One of the most important aspects of running a big business disrupted by the pandemic has been how to get products to consumers.
Toolmaker Stanley Black & Decker saw wild fluctuations in sales last year, and the company expects more ups and downs. At Newell Brands, owner of names like Yankee Candle and Sharpie, the COVID-19 pandemic doubled its e-commerce business compared with two years ago, complicating matters like sourcing. Meanwhile, medical products maker Baxter International has rethought the tech it uses to keep track of where its products are on their way to clients.
Supply chain is not the most glamorous aspect of managing a company, but it’s crucial to success, and the pandemic has made an already complex area even more so, leading big companies to rethink everything from the tech they use to manage it to where they choose to make products.
At Stanley Black & Decker, sales fell 40% in the first month of the pandemic last year, only to increase just as sharply the following month. “We don’t have a supply chain designed for that kind of volatility,” CEO Jim Loree told the Fortune Global Forum on Wednesday.
And with many companies sourcing overseas, supply chain management has only gotten more fraught. “There is going to be a big supply chain transformation because in the past, everything was about outsourcing. It has created so much complexity,” said Ravi Saligram, president and CEO of Newell Brands. The outsourcing has kept costs down but brought with it risks on prominent display during the pandemic: If one component is missing in the production of an item, “it throws you off,” he said.
This has given rise to a whole spate of new tech companies just focused on supply chain, said Barbara Humpton, CEO of Siemens USA. They work on more sophisticated risk-based scenarios and business continuity. “We know our supply chain teams are earning their keep,” she joked.
For a company like Baxter, which makes a wide variety of critical care, nutrition, renal, hospital, and surgical products, many of which have been in very high demand during the pandemic, it’s clear supply chain management has to be updated—all the more so given recent events like port congestion and container shortages in the U.S. “The old tools are not very good,” said Baxter International CEO Joe Almeida.
The upheaval extends to other areas, of course, like customer assistance. “It exposed the gaps and weak links of companies with service operations,” said Clara Shih, CEO of Salesforce’s Service Cloud. That has led to an increase in the use of services such as virtual remote assistance that connects a person needing to repair a household item with a tech who pre-pandemic would have had to visit the consumer’s home.
The CEOs agreed that the pandemic has been a big wake-up call for corporate America to rethink all their processes and be aware of the higher risk of so-called black swan events happening with greater regularity.
“Shocks are going to come,” said Loree. “That’s the world we live in today.”