Preparing Your Supply Chain for the Holiday Season

 

The peak selling season is only a few months away. It’s ideal for planning your holiday fulfillment strategy in the summer. Most consumers are already researching what they will purchase for their friends and family in October. For 2021 companies are already reporting record-breaking sales for back-to-school. The National Retail Federation (NRF) recently updated its 2021 forecast to more than $4.44 trillion this year as the economy accelerates its recovery pace, foreshadowing a blockbuster holiday season. It can be challenging for companies of all sizes to handle a monumental surge in volume while delivering the right products on time and at a reasonable cost.

Build Your Forecast

Although 2020 was an unusual year that accelerated eCommerce by a decade, it is still crucial to have a well built forecast model. Build a forecast model with the 2020 data and estimate what you would sell with a similar percentage increase as last year, factoring in any external factors you need to account for. For companies with little or no historical data, don’t be afraid to ask around and seek advice from others in the same industry. 

Getting as detailed as possible in your forecast will help you be better equipped. Break down volume by sales channel (eCommerce and retailer) at both a unit and order level. By segmenting your projections, you will have more accurate forecasting for this quarter and the future.

Pro tip: The heaviest shipping period of the year is between Black Friday and Christmas Eve, so model your volume day-by-day and factor in marketing promotions.

Connect Marketing & Logistics

Marketing and promotions will play a significant role in your sales spikes. Make sure all departments understand when your marketing campaigns are live. Having insights into your promotions that will increase order demand to the warehouse is critical to your team’s success. This will help you avoid getting a stockout, and understand which events and announcements drive the best customer demand.

Communicate with Your Carrier

Consumers expect short transit times year around, and they are especially critical for holiday shipments. Communicating with your carriers is imperative, and it is better to communicate earlier than later so you understand their limitations. 

Get your carrier’s holiday cut-off schedule sooner than later. Understanding your carrier’s cut-off times is extremely important to your shipping strategy. Communicating this clearly to your customers to ensure they have the products they want in time for the holidays. This year Christmas is on Saturday, which means carrier pickups will need to be scheduled accordingly. The three days before Christmas might not be a viable time to expect anything in your supply chain to be moving. 

You’ll also need to ensure that your carrier has your projected sales volume’s local and national networks capacity. Be sure to ask your supply chain partner about any peak surcharges or additional carrier fees if they have plans to send additional trucks to pick up your increased volume.  

Conveying these changes, and communicating them to your customers, is key to optimizing orders and keeping customer service issues low. 

Pro tip: Expedited shipping can be an asset to your shipping strategy and build customer satisfaction and loyalty. This allows your customers to receive your products until the very last moment of the season. Same-day delivery, in-store pickup, or free returns are also widespread changes, but will add complexity and require a lot of planning. Be sure to research each delivery option and have them in place well before the season arrives. If you work with a 3PL or 4PL, they will be instrumental in helping set these up for you.

Don’t let Materials be an Afterthought

Take stock of warehouse space, equipment, shipping materials and staff. Have a contingency plan if you realize you are going to run into space issues. With the rise of eCommerce, warehouse space is at a premium, so locking in your plan sooner than later is important. If you use multiple distribution centers, now is a great time to balance your inventory across facilities. By analyzing historical shipment patterns and delivery data, you can help minimize shipping costs and delivery times and increase customer satisfaction. 

Don’t let shipping materials like labels, boxes, and dunnage be an afterthought —use your forecast to stock up on these. Identifying and addressing these needs ahead of time can prevent major headaches at the height of the holiday season.

Third-party/ Fourth-party logistics providers (3PL/ 4PL) are optimized to accommodate the peak holiday season volume, helping to meet customers’ requirements without adding overhead costs. If you work with a 3PL, be sure to communicate your different needs to them sooner than later. 

Grow Your Team

If possible, expand your team during Q4 to ensure you have the right amount of help. Having the extra support can help ensure you have excellent service throughout the holiday season. Sufficient training and cross-training will be critical to that success. Suppose you are a small company and cannot afford to hire additional full-time staff. Plan to have essential people in your network on-call throughout the season. In that case, these could be your friends and family, advisors and board members, or a reputable temp agency that you can call at the last minute. Above all, be sure to communicate what you expect of them through the holiday season to your core team. Will they be required to work on the Friday after Thanksgiving and also on Christmas Eve? 

Pro tip: Most warehouses run a standard forty-hour week. However, there are seven days a week and 24 hours a day, which means you could increase your throughput capacity by 3x. Look at shifting schedules on off-hours or weekends to meet your increased volume for the holiday season.

 

The Bottom Line

Develop a strategy now to ensure a successful holiday season. Be sure you have the proper systems in place to collect all the right data to note any changes you’d like to implement for 2022—it’s never too early to start planning for the peak selling season. 

 

Offsetting our Carbon Footprint

Expak Logistics’ commitment to service extends to our community as a whole, which is why we continue to work with our clients to expand our carbon offset program. 

Over the years, Expak has partnered with Dot Neutral. This organization matches businesses with carbon emission offset initiatives, including reforestation, renewable energy such as solar and wind energy, capturing harmful gases, and more. Expak invests in a series of projects that reduces or negates the amount of CO2 released into the environment each time a package is shipped.

Concurrent with our Mission Statement, Expak is determined to create overall value across all stakeholders, including customers, employees, shareholders, vendor partners, and our surrounding community. 

How it works

We evaluate the following criteria to reasonably estimate the CO2 emissions generated (in kg) for each delivery:

  • The approximate weight of a typical delivery
  • The mileage traveled via Expak vehicles 
  • The type of vehicles utilized to execute such deliveries 

In partnership with our clients, Expak will invest in an equivalent value of green energy initiative(s) to offset our CO2 footprint.

  • Location: Bethel Wind Farm in Castro County, TX
  • Fuel Resource: Wind
  • Project Description: 120 wind turbines manufactured by General Electric Renewable Energy
  • How it works: Each turbine is mounted on top of an 80-meter-tall tower and has a 116-meter, three-blade rotor connected to a generator. Multiple wind turbines are electrically connected in parallel to the main power transformer, where the energy is converted from 34.5kV to 115kV for interconnection.
  • Current Market Cost: $0.0016 per kg

 

Expak is committed to positively influencing our community by offsetting over a million pounds of carbon emissions. Learn how you can partner with Expak today to ensure your packages are delivered on time and that you’re boosting your social responsibility efforts along the way. 

3PL vs. 4PL: What is the difference?

The COVID-19 pandemic has forever altered shopping behaviors and how consumers’ online shopping habits. Reports show that more than half of consumers now shop online more frequently than they did before the pandemic, accelerating eCommerce a decade. 

For brands to succeed, they need to meet customers where they are; online. Suppose you’ve seen your brand scale online. In that case, you may be searching for a new outside partner to help with your supply chain, weighing the differences between a third-party logistics (3PL) provider and a fourth-party logistics (4PL) provider.

We’re here to help you learn about each of these logistics models. 

 

What is 3PL?

A third-party logistics model manages and supervises part or all of the supply chain, from distribution, warehousing, and fulfillment. A 3PL can handle everything, including:

  • Transportation
  • Warehousing
  • Picking and packing
  • Inventory forecasting
  • Order fulfillment
  • Packaging
  • Freight forwarding

The advantages of using a 3PL provider allow you to focus on other critical aspects of your business like product development, sales, marketing, and overall growth. In contrast, the 3PL provider handles their transportation and logistics needs. What other benefits does choose a 3PL provider offer?

  • 3PL providers can leverage lower, more competitive shipping rates
  • The ability to scale services up and down as needed in a cost-effective manner
  • Offering better customer experiences, including expedited shipping, 
  • A chance to expand and reach broader markets
  • Lowered risk of shipping delays and other unforeseen circumstances
  • Cost savings in the warehouse through inventory management, forecasting, and more optimized inventory levels

 

What is 4PL?

How does fourth-party logistics vary from 3PL? A 4PL provider also referred to as a lead logistics provider or an LLP, takes all the same services offered by a 3PL provider and ramps up their offerings by managing resources, technology, infrastructure, and even handling external 3PLs to build fully-formed supply chain solutions. A 4PL provider is a single point of contact for logistics, warehouse management, consulting, and planning. 

Besides the services offered by a 3PL provider, 4PL services include:

  • Logistics strategy
  • Analytics of spending on transportation, analysis, capacity utilization, and carrier performance
  • Consulting and planning
  • Inventory planning
  • Weighing various logistics models
  • Coordinating a broader retail supplier base
  • Managing reverse logistics, returns, and refurbishment

Essentially, a fourth-party logistics provider is an independent party that’s accountable for integrating and assembling resources, technology, and services within their organization and with external services and organizations from a single interface, all aspects of the supply chain. 

A 4PL provider helps by taking over the entire logistics process for your business and offers consultation to help you achieve strategic goals in tandem with their ongoing operational support services. They can help you avoid costly mistakes, develop a successful recurring revenue business strategy, and find ways to improve your business processes from end-to-end. 

 

The Key Differences Between 3PL and 4PL

When examining the significant differences between 3PL and 4PL providers, there’s no clear-cut definition of the differences between them. In general, a 4PL offers more services than a 3PL. What is one of the services you might expect from a 4PL? Reverse logistics. Many 3PLs don’t have the resources to handle reverse logistics. 

eCommerce businesses or subscription services where returns are necessary and consistent turn to 4PLs. Some—but not all—3PLs can handle reverse logistics. 

What are some of the overall differences?

Online retailers will choose 3PL for transportation, warehousing, and distribution. At the same time, they may select a 4PL to fully manage all supply chain operations, including carriers, warehouses, and reverse logistics, among other consulting services, for full end-to-end support.

 

Which One Should You Choose?

Which type of logistics provider is right for you—the third-party logistics provider or the fourth-party provider? It depends on what level of service you require.

Are you looking to pick and choose from a select menu of services? You can select different 3PLs to handle each step in your supply and logistics chain for warehousing, shipping and transportation, and distribution. This is also a strong choice for smaller companies who need support but aren’t ready to invest in more hands-on support from a 4PL provider.

If you are looking for more internal management and a single interface in dealing with multiple service providers across the entire supply chain, as well as ongoing support from a trusted advisor and a complete reverse logistics service, the most robust option for you is a 4PL. 

Do you need a logistics provider that understands your industry, such as healthcare or subscription boxes? What about a provider that can scale if your business experiences large seasonal swings? These are all critical questions to ask before you choose a 3PL or 4PL provider. 

Some 3PLs offer more than others and will provide more analytics support than others, managing things like your customer to understand better how you’re performing and pinpoint growth opportunities. It truly all depends on what you’re looking for.

 

How Expak Can Help

Not all supply chain solutions are the same. With modern, technology-first solutions, ongoing analytics, and individualized customer service at scale, Expak’s modern solutions offer all the services you need to provide exceptional customer care to retain customers for a long, long time. We’re small enough to care, yet large enough to scale with your business. We’ll continue making improvements in technology and customize to your needs, rather than asking you to bend to meet our systems. 

You need a smart solution that will free you up to focus on building the business you’ve always imagined. 

 

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