17 Nov 2020
Agile response: How one of South Africa’s largest retailers managed the supply chain challenges of COVID-19.
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Bradley Nitsckie, Head of Supply Chain and Logistics at Woolworths SA, describes his company’s experience of the lockdown.
In part one of this interview, Chania Stempowski, Joint MD of Odgers Berndtson Executive Search, finds out how the supply chain and logistics challenges of Woolworths South Africa were met and what this means for the future of this critical function, and its leadership.
Chania: How did the lockdown and the restrictions imposed by government challenge your thinking about supply chain management, and how did you adapt?
Bradley: Well, in any situation, supply chains need to be managed strategically. The certainty of a strategic plan provides the foundation for everything you need to do. These include building networks, investing in infrastructure and technology, developing partnerships, developing skills and constructing the services required to fulfil to the demand and satisfy the customer in the modern era.
On the other hand, as COVID-19 illustrates, there is a need for flexibility and agility too. This is quite a paradox. On the one hand, strategic certainty, but also the flexibility that requires the ability to learn and adapt in shorter cycles, responding to more immediate stimulus in opportunities or dangers.
So, you have to be both strategic and flexible.
We can build networks and be strategic, but it our people’s ability to respond to immediate stimulus, their learning orientation and adaptability that’s critical to resilience.
The world over, suddenly people became the most valued essential service keeping supply chains operating. They were making decisions to adjust product flows, adjusting processes, developing protocols to make the workplace COVID-19 safe, and working cross-functionally in crisis committees to solve supply chain problems.
While we are not yet out of the woods, I am certain the ability to build supply chain networks, processes and services which are capable of quickly adjusting, learning rapidly and capable of orchestrating with various partners, will continue to support our business and community.
Chania: The COVID-19 crisis has seen the corporate sector at its best, with businesses not simply fighting to stay afloat, but collaborating for the benefit of the wider community. In April, Woolworths announced a commitment of over R34 million to support a variety of initiatives to meet the challenges of this crisis in South Africa. What steps have you had to take to help your suppliers since the start of the crisis?
Bradley: There is no doubt that this pandemic has had a devastating impact on many people in SA, some directly through health, others through the loss of loved ones or colleagues and others through the loss of livelihoods.
In our own business, you are correct, we pledged community support through funds we injected into various community projects.
We also undertook fund-raising activities and partnered to deliver food relief. We also provided PPE, hand sanitizer and other critical COVID-19 protection to our employees.
In the early part of lockdown, the restriction regulations significantly impacted our Fashion, Beauty and Home business, as we were not able to trade. Many of our service providers and suppliers in our Distribution Centres were directly impacted. This lasted for at least one month before we were allowed to start opening up more of that supply chain.
For those service providers, many of whom are temporary labour-broking staff who support our full time staff, but also include security, cleaning and other service-oriented partners, we undertook to support them through payment for that initial period while our operations were shut down and in order for their staff to continue earning money.
As the lockdown period was extended, government support in special unemployment disbursements helped support funding shortfalls for those service providers where income was temporarily lost, either fully or partially. As you may imagine, this was a very precarious situation for many, and we worked to try to support those directly impacted in our network.
Chania: Globally, consumers turned to online shopping during the last seven months which seems to have fast tracked online shopping in South Africa. Was the infrastructure in place to handle this? What have been the trends within Woolworths?
Bradley: Online retail in South Africa has typically been a small channel. It’s around 1% or less for the major local retailers. The pandemic contributed to a growth spike of 3-4 times almost over-night. Retailers scrambled to quickly scale existing online operations.
Local online sales in SA normally have a few peaks during the year. Most retailers have plans for scaling up for those. But this sudden growth from the pandemic was completely beyond any existing plans.
Of course, this also happened while teams where working from home. Woolworths similarly worked quickly to scale and add capacity.
We launched a click and collect offering within nine days to support the extra demand.
This also has its limitations due to the need to enable social distancing in the workplace and so even when adding additional resources, there is a ceiling. Larger, more substantial investments in infrastructure, space and capability are required.
Woolworths is adjusting with large investments into creating completely new solutions for online shopping for their customers.
Chania: Are you seeing more customers using the small-shop formats?
Bradley: There was quite a shift in shopping patterns and habits. We saw customers shift to smaller stores on certain days linked to their shopping missions, and larger stores in other cases.
The general trend was towards fewer trips, with larger purchases which tends to be in larger stores, with smaller stores supporting the need for a faster top-up shop.
As customers became more familiar with and trusting of our COVID-19 measures, the shopping behaviours started to become more normal.
Chania: Thank you, Bradley. In the next part of this interview (link), we will move on to the pressures on global supply chains, the role of local suppliers and which leadership styles have proved most effective in the ‘new normal’.