In our last post, we discussed the concept of making a mountain on a mountain.  Like most other things, the idea of scaling the mountain created by COVID-19 is exciting at first and then can quickly become intimidating.  We hope to share the planning we are assisting our clients with and the tools we have put in place to help make 2021 a stronger financial year than 2020.

First, let’s start with the confluence of events we are dealing with currently. Rarely in history have supply and demand been so negatively impacted at the same time. Much less, by something as invisible and crippling as COVID-19. These events created a unique physical (stay at home) and mental state for all consumers.  There are also secondary impacts of COVID on manufacturing, such as the ability to remain open. For those able to stay open, the ability to maintain labor has and is still having significant impacts on production capabilities. This is all combined with a very lean supply chain built on turns, forward forecast, and logistics (availability of containers, ability to off-load containers, availability of OTR transportation, etc.) consistency, none of which still hold true today.  That is the situation we are operating in, something most reading this are very aware of.  So, how do you build a mountain on a mountain when you feel like you are at the bottom of a rock slide?

We have been trying to balance “the new normal” and “this too shall pass.”  The latter tells us that we have been through trying times before. In contrast, the former tells us, as we can all sense, what will be on the other side of this current situation is not going to be like what it was in February of 2020, whether it is the acceleration of eCommerce or the number of new consumers brought into the marketplace. We all see it in our own lives as we discuss how many more boxes were are seeing on our doorsteps, the increased trips we are making to the UPS Store to return packages, or how much more we are now pulling up to the front of a retailer to pick up our order.  Additionally, many of us started new hobbies or recommitted ourselves to old ones. You almost could not buy a bike during the height of the pandemic, no matter how bad you wanted one.  Or ask the many golf courses that were struggling before COVID and now don’t have available tee times on the weekends. Many of us disconnect our personal logic from our work logic. What I mean by that is I have been asked many times when I think the COVID bubble will burst.  I have replied that due to more consumers entering the market where they were not before (biking, golfing, gardening, etc.), I am not sure the swelling will go down.

With all that said, we still have a mountain on a mountain to build. We have to start with figuring out how high the mountain we already have is to climb. For many, this involves taking a snapshot of total sales and margin dollars and putting a stake in the sand.  But we have been going deeper, planning by week, not at the macro, because the weeks we experienced in 2020 in some cases felt like months.  Not just emotionally as we were on lockdown, but from a unit velocity perspective. Understanding the standard deviation each week to the average is an important first step in helping our client’s finance and operations teams see how steep the mountain is and the commitment level (inventory, labor, etc.) it will take to scale it. Breaking this data even further down by relevant sub-groups (product categories, seasonality, color, etc.) has proven helpful as well.

We have also been doing deep dives into POS (point-of-sale) and inventory. The POS is probably a more obvious one for most. After all, this is what drove most of the orders in 2020.  The difference between 2020 and 2021 is reaction and action.  In 2020, most of us were reactive, and who could blame us (see confluence of events above)?!  But will the POS in 2021 be like the POS in 2020?  Are we driving the car looking in the rearview mirror?  Early indications of 2021 signal a clear answer…yes!  If we run the business forecast to mirror 2020’s trajectory, we are not doing anyone justice.  “Well, of course not; there is no way we can repeat the astronomical numbers from 2020!”…not so fast.  Doing so would be discounting several factors from 2020: consumer fear, new consumer entrants into categories, stay-at-home orders, reduced income due to consumers not being able to go to work, and a lack of inventory on the shelf to serve demand.  It would also be discounting several factors from 2021, most of which are the inverse from 2021: consumer optimism, cabin fever, businesses recovering, economic stimulus packages, and a lack of inventory in the pipeline.  There seems to be a lot going in our favor for 2021, which I know is difficult to see considering the trauma shadow we are just now starting to come out from underneath.  I get it, but let’s look forward as we climb the mountain.

Now that we have established the peak that we need to start with and the things that might have held that peak back from being as high as it could have been, what do we need to do to stack rocks on that peak? As alluded to in an earlier post, we have started by selling more of what we already have, not relying on what has been the go-to for years past, selling more of the new. I know leadership groups (boards, owners, and the like) sometimes have an easier time putting a number on new customer and item sales. We have demonstrated the 2020 demand and supply gap that can be parlayed into the 2021 forecast through our analysis. This analysis has been an exciting process, like mining for gold in previously untapped mines as we trek up the mountain. We have been able to take this newfound gold and trade it in at the altar of inventory at both our partners and retailers, which has put stress on an already stretched thin supply chain (see confluence of events above), but we are climbing the mountain.

Finally, we have tried to be more creative in our analysis than ever before.  In another previous post, I mentioned our proprietary comp shop tool.  The tool is up and running and producing nuggets far beyond what we could have ever imagined. It took over nine months to perfect and build with our outside partner, but we have it to 90%. I say 90% because I think we will continuously be improving it as we climb the mountain. Please reach out if you’d like to hear more about this tool.

In closing, I want to tell a story. Many of you know how much I love being an adjunct professor at UNCG’s Bryan Business School as part of the North Carolina Sales Institute.  It is one of the most rewarding things I get to do all year, to teach Junior’s and Senior’s thinking about going into sales as a profession. After telling a Merchandising VP about my love for teaching, he reacted by saying, “Oh great, just what we need, more salespeople.”  Yes, I was insulted but took it in stride.  I knew that person hadn’t seen the work put in by many salespeople as they led their organizations to do things the organization never thought was possible, or as they negotiated to obtain something for their customers that they would never be able to disclose how hard it was to get. But for all organizations (sales, finance, operations, manufacturing, merchandising, and any I have forgotten), it is time we lock arms and pull each other up the mountain.  We are going to need each other’s help and support. KEEP CLIMBING!!