Few industries experienced such record-breaking growth like that of ecommerce in 2021. As the world came to terms with the reality of Covid-19 pandemic, a general belief that the pandemic would end abruptly took root. Unfortunately, that was not the case and as the virus continues to plague the world, this results in increased demand for ecommerce shopping in the upcoming holiday season.
Now, shippers, carriers, freight forwarders and freight brokers are all turning their eyes to the next event; the peak shopping season. At the same time, ecommerce growth is almost unsustainable, leading to a massive strain on freight capacity and navigating freight growth amid peak season planning is goin to be challenging.
As a result, supply chain leaders need to understand a few things about how to get through this unusual situation.
Peak season planning traditionally begins as students prepare to return to the class room. Often overlooked, this gradual return to educational facilities heralds the beginning of a build up of logistics capacity, resources, inventory, and personnel in anticipation of the coming peak season. Unfortunately, ecommerce grew 6 years worth in a period of mere months. That is unsustainable and the industry is approaching a breaking point.
Organizations that did manage to implement digital imperatives and capabilities prior to the pandemic are better poised to handle these changes.
However, the basic issues within the supply chain such as handing off the trailer to another company have brought in a new aspect of supply chain management; for example, are these trailers sanitized, do the trailers present an added health or safety hazard, what about the drivers and their ability to hand off paperwork to other supply chain professionals.
These questions reflect the very seriousness of trying to engage in peak season planning when the current disruption is continuing to occur.
Next, peak season planning must revolve around an optimistic viewpoint. What does optimism in the supply chain really mean? Optimism involves a belief that everything will be okay.
However, it has another meaning in the supply chain. Optimistic supply chain planning means preparing for increased demand regardless of what may happen.
This peak season might be more hectic than ever as pandemic-induced ecommerce preferences add to the already growing business of online holiday shopping. This will put increasing pressure on retailers that have failed to put solid omnichannel buying solutions in place.
As a result of both the existing massive growth, any growth from this point is still going to be representative of year-over-year growth since the last peak season planning phase occurred. As a result, supply chain leaders must realize that the increased demand on the supply chain is only going to get worse.
Yet, there is still some uncertainty in the market. The uncertainty revolves around what will happen with the global economy. If the pandemic continues to worsen and results in another economic shutdown, consumers will rapidly close their pockets. As a result, expectations for a higher than average holiday shopping season will go out the proverbial window.
Regardless, supply chains need to be ready to rapidly build up production and capabilities to handle the demand.
It is essential regardless of how the economy sways.
Supply chain leaders need tangible ways to improve the operations of their organizations. Leading ways to manage the uncertainty within the market lie within improving the scalability of existing operations.
To that end, supply chain leaders should focus on taking these next steps.
First, implementing a could-based resource for managing transportation including a transportation management system.
Second, creating peak season planning protocols to enable freight consolidation and deconsolidation to handle a demand within partial packages.
Third, choosing a third-party logistics provider that can flex to meet the needs of any supply chain and offer a global footprint for reaching more customers.
Fourth, using data to make informed decisions regarding which carriers, lanes and other 3pl service providers may be necessary to meet the upcoming peak season.
While each of these steps traditionally focuses on the expansion of supply chain processes, they also allow for the retraction. As a result, supply chains can avoid putting too many resources at risk and help manage things should the worst set of circumstances come to a fruition.
While the pandemic continues, there is no excuse for not engaging in basic peak season planning practices. This includes preparing for uncertain expectations, judging the market, reviewing existing operations in supply chain performance, benchmarking freight rates, and reconsidering your existing contracts with supply chain partners.