5 Benchmark Practices: How to Prepare Logistics Force for Holiday Season
It’s that time of the year when shippers – manufacturers, retailers, and distributors – are on their heels, gearing up for the holiday season. With festive peak adding omnichannel pressures on shippers, it is important that companies prioritize their logistics force to effectively manage customer orders.
No matter what service or product distribution it is, the growing diversity of supply chain and managing reverse logistics seems to be an on-going challenge. Logistics technology, shipping strategies, and effective planning have helped brands attain supply chain success and manage returns to keep customer service levels up.
Here are top 5 benchmark practices that will help you prepare logistics force for the holiday season and turn the holiday rush into rewards.
1. Effective inventory handling
For brick-and-mortar chains, predicting precisely as to how many of each item the company will need at every retail location is a complex math. During the holiday season, when companies sell tons of volume and throw a bunch of inventory at it, the following months can find them surrounded by a pile of unsold goods leading to issues of reverse logistics maintenance.
Quantum Retail’s software solution, Q, has helped brands with forward and reverse logistics by tracking sales of goods at specific locations over time. Using accumulated knowledge, the brand strategy, for example, the software predicts demands during various periods.
Q suggested a user buy $90 million less in inventory for the coming holiday season than the company had bought the year before. Even though the user was a bit skeptical, they purchased about $70 million less inventory. Greg Wilson, vice president of field strategy at Quantum Retail Technology says, “As rightly determined by the software, it was the holiday season when the economy first tanked. Q had identified customer buying trends and its impact on the holiday shopping months in advance to save the company from a terrible loss.” Obviously, when forward logistics are maintained, the reverse logistics does not pose a great challenge.
2. Disciplined supply chain management
Whatever is the brand’s inventory strategy, it must have an effective supply chain management to ensure on-time delivery. Especially during the holiday peak, paying close attention to purchase orders can save shipments from falling behind.
Companies will have an upper hand if they maintain well-built supply chains with adequate controls and measures and use 3PL partners to ensure vendor compliance. Even companies like Amazon are turning to 3PLs (third-party logistics providers) to help fulfill their customer demand.
Setting the deadline a little ahead of time can also be a part of disciplined supply chain management. This is because even with the best controls, production delays are a harsh reality.
During peak holiday crisis, a delay in production cycles might force a retailer to shift some volume from ocean to air, sparking a search for air cargo capacity. In 2012, when Apple introduced iPhone 5, an air cargo backlog occurred through the north Asian hubs. The shipment planning, however, was adequate and the phones hit the market on time.
3. Handling domestic transport capacity
Another thing to note while considering holiday logistics is the ability of domestic transportation capacity to handle huge volume in the days prior to the holiday season. Unyson Logistics, the 3PL arm of Downers Grove, plan their domestic transport capacity right from tracking retailer’s footprint – for example, new or closed stores, or relocated DCs. Donald Maltby, Unyson’s chief supply chain officer says, “We set up a strategy for accomplishing successful retail season by determining retailer footprint.”
It is important that retailers build strong relations with their transportation suppliers. By making themselves important enough to the carrier’s success, brands strategizes that the carrier will provide capacity when space grows tight. The retailer might negotiate incremental cost, agreeing to pay more during festive times.
Obviously, retailers should do cost-cutting – one way is to cut transportation cost. During the peak season, companies can consolidate freight and build multi-stop truckloads. A 3PL provides opportunities to gain those economies of scale by collaborating with other shippers.
4. Hiring seasonal staff
During the holiday surge, retailers are required to boost capacity in their distribution centers by bringing in seasonal workers.
Newegg, a leading online electronics vendor, finds that recruiting and training new staff during the holiday time is a challenge. It is important that skilled labor workforce is in place to cater rapidly growing order volumes.
Newegg’s supply chain team begins its holiday logistics planning one calendar quarter ahead. Even though the company maintains an efficient supply chain around the year, preparing for the holidays differs from managing day-to-day operations in several ways. Apart from planning inbound shipments, warehouse supplies, and transportation needs, the company appoints new people early enough to be properly trained, taking care that this does not be an additional cost.
5. Implementing new technologies
Investments in picking and packing technologies have proven very helpful to companies like Newegg. Kunal Thakkar, vice president of operations at Newegg says, “We have modified and enhanced our in-house warehouse management system (WMS) to support the operations with a pick-to-light system and an automated outbound sortation system. We have also adapted new scanners for higher accuracy and efficiency, as well as invested in new packaging technologies.”
Companies find that innovations in technology to store, move and direct and flow of goods inside a logistics facility manage the holiday- rush in a better way as compared to manual labor.
Also, automated equipment running at variable speeds can be immense. During the holiday crunch, when the window is short and the company needs to push more cartons through the facility, the equipment can be set at a faster speed to create a higher ship rate. Temporary or seasonal staff can easily handle a large number of cartons rolling off the conveyors.
Preparing for the shopping frenzy takes a toll even on the most intelligent of brands. The key to handling logistics — both forward and reverse supply chain, is to start early and plan well. Creating sales forecasts, coordinating with the marketing team to support promotions, renting equipment, recruiting and training temporary staff, stocking supplies, and managing facility needs are some of the ways companies can gear up their logistics force to prepare for the holiday season.
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