Tech Guest Viewpoint - Why the Holidays are a Shipping Nightmare

By Fabrizio Brasca, JDA Software



I’m a bit old-fashioned, so I still like to go to stores to examine the merchandise before I buy. Especially during the all-important holiday season, retailers, and the manufacturers and distributers that supply them, must figure out how much of each item all of us collectively are going to buy at each store at what time, and then get it there at the right time. Too much inventory and you end up with markdowns that erode margins; too little inventory or too late and you lose sales and customer loyalty.



For shippers, this retail shopping transformation has meant that the transportation planning question has gone from a simple ‘how much,’ to the nightmare of ‘how much, when, through which channels and delivery modes?’ A less than optimal answer to this question can raise transportation costs, destroy margins, disappoint customers, and turn the holidays into a red ink season. But there are actions you can take now to avoid these nightmares in the future.



Demand planning has become a lot more difficult, and more critical. You need to know what consumers will buy, when over the extended holiday, and through which channels so you can position merchandise accordingly. Purchase history alone won’t tell you this. You will need to analyze a much broader scope of “Big Data” to uncover shopper intent and paths to purchase. This more comprehensive and time-specific demand plan will inform the fulfillment and transportation planning processes.



Demand, fulfillment and transportation planning must all be integrated to reflect business strategies. It’s not just about getting the lowest cost shipping; it’s also about getting the right inventory to the right place at the right time based on those strategies. And don’t forget your 3PL partners. They may be handling your ecommerce orders or all of your shipping. They need to be integrated into the planning process too to ensure optimal results.



When planning and execution work in silos, plans get created that cannot be executed and execution often does not match plans. The result is costly workarounds and/or higher transportation costs. Transportation planning and execution must be integrated so that business strategies are executed effectively and efficiently. Again, this should include your 3PL partners.



Even the best plans bump into real-world problems: demand shifts by store or channel; a new item becomes unexpectedly ‘hot’ for the holiday; a winter storm disrupts transportation. Therefore, transportation planning and execution must be agile enough re-plan on an iterative basis so the new most optimal solution is created and executed based on the changed circumstances, keeping costs in check while not disappointing customers.



The holiday season does not have to be a shipping nightmare. Implement a fully integrated planning and execution process and the results will let you sleep easy.



Fabrizio Brasca is VP of global logistics at JDA Software.