Supply chain issues are an ongoing challenge for merchants. What became problematic with Brexit was hugely exacerbated by the Covid pandemic, as well as changing sustainability targets and worldwide shortages of particular products. Now, the situation with Ukraine and Russia is further destabilising the supply and movement of construction supplies, with the full impact yet to be seen, according to recent comments from the Construction Leadership Council's Product Availability group as reported in Builders Merchant News.
While these challenges are impossible to ignore, there are things all merchants can be doing to alleviate some of the impact, both on themselves and their customers.
Here are our top 5 ways for merchants to proactively manage the impact of supply chain uncertainty.
1. Understand and monitor your own stock movement and turnover better
Sounds simple, doesn’t it? But really understanding what’s working and what could be working better requires quite sophisticated reporting tools to be able to analyse the stock movement, pricing and performance potential.
Once you’ve got a really good grasp on how stock is selling through, it’s easier to make better decisions around replenishment, merchandising, promotions and pricing to ensure that you’re serving the right customers with the right stock at the right price.
Using metrics like Stock Confidence* can help you to identify where issues around availability may be, helping to flag potential gaps before they become a problem, while the intelligent reporting of your ERP system should be able to highlight potential alternatives and changes to plug those gaps where possible.
2. Make more of what you DO have available
It’s easy to focus on what you can’t get hold of but perhaps there is more you can do with the stock you do have available. That might mean using analytics tools to assess the most popular lengths of timber, for example, and re-purposing materials you have more readily available to meet demand. If you aren’t selling much of one length, but loads of one slightly shorter, there could be an obvious solution. You can also analyse what’s selling well to identify trends and shift your stock profile to meet current and predicted demand.
This also relates to ensuring you’re selling the stock you have at the right price. And no, we don’t mean the cheapest price! Not to sound mercenary, but making sure your prices are at the right level for market demand and general availability is really important. Monitor the shifting market prices of materials and flex your pricing accordingly to make sure you’re operating in a profitable and sustainable way.
Keep control of margins with automated margin protection, and keep an eye on customer credit with built-in credit controls. Understanding who your best customers are is an important part of doing business, as you don’t necessarily want to sell the most in-demand stock to the first bidder if they’re not a reliable or regular customer.
3. Use analytics tools to spot trends and patterns to predict requirements seasonally and plan ahead
Again it sounds obvious but outside the main seasonal trends, there may be more insights to be gleaned which could help you predict demand.
If gardening is massive in the UK in spring and summer, what will the autumn trend be? If house prices soaring are stopping more people from moving house, what home improvements are most popular? What new products and trends are coming through to boost sustainability and reduce fuel prices? How could you enhance your own delivery and logistics services to reduce travel for customers and save fuel for your business?
It could also be worth considering pricing incentives to encourage longer lead times on orders, if you don’t already. For orders placed regularly or further out, is there a reduction for you in cost to serve? Could that be passed on to the customer?
On the more basic side, use the analytics tools at your disposal to look back at previous years and see if there are common patterns you could predict for the future. You’ll quickly reap the rewards when everyone’s trying to source that particular product again this year!
4. Get to know what people want
While you might think this will require a crystal ball, there are plenty of analytics tools around which could help you understand this. You might also want to consider asking your customers via email or in-store – after all, if you don’t ask, you don’t get! Make it easy for them to communicate their wishlist, either with an ideas or requests board in-branch, or with a simple online form.
Your own system can help you understand how customers buy from you, what they buy, how often and for how much. But to understand where the gaps in your stock profile may be, you need another part of the puzzle – you need to know the things they’re looking for that you don’t stock in the first place.
While there are lots of analytics platforms in the market which you could choose for this, one of the best examples we’ve seen is the brilliant online availability tool Near St. With a simple data integration, Near St can help local customers see what stock you have in-branch at any given time, thereby using the power and reach of online to drive football to your branches. But the value-add doesn’t stop there. As part of their service you can also discover what other searches for similar products people in your area have been making, so you get far greater insight into what might sell well for you.
You can find out more about NearSt by visiting their website here.
5. Monitor cost pricing in the market
We touched on this earlier but it’s so important we thought it warranted its own section.
Keeping on top of the rapidly fluctuating purchasing prices in the market right now is vital. Use automated price tracking tools to monitor and respond across your entire stockholding.
It’s also important to monitor your own costs to serve, including all operational and logistics costs. If delivery is costing you 10% more because of fuel price rises, how are you covering that? There are so many ways in which current global issues are affecting businesses, it’s vital to consider every aspect of your operational set-up to ensure you’re making the most of existing assets, minimising costs and optimising pricing.
If you would like to try Merchanter for yourself and see how your business could benefit, please register here for 30 days’ access to our online demo system.
*Stock Confidence is a feature unique to Merchanter
