How to manage supply shortfalls

COVID-19 has had a broad impact on our lives. 

One of the most clear effects, as many of you already know, are supply chain disruptions. 

Some clear examples are : toilet paper hoarding, yeast for baking and spot supply shortages.

When such events happen, retailers, wholesalers and manufacturers find them selves not being able to fullfill customer demand. 

In this article we will cover six tactics to manage these shortages.

•  Give priority to the most important customers
  • Try to serve customers where the return on sales provides your company with more margin but also higher sales volume. Don't forget to serve the clients that have a lower probabiliy of churning.
•  Make the best of the situation
  • Incentivize clients to sign long term agreements with your company in order to maintain constant supply throughout the year.
•  Treat every customer with the same conditions 
  •  As it happened with the Fukushima disaster, Japanese companies decided to treat each client in the same way. Hence allocate uniformly your products in order to avoid favoristisms.
•  Shape demand 
  • A great example of demand shaping that we have seen, was with Dell computers. When there was a shortage of parts required for computer manufacturing, the company highered prices on products that required scarce parts and lowered prices on products that had more spare parts available. This is useful for not ruining customer relations.
• Modify product offerings 
  • Instead of raising prices and isolating clients, reformulate your producs. Reduce the amount of raw material needed for production by using alternative and more plentiful raw materials, with out impacting quality and performance.
• Weigh each course of action
  • Consider how the decision your company takes impacts the company internally and externally, meaning its clients. While making the most strategic decision, take into consideration the following aspects: profits, market share, reputation, survival of your customers, ethics, long term value and growth opportunities.