In December 2016, South African consumers spent roughly R100 billion in retail buying. Despite low levels of consumer confidence, the festive season remains a peak spending time within the country, and this increase in shopping translates directly into increased demand on supply chains.
Effective peak season planning and the resulting operation performance does not happen by accident, and with the increasing accuracy of data analytics, this process can be fine-tuned to a much higher degree of accuracy than ever before. Peaks season planning begins with the assessments, and insights garnered, from current operations, buyer behaviours and economic trends likely to impact peak forecasting. Increased demand requires considering 4 key elements within any supply chain, namely inbound logistics, system and resource capability, and outbound distribution.
How do we get it right?
Inbound logistics is arguably the key to successful peak planning, as any delay in this process will divert attention away from warehouse and distribution operations when the supply chain is under immense pressure. Inbound transit times require accurate demand forecasting to facilitate inventory ordering many months in advance. Dock scheduling, capacity and cycle times are critical when the increased product requires processing and accepting into a warehouse. Specialised product lines may need new data, and obtaining and entering such into the system before arrival will facilitate the swift movement of the stock into the warehouse. Larger inbound shipments typically require high usage of reserve storage areas, and it is useful to consider moving slow-moving items into such reserve areas to accommodate for high volume seasonal goods. Inbound logistics should be in sync with Sales strategies to ensure that the supply chain is aware, and prepared for the release dates of promotional campaigns. Any misalignment between the two can wreak havoc to both operations, and ultimate customer satisfaction.
Challenges we can expect
It is not unusual for increasing pressure from additional SKU’s, orders and customer tracking to throttle the best IT systems, and this can be further exacerbated through planned system downtimes or internet disruptions. Communication and coordination between employees, department and systems are vital for the handling of volume, and it is therefore critical that any maintenance or upgrades are completed, and tested, well in advance of the peak. An increase in demand translates into the need for more staff, from the warehouse through to drivers and other support functions. Temporary staffing is not only an additional cost in the system, but such employees require intense training to be able to perform in times when the system is most pressurised. Last mile drivers and support staff often represent the face of your organisation, and as such, become a crucial determinant of customer satisfaction. Insufficient on-boarding can not only result in operational delays, but brand impact long after the season ends.
The outbound network becomes particularly bottlenecked during peak season, with many industries competing for the same network infrastructure. Added road congestion and extended shopping hours mean that deliveries take longer, and are required for more prolonged periods within a day. Requests for expedited freight or special arrangements are commonplace as the peak reaches its zenith, and without careful consideration as to the extent to which these will be accommodated, such instances can disrupt the whole network.
A robust peak season can augment a company’s financial performance significantly, with many retailers experiencing as much as 25% of all sales during the holiday season. The keys to effective planning are understanding your supply chains reality, determining potential bottlenecks, focused priority management, ramping-up of resources and communication between departments. As the countdown to the 25th December begins, it’s worth considering that the right supply chain partner could help you have a jollier time next year.