This is the fifth and final installment in our 2020 Peak Season series in which we explored the unique challenges of the current peak holiday shipping season, as well as a variety of strategies and solutions for shippers to consider. To learn more, please read these previous entries:
As the 2020 peak holiday shipping season approaches, shippers and carriers face unique challenges. However, consumers will expect their holiday favorites to be on the shelves or only a click away, regardless of the unprecedented obstacles.
Predictions for consumer demand over the holidays are a guessing game, as any forecast made before February of this year would be wildly out of date, and the current outlook is no less cloudy. For example, retailers drew down inventories earlier in the year than is typical, and are building back up now. However, one prediction that’s likely to hold true is further growth in e-commerce. The combination of direct delivery and buy online pick up in-store will continue to gain market share over in-store sales.
For retailers, agile networks that adapt rapidly to volatile supply and demand inputs will be essential. For example, traditional marketing tactics like Black Friday sales go against social distancing protocols in place now. On the other hand, standard promotional sales that spike demand could overwhelm already strained e-commerce fulfillment channels. Several large retailers have announced they will close on Thanksgiving Day, further compressing the holiday buying season.
Given the uncertain nature of the peak holiday shipping season, we offer a few tips to maximize your success.
Six Tips for a Successful Peak Holiday Shipping Season
Share goals and objectives with your 3PL
Help your 3PL understand your plans, priorities, and expectations. Will you frontload inventory for promotional marketing? Are you adding fulfillment centers near major markets and reducing the role of regional DCs? What are your tradeoffs in landed costs vs. delivery schedules? Will LTL and parcel play a more significant role in your plans, or has the current strain on parcel networks caused you to rethink your approach? With the growth of direct-to-consumer delivery, what is your plan for final mile excellence? Share your peak holiday shipping season planning as early as possible so your 3PLs can secure capacity and rates to support your strategy.
Prioritize shipments
Help your 3PL understand which shipments have a Must Arrive by Date or an On-Time In Full (OTIF) requirement. Prioritize shipments by mode, so you don’t pay for a service level that’s not required. For example, you could consolidate LTL loads into truckloads when the 3PL understands your priorities. Use a zone skipping strategy to move shipments across multiple states.
Research shows customers are more interested in free, reliable shipping than fast shipping, so develop a strategy that aligns costs with customer expectations. Remember, a poor shipping experience will damage the long-term customer relationship for lower lifetime value. Strategies like pop-up fleets can help secure capacity temporarily while maintaining the desired service levels. Better planning can help avoid surcharges and accessorial charges from carriers.
Proactive communication
Share data and KPIs with your 3PL, and expect the same in return. Alert your 3PLs of anticipated capacity requirements, especially for last mile delivery. Your 3PL should be alerting you to any problems or delays, regardless of the time of day. The technology stack should include real-time tracking and alert functions for exceptions. A control tower view provides greater visibility and control, and analytics will drive tactical and strategic planning. Successful strategies, particularly for final mile logistics, require communication and collaboration across the board.
Develop a plan for reverse logistics
With e-commerce volumes expected to hit record highs, your return policy and management are just as critical as your sales channels. Rely on your 3PL to tackle returns from retail and e-commerce channels. With automated inventory management, you can speed up the return process, and customers value prompt resolution. You can return items to inventory for resale or extract value through disposing of the items. Reverse logistics should have the same level of visibility as outbound shipments.
Embrace automation
This is the year to take advantage of the latest technology to automate an array of tasks, from freight matching to auditing bills. These tools improve efficiencies and allow you to deploy resources where they’re needed most. Your 3PL can help you implement solutions that speed up decision making based on historical data and business rules. Manual processes that used to take days can be accomplished in seconds. Insights from real-time data analytics pinpoint trouble spots, and drive decision-making. Whether you are a small- to medium-sized business or an enterprise-level organization, look to partner with a 3PL that can provide the TMS technology you need to drive success through peak holiday shipping season, and year-round.
Expect the unexpected
External factors such as the possibility of another government stimulus program, economic volatility and weather events could lead to short-term disruption in demand and supply. There’s no way to plan for every eventuality, especially this year, so develop a peak holiday shipping season plan that’s flexible and adaptable.
The 2020 rollercoaster will continue to offer its share of surprises through the peak season. Goat Rocks Group, (GRG) provides a range of solutions that help your supply chain adapt to global challenges and changes in consumer purchasing behavior.
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