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“A crisis is a litmus test for human character”

“A crisis is a litmus test for human character”

DEMAND HAS FALLEN SHARPLY

FOREWORD

"I was calling a friend to pitch a business idea and while the phone rang I realized how inadequate my action was. Because I suddenly figured out that my friend, involved in food production, had far bigger headaches. And so it was.

That was the trigger which prompted the idea to run a short survey about the pressures that corona virus crisis puts on the supply chains. We went on to ask people directly involved in the production, logistic and retail business about how they cope with supply and demand in the time of corona virus.

Most surveys I’ve read so far were quite general and somehow with common sense advice, telling us things we knew we had to implement a long time ago but ... you can fill in the blanks with whatever reason. That is why we wanted this to be specific: how the supply chains were impacted, how well they were prepared to handle pressure, what solutions businesses have found and how they implemented them, what learnings came out as a consequence.

As the results unfolded under my eyes, I realised how deep the pain was. The answers are brutally honest and candid, full of bitterness and helplessness rather due to the increased unpredictability of this world then to the crisis itself.

The sole intention of this study is to offer some learning from direct experiences. So I deeply thank to all those who were willing to share them, by taking some minutes to complete this survey.

I wish you a useful reading!", Roxana Baciu - MEDNET Marketing Research Center

METHODOLOGY

The study was conducted on B2B databases, between mid-March and mid-April. It does not pretend to be representative for the Romanian business landscape. Whoever wanted to take a moment to respond to our questions was most welcome.

“Always be prepared for a crisis” is probably the main learning of a study recently done by MEDNET Research about the supply chain challenges during COVID Crisis.

Businesses from a varied industries explained in this research which were the main problems they faced and how they dealt with them. No surprise, the sharp fall in demand was the main issue, followed by raw material shortages and cash flow problems. It was just 4% of the businesses that said they faced a high increase in demand that disturbed their activity.

MEDNET Marketing Research Center, with the support of www.doingbusiness.ro and ARILOG, has roll out a short survey about the pressures in the supply chain, during COVID crisis.

We kindly invite you to find the main insights below and to download the pdf report at the end.

DEMAND HAS FALLEN SHARPLY

Probably the most important feature of this crisis is that it hit almost everybody at once. Apart from tourism & travel, non-food retail and Horeca, which by all means were impacted almost 100%, the rest of the industries suffered negative consequences in various degrees. Even the food production and retail, which otherwise registered probably one of the their best years, had to deal with the challenges imposed by the virus.

Our survey showed that 60% of the businesses have been impacted to a large and very large extent, while 35% to a smaller extent. The biggest headaches of managers were ensuring raw materials, customer relations and staff related problems, with over half of the respondents experiencing these problems. Even in the fortunate situation that one’s products were in high demand, many managers accused the lack of raw materials and, where available, the prices that went up overnight. NB for the food industry: After years of streamlining food supply chains and making a virtue from reducing number of stock days, how much would have been the cost of food stocks under these circumstances?

However, the lucky ones were far less numerous then the others, as almost 50% of the respondents said that the demand for their products has fallen “sharply”. Not only images, but also figures can speak better than one thousand words, so let the figures do the speaking!

SIGNIFICANT DECREASE IN DEMAND

“Our business - selling diesel injection spare parts - is directly related to the intensity of traffic, which is the most real, sincere and correct indicator regarding the state of a country's economy. Car traffic has dropped a lot, repairs are delayed, so the demand for spare parts is low. In addition, the repair activity for agriculture decreased.”

“We do not have orders to be able to deliver the goods made in stock and we no longer know how to proceed with the employees.”

“The demand decreased for the installation works of the equipment sold by us. It is not possible to carry out the activity respecting the measures of keeping the distance, we do not risk to endanger our employees.”

“Demand for products has plummeted. The retail spaces were closed by the Military Ordinance. We are not ready for our own online store. Expenditures continue to flow and revenues are zero.”

LACK OF SUPPLIER STOCKS

“Lack of stock of goods at suppliers causes delays in carrying out contracts signed before the epidemic.”

“Delayed orders for raw materials. Uncertainty regarding production planning in the context of possible lack of raw materials.”

“…our major problem is the uncertainty that we will not be able to honor contracts with customers, because, one by one, our external suppliers no longer produce.”

“Insufficient ability of some suppliers to honor orders.”

PROBLEMS WITH CASH-FLOW / CUSTOMERS DELAYING PAYMENTS

“Cash flow pressure caused by advance payment requested by suppliers and timely payment by customers.”

“Drastic imbalance in terms of internal cash flow.”

COMMUNICATION WITH CUSTOMERS

“Company representatives can no longer visit new customers.”

“Cancellation of face-to-face meetings with customers, direct interaction in dedicated events -logistics, distribution.”

“Customers no longer come to our headquarters.”

“We work in services, we sell industrial equipment…Our business relies on customer visits--now they're banned.”

“Most clients do not accept visits.”

STAFF RELATED DIFFICULTIES

“Disruption of productivity because most staff WFH.”

“Increased demand in stores and insufficient staff for shelf replenishment”

“Working from home made it difficult to solve problems.”

“We split the production team in two and the production capacity decreased.”

“Exposure of employees who need to travel and get in touch with many people.

The inherent decrease in productivity caused by part of the activity being moved home.”

“Protecting people while protecting and maintaining business at an acceptable level”

“Reduced work schedule of all employees. Spending on protective equipment, hand and surfaces sanitizers, including disinfection of all products in the warehouse.”

“Volume increase versus available staff. Extended work schedule that can meet the demand for volume processing.“

“…lack of operators (staff), panic that influences all staff…”

“Employees who have requested leave to stay home with their children.”

“Communication within teams, affected by WFH and traffic restrictions. Ensuring hygiene and safety measures to avoid the occurrence of illness among staff.”

ACKNOWLEDGEMENTS:

Special thanks to the Romanian Logistic Association ARILOG and B2B platform www.doingbusiness.ro for the trust and solid help they provided in doing this research.

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We invite you to read the whole study in the attached file below:

Authors

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DOINGBUSINESS.RO SRL
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MEDNET RESEARCH SRL