Supply Chain Management Assignment: Disruptions Of Covid-19 On Retail Industry
Supply Chain Management Assignment task details and instructions
“Businesses need to lead ‘transformational change’ in order to tackle the most urgent threats facing the planet and its people, including a radical overhaul of supply chains~ We must work together, because the engine of global business – its supply chain – is broken, and requires transformational, cross-industry collaboration to fix it,” Grant F. Reid, CEO Mars Company.
Based on the above predictive statement before the advent of current pandemic situation, you are asked to choose a sector/industry (e.g., food, technology, healthcare, retail, services, automotive), and critically:
i. Discuss the supply chain visibility and agility, i.e., the ability of companies in the chosen sector/industry to build and manage more cost-effective, efficient, responsible, and customer-focused supply chains given the disruption caused by COVID-19.
Identify both internal and external COVID-19 risks for the companies in the sector/industry and discuss how the companies build supply chain resilience to quantify and rebalance those risks by emphasizing cross-industry collaboration.
Discuss how state-of-the-art technologies and/or new forms of supply chains (e.g. Additive Manufacturing, Big Data analytics, Internet of Things, Omnichannel, blockchain) help companies within the chosen sector to tackle those urgent supply chain threats an remain competitive during and after the pandemic.
For each question above, you should support your arguments by bringing into the discussion 1-2 examples of companies that belong to the selected sector/industry.
For the present supply chain management assignment, the retail industry or sector has been chosen to analyze the overall requirement of the study. Based on the statement given by the CEO of Mars Company, Grant F. Reid, wherein a transformational change needs to apply to overcome the most urgent threats, the overall assessment will focus on the disruptions of the Covid-19 pandemic on the supply chain operations of the chosen industry. Furthermore, the overall study is based on the retail sector that mostly focuses on the supply chain visibility and agility, internal and external risks of Covid-19 within the said sector and the new forms of the supply chain help firms to overcome those urgent threats of the supply chain. The assignment will also discuss the internal as well as external risk of COVID 19, which could serve as a barrier in the process of resuming the business. In this study, there will be a critical analysis or discussion on the impact of COVID 19 in the retail industry. In addition to that, the assignment will be including recommendation where some measurable steps must is included that could help the industry to recover from the adverse effect of the COVID 19. As a whole, it can be said that the overall assignment will be summarizing the scenario of the retail industry after the outbreak of COVID 19.
The overall study focuses on the global supply chain management of the retail sector during the Covid-19 pandemic situation. Global supply chain management has many benefits for companies of all sectors as it allows business practices to be managed using international firms. It helps to overcome uncertainty wherein firms can respond immediately to unexpected conditions, strategies of transport can be improved, costs can be reduced, and waste can be eradicated. However, the overall study is based on the retail sector that mostly focuses on the supply chain visibility and agility, internal risk and external risks of Covid-19 within the said sector and the new forms of the supply chain help firms to overcome those urgent threats of the supply chain.
Supply chain visibility and agility in the retail sector
Supply chain visibility (SCV) is the aptitude to measure particular factors, sub-congregations, and ultimate commodities as they pass through from provider to producer to customer. For example, the scale included is raw material, and the product will be measured with tracing backward and forwards that mostly rely on the manufactured goods. SCV is facilitated by the technology of SCM that delivers near-real-time information concerning the operations of supply chain and logistics (Biel, 2020). The key objective of supply chain visibility is to gather valuable details concerning SC operations, enhance competence, minimize risk, improve customer contentment and boost productivity. In the retail industry, companies attain these outcomes with the advanced planning, perceptions, and execution of the supply chain delivered by the software of supply chain management. Considering the Covid-19 pandemic, success relies on the way into real-time, circulated data within every knot in the supply chain channel. This generally means configuring a central hub or direct tower, where supply chain visibility software evaluates the data of the SC, which involves sales forecasts, the demand of a product, availability of material, and more. It turns out to be an extensive resource to those who make a decision to re-examine and manage all of the supply chain activities of the companies.
On the other hand, agility is to take immediate or quick steps to overcome the situations by responding to changes in the external market conditions. The socio-economic crisis of ongoing Covid-19 is compelling companies of retail sectors worldwide to take immediate measures to respond to the pandemic and its impacts on their businesses. Due to the sudden outburst of Covid-19, businesses are spreading around the globe, and so are supply chains. Hence, in the retail sector, supply chains are growing more compounds, and lead times are turning out to be a concern of serious concern. As per the study, it has been found that approximately all retailers are planning to invest in making their supply chain more agile, i.e., more than 65% and flexible (90%) by 2020.
Thus, it can be said that the Covid-19 nationwide pandemic basically changed the retail landscape, increasing the need for the transformation of global supply chain management. Hence, it can be said that Covid-19 has changed the priorities of the SC for retailers and customer merchandise firms (Mikey and Goldman, 2020). The figure below shows the aim of the retailers to increase supply chain speed and agility.
Fig 1- Retailers aims to increase supply chain speed and agility
Sources- (Mikey and Goldman, 2020)
However, as per the study, it has been known conventional SCM has been all concerning reformation, but Covid-19 has revealed the threat of a constricted emphasis on cost efficiency at the expenditure of purchaser expediency that includes focusing supply with more than one large sources and restricting competence of the buffer. Moreover, the ability of the companies in the retail sector to build and manage the supply chains disruption that has been caused by Covid-19 has been discussed on the following grounds:
Cost-effective- The Covid-19 pandemic shows major shifts in consumer behaviour wherein they are becoming more careful about how they are spending ad taking steps to be more careful about what they choose (Dekhne et al., 2020).
Fig 2- Major shifts in consumer behavior
Sources- (Dekhne et al., 2020)
However, the retail sector shows have been showing supply chain visibility and agility by focusing more on customer retention but not acquisition, as well as cutting unnecessary expenses. In the retail sector, customer acquisition is said to be one of their biggest goals for marketing. Hence, due to the Covid-19 crisis, the retail companies are giving more importance to consumer retention, which could bring in more pecuniary incentives, and more significantly, is a more cost-effective that refers to the increasing of sales. Sheehan (2017) states that it costs sellers more than five times the sum to get a fresh consumer than to re-engross an existing customer, but they can also improve their rates of customer retention by the loyalty program, meeting to customers who reach milestones by improving their customer service.
Efficient- The supply chains disruption due to Covid-19 wherein Amazon first comes to mind for efficient supply chains for many people. As per the study, it has been identified that the supply chain management of Amazon shows an extensive procedure by covering all modes of trade actions, starting with product development to proper logistics (Ribble-pack.co.uk, 2021). Thus, in the retail sector, Amazon has come up with its proper supply chain efficiency by competing with its rivalries. In the Covid-19 situation, Amazon, with the high levels of efficiency and a shopping experience that is completely driven by its customer, the company endures striving for customer satisfaction by developing a fast and reliable delivery system to fulfil the customer demands.
Responsible- Retail industry shows a responsible concern towards the safety of the customers as well as their employees to flexibly run the supply chain management. They adopted new policies and made sure that every business practice was handled and managed with proper hygiene and safety measures.
For example, Walmart, which is one of the largest retail firms, shows a quick response by giving more importance to the wellbeing and safety of their employees' customers and associates internationally. As per the research, it has been found that the firm has adopted an urgent situation policy leave for Covid-19 to their workforces who are not able to perform their duty or are not comfortable at the workplace (Walmart.com, 2020). However, it can be said that the firm is working with efficiency and unprecedented speed to deliver important services. Hence, the firm continues to adopt alternatives measures to help their employees and customer to stay healthy and safe. Therefore, the supply chain agility and visibility of Walmart is in a better position as of now.
Customer-focused- Customer-centric retail companies like Amazon, Apple, Target Corporation wherein these companies have increased disinfecting measures and safety, operational changes, and advanced pay and benefits.
For example, Target Corporation has coordinated the stores, suppliers, and distribution centres so that the items the customers need are mostly tracked faster by their supply chain to fulfil the customers' demands and needs. This retail company has also focused on customer safety and maintained proper hygiene that has been shown in the figure below:
Fig 3- Covid-19 protocols followed by Target Corporations
Sources- (Target.com, 2020)
COVID 19 Risk
The retail sector is the industry that has been the most affected industry because of the COVID 19 all over the world, and the recent time is unprecedented and the most difficult and challenging time for the industry. The companies have been facing numerous risks such as follows:
The internal risks are the risk associated with the company within the organization and arise during the normal operations of the company. Therefore the internal risks of COVID 19 faced by the companies in the retail industry are as follows:
Loss of productivity- Due to the outbreak of COVID 19, the companies in the retail sector have been dealing with the risk of loss of productivity to a higher level because most of the business premises had been locked in order to stop the virus from spreading from one to another. This had led to a stop to the overall business practices and the overall work. Therefore, it has directly reflected on the productivity level of the firm. In addition to that, the companies were dealing with less supply of the materials that disabled them to produce the huge level of units (Brandtner, Darbanian, Falatouri and Udokwu, 2021).
Loss of Profitability- The outbreak of COVID 19 led to a risk of loss of productivity because the companies were dealing with a reducing level of sales volume. In order to protect themselves from the infection of COVID 19, the customers have changed their purchasing behaviour, because of which the companies are finding it difficult to sell their products. The reduced sales volume has led to the loss of profitability as the companies are not being able to increase their profit.
Disruption in internal business practices- Another internal risk of COVID 19 for the companies of the retail industry is disruptions in the internal business practices. This is because the risk of COVID 19 has been increasing day by day, and therefore, the companies have not been able to manage the business because of the increased level of labor turnover in the companies. Since the outbreak of COVID 19 has led to the companies to employ fewer numbers of staff at a time, the companies are finding it difficult to manage with fewer workers (Goldberg, 2021).
Example- Walmart Company, one of the top listed companies in the retail industry in the USA, has been dealing with internal risk within the business due to the outbreak of COVID 19. Clement (2021) states that the operational business practices of the company have declined to a certain level that has led to the loss of productivity, loss of profitability, etc. Since, retail industry is one of the most affected industries of COVID 19, Walmart has been one of the companies that has been dealing with internal risk rising because of the global pandemic.
In a business organization, the external risk is the risk that takes place from outside the corporate structure. The outbreak of COVID 19 has also led to external risk as well in the retail companies as well, which has been explained below:
Economic Risk- Economic Risk is the risk that is associated with the market conditions and is the most potential risk of COVID 19 in retail companies. Since there is an economic downturn all over the world, the companies have been suffering from the loss of finance in the business. In addition to that, the massive downfall in the economy of the country has led to an increase in the interest rates that has directly reflected on the increase of the expenses in the organizations (Sharma, 2021).
Credit Risk- Credit risk can be described as the likelihood of a loss from the borrower's collapse to pay back the loan or fulfill a contractual obligation. The retail companies usually sell most of their products in credit, and therefore, since the outbreak of COVID 19 has minimized the financial flow of people, the people are unable to pay back their credit. Therefore, retail companies are highly associated with the credit risk that will eventually lead to a disruption in the financial flow of the business.
Liquidity Risk- Liquidity risk refers to the risk that is associated with the ability of the business to fulfill temporary monetary compulsions devoid of incurring major losses. Therefore, the retail companies are also associated with a higher level of liquidity risk because of the COVID 19. This is because the companies have lost their ability to meet the short-term financial obligation of the company. The companies have also been dealing with heavy financial crises since the past two years or after the outbreak of COVID 19 (Harris, 2021).
Example- Walmart is the retail company that has been suffering from the external risks of COVID 19, as illustrated in the above section. Walmart Company has been dealing with many financial losses that have been leading to credit risk and liquidity risk.
Therefore, although the retail industry has been affected the most because of the outbreak of COVID 19, the companies in the industry are now started to resume and recover the losses because of the global pandemic. However, the companies build their supply chain resilience in the following way:
Inventory and capacity buffers- In order to increase resilience in the supply chain, the companies follow the strategy of inventory and capacity buffers. Buffers capacity has been one of the simplest ways to improve resilience, either in the form of underutilized manufacturing conveniences or inventors in surplus of stock requirements.
Manufacturing network diversification- Diversifying the manufacturing source is the most common strategy used by companies to enhance supply chain resilience. This has helped the companies to implement innovation that could improve the supply chain of the companies (Manyika, Woetzel and Barriball, 2021).
For example, Amazon is the company with the strong supply chain resilience because the company has been found with the most effective strategies used for enhancing the supply chain resilience because of which they can be prepared for future uncertainties and unfortunate risk events.
On the other hand, with the collaboration of cross-industry, the companies have rebalanced the identified internal as well as external risk in the following ways:
Minimizing daily expenses- Since the companies are mainly facing a major drawback in the financial sector because of the COVID 19, the companies are strategizing to minimize their expenses so that the financial flow is maintained at least by a certain level.
State-of-the-art technologies and new forms of supply chains
Retailers are already performing on the changing habits of the consumer and either adapting their business models or adopting technology to help customers feel more at relief when shopping and to help shoppers to store. Hence, the sudden outburst of Covid-19 and the ensuing long period of lockdown has severely impacted the retail sector. The impact has gone beyond all predictions and caused rigorous distortions to supply and demand internationally. However, the state-of-the-art technologies and innovative forms of SC can help the firms to overcome those urgent supply threats to be competitive during and after the pandemic.
For example, a number of Retail Company like Coca-Cola initiated a vending machine that is touchless which uses QR codes to allow a consumer to pour themselves a drink-through their smart phone. Thus, the company is making an effort to look forward to fight against the worldwide pandemic and making sure their employees and consumers are safe and healthy.
However, a new technology of supply chains that can help the retail companies to overcome the urgent threats of supply chain and to stay on competitive during and after the pandemic has been discussed on the following grounds, respectively:
Big Data Analytics- In business, big data analytics is commonly the multifaceted procedure of evaluating big data to expose informational data. The information can be in the form of concealed patterns, association, trends of market, and consumer preference. In organizations, this analytics system is important for the improvement of business-related outcomes. With the use of this technology, the companies will be able to create more effective marketing, innovative income occasions, consumer personalization, and enhanced operational competence. It also helps the business to improve competitive advantages over their competitors (Chai, 2021). However, during and after the pandemic, the use of big data analytics has helped retail companies to handle supply chain threats while maintaining a competitive advantage in the business. Therefore, Big Data Analytics can help the company in the following ways:
- Helps to know the Customer Trend- In retail industries, acknowledgment of customer trends has been the biggest need so that the firms could operate as their needs and earn profit to a maximum level. Therefore, with the use of big data analytics, the companies will be enabled to understand the customer trend in the market (Riahi, 2021).
- Optimize labour force development and operations- The application of Big Data analytics can also help companies to optimize their workforce because the COVID 19 has led to an increased workforce turnover, and thus, the software will ensure better planning in regards to the workforce as well as the operations.
Internet of Things- On the other hand, the Internet of things refers to the system that is connected with the interrelated computing devices, mechanical as well as digital machines. It can also be said that the entire world is revolved around the internet. However, in business, the Internet of Things is related to multiple physical devices that work with the Internet, and the main motive of the same is t help the businesses collect as well as share data. Therefore, during as well as after the pandemic of COVID 19, the Internet of Things can play a major role in the companies and help them recover from the losses a maintain their competitiveness in the industry (Ranger, 2021). Therefore, IoT helps retail companies in the following ways:
- Reduction of operating cost- The use of IoT can help retail companies to cut their cost in this most challenging phase of the retail industry as well as help them maintain their competitive advantage. It will help them supervise their equipment and reduce downtime by determining breakdowns or misalignments on the line of production.
- Improve productivity- Since the companies in retail industries are dealing with reducing sale volume because of the low productivity, the use OF IoT will be important as it can help them to improve productivity by making the overall work easy for the workers. Eventually, it will lead to higher profitability of the business that will help them recover from the losses incurred by the outbreak of COVID 19 (Patel, Patel and Salazar, 2016).
Omnichannel- It is said to be the content that focuses on a cross-channel strategy, which is used to develop the customer experience and make an effective associations across all potential channels and touchpoints. Generally, this consists of digital and traditional channels, sale points, and physical and online experiences. Customer disclosure to multi-channel has driven the demand for flawless connectivity amongst the digital and physical worlds. Thus, the retail business, with the help of Omnichannel, must provide an option from a complete self-service buying experience to an advanced full-service buying experience (Fontanella, 2019). Physical stores need to deliver convenience to buy in-store, from mobile phones, and offline. Hence, such multi-channel experience during and after lockdown would need to promote all kinds of purchases behaviors. However, adopting an Omni-channel with ERP friendly can help the retail sector to overcome the risks by delivering integrations to market, ordering online and integrity, backed up a transaction with full real-time inventory.
Blockchain- Blockchain is a said to be the system that records the information in a manner that makes it hard are impractical to modify, deceive or hack the system. A blockchain is effectively a digital ledger of payments that are dispersed and replaced across the overall computer system network on the blockchain. However, using blockchain technology, retail companies can track their commodities from the manufacture and assure that they are receiving reliable products regularly. As retail industries were rolling even last year before the pandemic hit the world, many retail firms offer the facilities of online purchasing, and the main revenue comes from their physical stores. Hence, the retailers have faced several major issues such as sustaining the supply chain, opening stores, selling products and keeping all the employees and customers safe. Thus, it can be said that all these issues of a supply chain can be evaded if the retail industry adopts blockchain from the starting of its journey (Anwar, 2020).
For example, some of the retail companies that use blockchain technology have been shown in the figure below:
Fig 4- Retail companies that use block chain technology
Sources- (Anwar, 2020)
These companies are using the block chain technology that has helped them to deal with the adverse effect of COVID 19 to a larger aspect.
Establishment of relevant theories
Under SCM, the relevant theories that have been identified are customer relationship management and supply chain roadman. Hence, both theories reflect differentiation within the supply chain environments from region to region.
Customer Relationship Management- As CRM is mainly used by the department of sales and marketing that is mainly used by production, procurement and distribution departments. Thus, customer relationship management differs from region to region as the customer relation will be based on consumer behaviour, their attitude and preferences. Every region has different consumer preferences and demands, thus, it is highly differentiated from region to region.
Supply Chain Roadmap- A supply chain roadmap is responsible to map out all the system and is a new theory, which can only be achieved through in-depth research and analysis. With this theory, the differentiation in the supply chain management can be indicated from region to region. This is because, the chain of supply varies from one country to another and the risks associated with the same is also different along with the management of that risk. Therefore, the differentiation in the overall supply chain roadmap can lead to a varied supply chain management all over the world.
The overall assignment is based on the global supply management chain wherein the assignment has evaluated the supply chain visibility and agility of the retail companies in order to measure the ability of the companies to build and manage the business more effectively considering the disruptions caused by COVID 19. Furthermore, the assignment has focused on the discussion of the internal risk and external risk of COVID 19 that has been affecting various companies in retail industries all over the world. In this section, the assignment also has included the discussion of the way companies construct supply chain flexibility to enumerate and rebalance the identified risks by focusing on the cross-industry partnership. At last, the assignment has also discussed the use of technologies or a new form of the supply chain that could help the companies within the retail industries to handle the immediate threats of the supply chain and to maintain competitiveness during as well as after the pandemic.
However, there are some recommendations of measurable steps that can be used in the retail industry in order to avoid the risks of COVID 19, such as follows:
- The industry must focus on maximizing the consumer base by operating and delivering products with the consideration of all the precautionary protocols.
- The industry must focus on the consumer trends and their income level after the global pandemic in order to operate accordingly.
- The industry must be specific and clear about their product brands in order to achieve the customer loyalty and satisfaction.
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