Boost Holiday Sales With a Strong Supply Chain: Last-Minute Tips
BySteve Sensing
Last year, 37.3% of “Black Friday” consumers began shopping between 8 p.m. and 11:59 p.m. on Thanksgiving Day. Shopper traffic over the two-day Thanksgiving Day and Black Friday period at retail outlets totaled more than 1.07 billion store visits. Sales during the two-day period were $12.3 billion, and online sales grew an explosive 18.5%.
After seeing the financial benefits of opening earlier, more retailers are expected to open their doors on Thanksgiving Day to get a jump on their holiday sales. This year, forecasters expect sales over the two-day period to grow 3.9% over last year.
With millions of people lining up — or logging on — for deals, retailers know the success of Black Friday rests on a strong supply chain. Preparations for Black Friday begin long before customers get in line, with supply chain managers putting their strategies in motion more than a month before the “biggest shopping day of the year.”
With the start of the holiday shopping season kicking off Thanksgiving Day and lasting through Cyber Monday, a weak supply chain could spell disaster for a retailer’s sales. The effects of the extended beginning to the holiday shopping season can be seen in the plans each supply chain manager has formed.
So how can you tell if you have a supply chain that’s ready?
Peak planning is one of the most critical components to a strong supply chain. Managers begin their preparations by assembling and training a team that is focused on preparing for holiday demand and capacity. Cross-training new team members on multiple skill sets give managers the ability to position new people based on seasonal shifts.
With the team in place, managers need to make sure the distribution center is set up for productivity as inventory volumes surge. Fast-moving products should be stocked closer to operating areas to reduce travel distance. For products with different order velocities, a slotting plan should be developed to help ramp up fulfillment for seasonal products.
As volume spikes, supply chains will see more full-pallet or full-case replenishment orders. Setting up the distribution center to support cross-docking will save time, allowing the workforce to move the products through the facility and build orders faster. Too many operations continue receiving, putting away and picking orders the same way they do during non-peak periods.
One of the big trends we’ve seen over the last three years is the ability to have flexible order-processing capabilities. This ties to packing products in different ways and having a build-to-order supply chain, which is one of the key capabilities in consumer goods and consumer electronics. A build-to-order supply chain allows retailers to adjust order patterns quickly to capitalize on changing trends.
Managers also have to plan around the driver shortage and capacity constraints in the trucking industry. Just as distribution center teams are being built, drivers must be in place to haul the products to the storefronts. This highlights one of the benefits of having a dedicated fleet, as it ensures drivers and capacity are available during peak periods.
As the holiday shopping season begins, there are some last-minute tips managers need to remember.
Right now, one of the biggest challenges across all operations — drivers, warehouses and packing — is the labor shortage. Having a pool of talent at the ready in case a surge in demand occurs is critical.
If there is a surge in demand, managers need to plan for distribution from multiple places. If product supply is low at one center, don’t get caught with empty shelves. A multi-center distribution plan will keep fast-selling products in stores and customers happy.
Now is also time for managers to begin preparing for returns. A reverse logistics plan with the right provider and network will make sure everything runs smoothly.
Managers also need to be ready to document everything that is done from now until the end of the holiday shopping season. This will give you a chance to see your successes and areas where you can improve for 2015.
A strong supply chain has the flexibility to handle all of these items. Having a successful Black Friday and holiday shopping season begins with having the end-to-end capabilities to adjust and deliver results.
With a strong plan and team in place, supply chains can be ready for the demands that come with the extended beginning of the holiday shopping season. Retailers hope these plans can kick off their holiday season and carry strong sales through the end of the year.
Steve Sensing is VP at Ryder System ([email protected]).