start to work on innovations that help predict and mitigate risk for customers now and have them in place before the next pandemic, extreme weather situation or other extreme event occurs. Four practical steps will kick-start progress:

  1. Talk to your customers to find out what worries them the most. Successful inquiries will happen at all levels from leader to leader, salesperson to salesperson, product manager to buyers and users, etc.
  2. Keep track of what you are doing that is helpful. Ask first-line managers across your organization to keep a daily diary of what happens and how your company responds. As the virus wanes, diligently collect and analyze their notes, find the best solutions and embed them in your processes and culture.
  3. Create an early detection system. Identify the signposts that point to unexpected crises that are most important in your industry and how to look for trends and outlier occurrences through data, social media, business contacts at home and abroad, and so forth. Your industry association can play a vital role in creating an early warning system, including assigning the responsibility for maintaining vigilance.
  4. Tell stories through social media. Social media can play a substantial role in building relationships and trust. Practical strategies for communicating your commitment to predicting and managing risk start with telling your stories of responding to the Coronavirus crisis, and more importantly, telling the stories of your suppliers and customers.

Mitigating risk is hard; predicting risk is harder. Distributors must get out in front by working with customers and suppliers to design risk prediction and mitigation strategies and capabilities. This will help us as we prepare for the next unexpected catastrophe.