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. 

 

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