Christmas is Coming. The Goose is getting Fat. Is Your Supply Chain Ready?

Stephen DeAngelis

October 19, 2018

Let’s be honest. If your supply chain isn’t ready for the holiday shopping season by now, it’s probably too late to improve it very much. Preparations for the holiday shopping season really need to begin around the first of the year. But, as Paul Myerson, an instructor in Management and Decision Sciences at Monmouth University, asks, “Where to begin?”[1] He notes, “An increasingly complex and varied competitive landscape and demanding customers [makes supply chain operations harder than ever to master].” Seasonal products only add to the complexity of holiday shopping. Marcie Geffner (@marciegeffner) explains, “It’s no secret that timing is everything when it comes to seasonal products. Successfully identifying trends, placing orders, receiving shipments, stocking shelves, advertising end-of-the season markdowns and returning or liquidating unsold stock all depend on smart day-to-day decisions.”[2] This built-in tension between early planning and late decision-making is enough to give any supply chain professional a holiday headache.

Preparing your supply chain

Geffner provides some of the answers to Myerson question about where to start. She suggests nine areas deserving of attention. They are:

1. Gathering data. Geffner writes, “There’s really no substitute for reliable hard data about your customers. And these days, analytics are everywhere. While this intel can come at a price, the more you know about your customers’ demographics, preferences and shopping habits, the better prepared you can be to manage seasonal demand.” For example, Enterra’s Shopper Marketing and Consumer Insights Intelligence System™, powered by Enterra’s Enterprise Cognitive System™ (AILA®), uses digital peer-to-peer data, ontology of the individual data, cross-channel behavioral data, integrated data services, and market dynamics insights to provide the kind of 360-degree view of a consumer that can improve conversion rates.

2. Negotiating delivery terms. Everyone knows customer experience often ends at the consumer’s door. Getting delivery right can make or break a company’s reputation. Geffner notes, “Taking delivery of seasonal products days instead of weeks or months in advance can dramatically lower your warehousing costs. Shop around for suppliers who can work with you to optimize your deliveries of seasonal products without charging you peak-of-season rates.” The staff at Material Handling & Logistics (MH&L), add, “Prepare to use the spot market to make up for excess demand not covered by carriers. Shippers can leverage their negotiated rates from their existing carrier relationships, and compare the full depth of market pricing across the spot bidding marketplace to find the best rates for the best service or to find extra capacity to meet excess demand.”[3] When selecting a carrier, keep the consumer in mind. The MH&L staff explain, “Give customers visibility to their orders. Using technology, retailers can provide Amazon-like experiences by tracking shipments in real-time and alerting customers if orders will be delayed. Carriers can house shipment information letting suppliers and customers know where their goods are and when to expect them to arrive at the next destination. With complete visibility, businesses can get more details on bottlenecks or specific incidents if there is an issue such as product damage or late delivery.”

3. Being flexible. “Recognize that seasonal supply chain management is rarely perfect,” Geffner writes. “Rather than bemoaning that reality, accept that even your best-made plans will likely be at least a little off the mark and be ready to make adjustments throughout the season as demand for limited-life products rises and then drops off.”

4. Making connections. Collaboration has been a topic of interest in supply chain circles for a number of years. Collaboration begins with connectivity. Geffner suggests, “Get to know your suppliers and how they operate their businesses, so you can identify vulnerabilities that could prove problematic for you as well as them.” Connecting to more carriers can also provide more flexibility. The MH&L staff explains, “Get more rates by connecting with more carriers. Connect to a global community with thousands of carriers, then compare all their rates side-by-side and choose the best carrier for each shipment, leading to substantial cost savings and better customer service.”

5. Making contingency plans. The military is fond of noting no plan survives first contact with the enemy. Life happens. Geffner writes, “Ask yourself ‘What if …?’ and plan in advance how you’ll respond if a natural disaster or geopolitical incident disrupts your supply chain at the height of your most important holiday season.” Don’t stop at two “what if” questions, the more questions you ask the better prepared you will be for the unexpected.

6. Lengthening your timeline. As I noted above, planning for the holiday season should start right after the last holiday season ends. Geffner adds, “The year-end holiday shopping season that accounts for a large proportion of many businesses’ annual sales doesn’t just seem to get longer every year — some shoppers now begin to hunt for holiday bargains as early as August or even year-round. You might need to start planning next year’s season as soon as this year’s season ends.”

7. Monitoring trends. Retailers who identify hot trends early can be winners in the holiday sales sweepstakes. Nevertheless Geffner suggests a little caution. She explains, “Be on the lookout for new products that your customer data suggests should sell well, but be cautious about trendy new seasonal items that might not turn out to be the next big thing. Many new products fail or take years to attract a large base of customers, while tried-and-true traditional favorites sell well year in and year out.”

8. Liquidating leftovers. Retailers are well aware not all seasonal merchandise sells and that can be a problem. Geffner explains, “Keeping seasonal goods stocked after demand wanes takes up valuable shelf space and may give your business a dated appearance, as few customers will purchase products that are long out of season. A quick sale (or return of goods to the supplier) enables you to regroup and restock for the next surge of seasonal demand.”

9. Tracking outcomes. Although life doesn’t always repeat itself, history can teach valuable lessons. Geffner notes, “Rather than rethink your supply chain management strategies for each season from the ground up year after year, keep records and written notes about what went well and what didn’t during each seasonal surge. Over time, these records will help you refine your systems, create efficiencies and improve your results.”

Summary

Myerson warns, “If your [supply chain] isn’t [ready for the holiday shopping season], then you’ll suffer from sub-par performance and higher-than-expected costs to recover from service failures and be at a competitive disadvantage.” The earlier you start preparations and the more collaborative your efforts the more likely your company is to find itself in a winning position during the holiday shopping season.

Footnotes
[1] Paul Myerson, “Don’t Wait Until It’s Too Late to Get Your Supply Chain Ready for the Holidays,” IndustryWeek, 4 December 2017.
[2] Marcie Geffner, “Prepping Your Supply Chain for The Holiday (or Any Busy) Season,” Dun & Bradstreet B2B, 4 October 2016.
[3] Staff, “6 Ways to Get Supply Chains Ready for the Holidays,” Material Handling & Logistics, 27 September 2018.