An Open Letter Re the Covid-19 Situation here in Bali
The pandemic has hit Indonesia very hard economically. During the time of the pandemic here in Bali, there are a number of challenges which every business is experiencing here and globally in regard to our front end supply chain, and back end delivery chain.
Front End Issues
Like everyone in the homewares export business, we are naturally having challenges with stocking some items because our suppliers are closing, reducing output, or operating at reduced capacity. Some of our long term valued suppliers have closed permanently because of a lack of income and orders; others are not answering our calls; others are over committing and under delivering because their workers have left; others are saying they can do orders, but provide poor quality items (using untrained staff), then walk away saying its our issue - and we are a Balinese company!
All this of course affects our normal order processing, quality levels & the delivery time it takes to get an order to you as a customer.
The other issue with supply is inventory. Our normal inventory stock patterns and forecasting no longer apply during the pandemic, as customer purchase patterns have changed significantly. Our fast moving and slow moving item lists, and our own purchase pattern, have changed overnight, and we have an oversupply of some items, and an undersupply on others. This has meant we are doing a lot more "made to order" items than normal to meet order demands, rather than draw on our own ready made stock items.
Back End Issues
We are also experiencing issues at the back end in regard to order delivery.
For Sea Shipping by FCL or LCL, most container transit ports are experiencing a severe back log in clearing container arrivals because of a shortage of wharf staff, leading to container congestion. This congestion in turn leads to a shortage of containers in other parts of the world. This is leading to increased container rates as competition for containers pushes container prices up, leading to higher ship rates for consumers from cargo agents and freight forwarders. This also results in a slower shipping time to destination port than initially planned, meaning ship arrival date delays at the destination port.
Order shipment by air is also causing issues. Our normally thriving online retail business with shipment by air for smaller orders is almost non-existent. The air couriers are claiming reduced cargo planes and clearing services have caused a cost increase which they are happily passing onto sellers. The rates charged per kg now by air couriers is so high that at times the air cost is 4 times the value of the item being bought! Our online retail ship rates are automatically linked to our air courier corporate rates, and we are experiencing a very high abandoned cart rate, as customers refuse to pay the exorbitant air ship fees.
We are advising all our online retail customers to move their orders where possible to delivery by sea, rather than air. We are also advising our FCL & LCL customers to leave container stuff date windows open, so we can ensure all of order item are delivered. Any customer starting with a stuff date and working backward is ending up with item delivery issues. Our staff are collecting ready made items as we have them for orders, and when we get to around 80% complete of ready stock and made to order items, we are working with the cargo agent to establish stuff dates and advising customers. This approach is also working well in reducing down the CBM wastage in our FCL orders, and providing a more accurate ship cost.
We are also advising customers to expect longer than normal production lead times, as our "made to order" item verses "ready stock" item ratio increases.
We are asking all our customers to be patient during this unusual period. Some folks get it, but others do not. This is an exceptional and challenging time, but especially so in a country like ours that has a poor social welfare system, no business or company support, no unemployment benefits etc. and a weak response to the pandemic. The best news is that we have not had to let any of our staff go, and we are still able to pay full salaries and benefits, because of the continued support of our customers. This means a lot to us, our staff and their families. Thank you.
We ask for your understanding as we work through the challenges presented by this pandemic.
We are praying for Bali and the world.
Please stay safe,
Ayu, Alexa & Chris
Canggu & Co