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Despite economic turbulence Thrive is now expecting to reach profitability faster than prior forecasts indicated. Thrive Markets former forecasting process did not include any immediate and significant increases in demand. As a result, predicted trends and former models held by Thrive became insufficient nearly overnight. Thrive was forced to formulate expectations for the current market ‘on the fly’, an often difficult task. As the threat of COVID-19 became more significant to Americans, executives at Thrive continued to see massive increases in demand. While products within brick and mortar locations were the first to be diminished, online retailers’ websites shortly followed. Consumers were then forced to search for secondary sources for essential products and this positioned Thrive strongly within the market. As a direct result of Thrives forecasting becoming insufficient overnight, they were forced to adapt to the market and its instability. With demand surpassing all-time highs, Thrives capacity planning also was forced to undergo significant changes. In regard to capacity planning, Thrive understood that the increase in demand would only be met if they were capable of expanding the current employee base to increase order fulfillment time. Within two months of the pandemic, Thrive utilized staffing agencies alongside new in-house operations to hire over 300 new employees. With this, Thrive was able to remove the restrictions implemented to shoppers in regards to shopping time and once again enable 24-hour ordering. Once the initial impact and challenges related to COVID-19 had resided, aggregate planning was essential in order to navigate the difficulties that remained. With aggregate planning generally representing a time period of 2-18 months, a well-constructed plan would likely carry Thrive through the duration of the pandemic. Hiring over 300 employees to assist with the surge in demand gave Thrive the ability to overcome immediate hurdles, and they have now developed an aggregate plan to reach new objectives within the next 12 months. According to executive and co-founder Nick Green, Thrive plans to add a third warehouse to its delivery network by the end of 2020 and as a result it will be able to fulfill nearly 100 percent of customer orders within two days. Additionally, Thrive warehouses will now hold at minimum 20 percent more inventory by including more suppliers within its network to ensure a surplus of product to meet it’s growing market. Although Thrive faced a challenging two months, the executive teams planning has now positioned them well for success within the foreseeable future.
It is evident that Thrive did not consider large surges in demand or significant decreases in supply chain capabilities. Prior planning could have reduced stress on the company. Forecasts by Thrive were likely formulated on weighted moving averages, and because of that they did not pay attention to unlikely but possible changes within the economy. In order for forecasting models to represent what happened in the United States, thrive could have developed ‘what-if’ models. These models would have given the executive team the ability to create strategic plans which would allow them to more successfully navigate significant changes within the consumer and supplier markets. Thrives capacity planning was suitable for current growth that was seen before the pandemic, however prior planning may have provided the company the ability to know how to immediately address and scale up or down with changes in the market. This method would help to absorb any stress the company underwent as a result of COVID-19. It is important to note that it is unlikely that any planning would have included such significant increases in demand. While extensive, an operational plan for significant increases and decreases in both supply and demand would have proven beneficial. Prior planning would have provided Thrive the ability to translate directly into the respective plan for COVID-19 and ease the challenges faced with unstable markets.
With the Covid-19 pandemic, many companies had to update their demand forecast and capacity plans, along with their aggregate plans. Thrive is no exception, especially with their business model of competing against Amazon. As the pandemic continued, many consumers were panic buying, and Amazon had to restrict their orders and available stock. Because of this, many consumers started looking towards other companies that would deliver food and everyday household supplies. Thrive was one alternative company. Thrive saw an increase in new memberships three times the number of the previous year’s new subscriptions in March and April. Seeing this huge increase in demand, Thrive ordered from their suppliers five times more than what they normally ordered in basic products to help meet this influx in demand. Unfortunately, even though the company was able to place more orders from their suppliers, the suppliers were not able to deliver and keep up with Thrive’s demand. The Chief Merchandising Officer Jeremiah McElwee had to continually change the forecast in real time due to the constant changes in demand as well as issues within the supply chain, which also affected their capacity plan. To help solve some of these issues, Thrive decided to take action to help decrease their demand and increase their capacity. To help decrease their demand, Thrive decided that they needed to reduce when consumers can place orders. They implemented store hours for when orders could be placed. To help increase their capacity, Thrive not only hired on more employees, but also changed the layout of their warehouses. The company almost doubled their warehouse staff to fulfill orders. They also rearranged what was considered a priority order and where priority items were located within the warehouse. All these changes led to Thrive updating their aggregate plan to include opening a new warehouse by the end of the year, adding more suppliers to their supply chain, and keeping a capacity cushion of 20%.
Based on the Supple Supplies article, there are a couple changes Thrive could have implemented to help alleviate some of the issues they faced. One of the changes they could have made is the use of several suppliers for any one product. Thrive ran across this issue when their suppliers couldn’t deliver because Thrive’s forecasts, along with other companies, had not been prepared for the pandemic. Another change is to Thrive’s capacity and inventory. With an increased capacity and inventory cushion, the company could have had a little bit of a buffer in their initial influx of orders. One aspect that was mentioned in the Supple Supplies article that Thrive did not have an issue with was their cash reserves. They were able to use cash to place orders with their suppliers and not increase their debt. Something briefly mentioned but Thrive was able to do was being flexible. Without their flexibility, the company would not have been able to make as many changes as they did and still fulfill consumers’ orders. Thrive learned from this pandemic experience and has plans in place to implement some of these changes.