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The festive season is a time of joy, celebration, and… logistics chaos? Let's face it, the holidays are a jolly good time for everyone except for the retailers bracing themselves for a rollercoaster ride of logistics lunacy. Retailers and e-commerce businesses often experience a surge in orders, placing immense pressure on their supply chains, which means pulling up the socks for a festive season full of logistics adventures as consumers gear up for the holidays. Managing logistics during this peak period can be challenging, with companies often facing an array of hurdles. Navigating logistics hurdles becomes paramount to meeting customer expectations and maximising sales. As a SaaS-based SCM platform provider, we explore strategies and solutions to overcome these challenges and thrive during festive season sales.
A recent survey by Outbrain revealed that while global retail e-commerce sales will continue to normalize and grow in the current and next year, the number of worldwide digital buyers will rise by 3.1% to reach 2.89 bn. Another study from Kenco’s found that 60% of consumers are concerned about product availability, while 54% are concerned about their ability to afford gifts, suggesting that holiday buying behaviour could shift even earlier. Consumers are even putting an order on layaway, paying overtime, or securing the item before it flies off the shelf. Further, two-thirds of Indian shoppers intend to spend as much or more this festive season compared to the last festive season. Companies like Amazon didn’t want to miss the bus and decided to deploy over 1500 additional resources to meet the surge over festive season, only in the US. In India too, logistics provider Delhivery recently announced plans to create over 75,000 seasonal jobs pan-India, and so is the case with a few other brands.
For brands, the holiday season is a glittering gold mine, where a large chunk of their annual turnover hinges on the excited jingle of shopping bells. Consequently, many brands accelerate their production and supply efforts during this period, resulting in a surge of freight orders. But here's the grinch in this festive equation: logistics carriers. It doesn't end there. Most carriers either fold their wings completely or fly reduced routes during the holidays. Faced with soaring demand and orders, carriers can sometimes get a little too enthusiastic and overcommit.
Common Disruptions
No matter your existing disjointed or faintly linked systems may have served you well for the entire year, but festive seasons are infamous for causing even the most reliable systems to fail. Let’s have a look at the potential disruptions that can affect the supply chain during the peak season:
1. Stockout and Overselling: Running out of stock and overselling have the potential to result in missed sales opportunities and revenue loss. Additionally, the absence of a Warehouse Management System (WMS) can contribute to overstocking, which involves acquiring more inventory than necessary to meet order demands. Overstocking not only escalates storage expenses but also heightens the risk of inventory obsolescence.
2. Festive Rush, Delivery Crush: The increased volume of orders during the festive season puts a strain on shipping infrastructure, leading to delays. Additionally, limited capacity in warehouses and transportation networks further exacerbates these delays. Companies need to plan their shipments proactively and explore alternative shipping options to mitigate delays.
3. Procrastinating Shoppers and Delivery Challenges: Many consumers postpone their holiday shopping until the final moments, resulting in a sudden increase in orders right before the holidays. This places significant strain on fulfillment centers and delivery networks, creating challenges in ensuring timely deliveries. Companies should adopt efficient order management systems and leverage technology to streamline the fulfillment process and better cope with the surge in last-minute orders.
4. Festive Cheers Return Fears: The festive season witnesses a notable rise in product returns, driven by customers changing their minds or receiving unwanted gifts. Effectively handling returns becomes challenging, particularly with resource constraints. It is crucial for companies to establish a clear return policy and implement efficient reverse logistics processes to facilitate a seamless experience for customers.
5. Increased Labor Demand: The surge in order volume during the peak holiday season increases the demand for labor, creating a mismatch with the available workforce and contributing to delivery delays. Furthermore, companies may need to recruit seasonal employees to meet order demands, adding to their operational expenses.
6. Meeting Customer Expectations: From last-minute gifts to surprise treats, the festive season is all about keeping customers happy. But one bumpy delivery can turn their holiday joy into a lump of coal. To earn loyal fans and repeat business, companies need to ditch the clunky supply chain and invest in a streamlined system that prioritizes efficient order processing and delivery, guaranteeing that every package reaches its destination.
How to Deal with the Ordeal
So, what can brands do to navigate this complex logistical framework and ensure their holiday deliveries don't end up under the wrong tree?
1. Forecast Consumer Demand: Using historical sales data, businesses can predict consumer demand. Although these calculations may not be entirely precise, they can provide a close estimation.
2. Warehouse Optimization: Supply chain executives should concentrate on maximizing warehouse space, introducing automation and robotics, and establishing safety protocols for warehouse personnel. Warehouse optimization plays a pivotal role in managing the festival rush, especially as timely replenishment becomes imperative. During peak periods, effective inventory management, carefully planned layouts, and streamlined order picking are essential for minimizing lead times and meeting customer expectations.
3. Addressing Transportation Delays: To tackle this challenge, businesses should adopt a multifaceted approach. This includes diversifying their logistics partnerships so they’re not overly reliant on one provider. Use of technology can also help suppliers enable real-time shipment tracking and provide regular updates.
4. Omnichannel interactions: With advancing technology, customers can now conveniently place orders from their homes and opt for in-person pickups at a physical store. In the UK, IKEA incorporates this into their supply chain strategy, allowing customers to order IKEA products and retrieve them at a nearby store at their convenience. This approach is often termed as a self-service model and involves order fulfilment through zero-contact delivery.
5. Dynamic Route Planning: Utilize SaaS-based Supply Chain Management platform to incorporate dynamic route planning. This guarantees effective transportation management by optimizing delivery routes and reducing delays, especially during periods of high demand.
6. Buffer Extra Time: Delaying decisions until the eleventh hour is never wise in the logistics realm, and it becomes a recipe for disaster choice during a holiday season marked by limited capacity, weather-related delays, carrier challenges, and other unforeseen seasonal events. Urgent holiday deliveries often coincide with a significant increase in rates and scarce capacity. Taking proactive steps well in advance is crucial for cost containment and ensuring timely delivery standards.
7. Scalable Cloud Solutions: Ensure that your SCM system is hosted on a scalable cloud infrastructure. Scalability is critical to accommodate increased demand during festive seasons without compromising performance.
8. Hassle-free returns: Historically, increased sales during the holiday season have often resulted in a higher number of returns. Last year, between November and mid-January, at least 10%, and potentially as much as 16%, of e-commerce orders in the U.S. were returned each week.
While a substantial volume of returns may not initially seem ideal, it presents a significant opportunity to demonstrate to your customers that you value them beyond their monetary transactions. Additionally, your Supply Chain Management platform should be capable of orchestrating a seamless return management process. According to a study by FedEx, 98% of shoppers expressed a willingness to order from a brand again if it offered fast and convenient returns, with 56% even indicating a willingness to pay for hassle-free return services.
9. Post-Season Analysis: Perform a thorough analysis post festive season to assess the efficacy of deployed strategies. Identify areas that require improvement and gather insights to refine logistics planning for upcoming peak seasons.
Conclusion
The festive season can present numerous challenges in the supply chain, making it challenging for sellers to bridge the gap between efficient order fulfilment and delivering a memorable customer experience. Fortunately, Tata BB Matrix offers a solution to effectively navigate these logistics hurdles through the adoption of technology-driven solutions. By prioritizing real-time analytics, fostering enhanced collaboration, and continuous optimization, companies can not only meet but exceed customer expectations, ensuring a successful and seamless festive season. The insights gathered here suggest that retailers have an opportunity to glean lessons from the peaks and valleys of the 2022 season without the same level of uncertainty experienced in recent years — it's time to apply the lessons learned from the previous year.
Brace yourselves – it's time to jingle all the way through the chaos!
