COVID-19 and warehouses

Sorry for the light posting lately. While some of our business has gone dead because of COVID-19, we are overwhelmed with business in other areas. On top of that, just like many other businesses, we are trying to anticipate what is coming and planning for contingencies.

I want to talk about risks the COVID-19 situation is creating for warehouses. This will be sort of a mishmash of information that might help some of you. Here is a list of each risk we are monitoring and some thoughts about how we are addressing them.

Government-mandated business shutdowns

All over the world and now throughout the US, local governments have issued orders shutting down businesses considered non-essential. The good news is that we are currently unaware of any precedent for shutting down warehouses that ship directly to consumers. That is especially true in the United States. Clearly, governments understand that consumers need to keep buying things and shipping directly to them is a fairly safe way to get them those things.

While this might change at any point, we currently believe that this particular risk is fairly low and we are assuming we will remain open throughout the entire COVID-19 situation.

Inventory supply problems and other supply shortages

It is getting harder and harder to operate under the assumption that the companies supplying our inventory are going to be able to avoid temporary or permanent closures. This is partly because of government-mandated shutdowns and partly because of the crushing economic conditions under which we are operating. Many manufacturers are going to fail in the coming few months and many more are going to be hurt very badly.

While there are no easy answers to this problem, we are trying to hedge that risk by boosting inventory reserves as much as possible. This has its own set of risks of course, but if you are confident that the market for what you sell is not going to completely collapse, bolstering inventory will insulate you from at least temporary disruptions in supply.

I should mention that I don’t think you should be boosting inventory with debt right now. Remember that there are a lot of things that can go against you even if you have a full warehouse of products to sell. If you are buying that inventory with debt and for some reason, find yourself unable to sell it, you may lose your business.

Transportation problems

We are based out of Atlanta and I tend to spend a lot of time watching what is happening in areas of the country and world that are a week or so ahead of us. In general, it is a pretty good bet that what you see in Italy will be in New York a few weeks later and here in Atlanta a few weeks after that.

Based on what we have seen, while there are likely to be short-term and sporadic shortages caused by transportation problems, we are hopeful that the transportation infrastructure as a whole is going to hold up. That includes the trucking industry supplying your warehouse and the package transportation industry (UPS, USPS, FedEx) that delivers to your customers.

At present, we are not seeing any problems with package delivery and we are shipping a ton of packages. Hopefully, it will stay that way. Do not believe the rumors about the USPS going bankrupt; the federal government will not allow that to happen.

Internet shortages/outages

Our warehouses are run entirely by cloud-based software. We cannot operate without the internet; of course, we cannot get new orders without the internet either.

While there are reports of internet slowdowns, it is likely that this problem can be managed. The huge streaming services may have to stream at a lower bitrate for a while and the government may have to step in to some extent but I think it highly unlikely that we will see huge internet problems.

On the flip side, if you are dependent on just one internet provider to your warehouse, get a backup and make it a good backup. Don’t rely on cell phone tethering as your backup option.

Health risks

Keeping your warehouse employees healthy is a huge priority for obvious reasons. Furthermore, in a warehouse, six-foot rules probably are not possible and there are hard surfaces everywhere that might be contaminated. Here are some thoughts on that.

First, understand that the virus can come into your environment via deliveries. The virus does exist on cardboard boxes. These boxes should be handled with care.

Just as the remote control is likely the dirtiest thing in a typical hotel room, the scanners your warehouse employees are using can be contaminated. Make sure they (and other common area tools) are wiped down on a daily basis.

We recently have moved to a glove/mask policy for all warehouse workers. While this may not work for every business, it is a reasonable and cost-effective step to reduce the risk of sickness.

Make sure your employees are educated on the virus and how it spreads. Encourage them to be healthy both in the warehouse and in their personal lives outside of work.

Hopefully, these thoughts will help some of you. Be wise, always thinking a few steps ahead. These are obviously not the days to let your guard down. The more you anticipate risks, the better you will be able to handle them down the road. My guess is that we are still fairly early into this journey.

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