For anyone involved in logistics at the moment, it is a complex and relentlessly demanding time, and has been for more than 18 months now. But, as an industry, we continue to adapt and innovate to meet demand and provide efficient solutions despite the testing circumstances.
Entering any peak season with confidence requires extensive planning, excellent communication and effective relationships across the whole of your supply chain. To address some of the main issues at this time for logistics professionals, we spoke with our SEKO UK Commercial Director, Claire Muir, to provide insight on how to manage peak seasons.
Forecasting
With so much unpredictability across the global supply chain since the coronavirus pandemic and a huge surge in ecommerce, forecasting has taken on more importance than ever before. Having said that, Claire admits she frequently reminds her team that: “There’s only one guarantee with a forecast; and that is, that the forecast is wrong!”
Given the volatility of the market and the fact that the historical data from 2020 was extraordinary cannot be a good indicator, there will be some discrepancy between your forecast and the final outcome – but this does not lessen the importance of the forecast itself. Forecasts are so crucial for a head of logistics because, especially when you get to Q4, planning is required on a daily level. As Claire says: “We have to tell our carriers exactly what is coming on a daily basis because they have to decide how many vehicles are required, their size, what their networks are going to look like, and carriers are very sensitive to the accuracy of forecasts.”
The role of distribution or fulfillment centers where orders are being picked and packed is crucial. Very often at peak periods, these centers will have a requirement for additional or temporary labor, so having access to quality forecasts allows for appropriate planning in terms of resource.
Despite the unreliability of 2020’s data, it would be advisable to use a blend of 2020 and 2019 data to understand how the current scenario is impacting any given product category. Muir suggests another key to forecasting is “for the head of operations and head of marketing to be best friends”. Marketing teams are key to driving large volume, but this can put pressure on operations – keeping each other informed on the impact certain promotions might have for operations and factoring that into forecasting is extremely important.
People
There is no avoiding the fact that currently we have issues surrounding staff across different elements of the supply chain. The driver shortage in both the UK and America has been well-documented and there are the constant challenges in various locations – particularly in Asia – of snap lockdowns compromising the workforce.
The shortage of drivers for heavy goods vehicles is an issue that has been rumbling under the surface for some time, exacerbated by both COVID and Brexit, and unfortunately there is no quick fix in the immediate future. More positive news comes in regarding distribution centers – introducing more efficient processes and automation for greater flexibility and more capacity.
It is likely to be an uphill battle but there are ways that the impact can be mitigated. As Muir suggests: “Get your requests in with your temporary providers and your team early, engage HR to
recruit people, but importantly – make yours a nice place to work for!” We have seen a number of companies, such as Amazon, offering significant bonuses for their work over this incoming peak period. Such programs as this have activated a renewed focus on training and incentives.
Space
The crunch in capacity has been felt over a period of several months, with costs rising and bookings having to be made further in advance than ever before. Some of the challenges in terms of capacity are also present in fulfillment centers, as the underlying trend is for growth but there is a finite amount of space available.
What companies must do is work with the space that they already have, and SEKO is working continuously to make improvements and carry out analysis in this regard. It is essential to establish what is selling well and what is moving slowly and plan your space accordingly. To Muir’s point earlier, marketing and operations must be aligned and she highlights, “It’s important to establish what products are going to be marketed; and then design the layout of your distribution centre accordingly, so you’ve got the right products in the right place.
“For example, you might want to put all your fast-moving products near the packing station, or you might what to spread out your fast goods so you can get more people to them rather than having to pick from one full area. You need to work out what’s right for you – know what products are going to fly, what offers and discounts will drive traffic, and have hot zones to minimize the distance for pickers and packers.”
Another issue at distribution centers is aged inventory. It’s very difficult to get buying or marketing teams to focus on old stock, but it’s actually something that is very important and something the ecommerce industry could do far better. An excellent solution to this issue is Recommerce, which you can find more about through our partnership with Reconomx.
Carriers
In the current climate, having effective relationships with carriers is essential. How you foster these relationships is influenced by forecasting and communication. Your carriers need to know what you require from them in terms of capacity and transit times so they can help you navigate the strained circumstances in the current supply chain as efficiently as possible. To provide them with this, again, you need to work closely with your marketing and customer service teams to acquire accurate data.
As Muir mentions, knowing your carrier’s requirements is essential: “Each carrier has a certain presentation requirement – some require roll cages, some need things palletized and some want things in sacks. You’ll be used to doing that throughout the year but you have to plan far in advance for these peaks so you have enough of those consumables, pallets, roll cages - enough space for marshalling on outbound so you can manage those two really busy weeks.”
Communication
Good communication is essentially the key to bringing together all the elements that we have referenced here. Whether it’s communication with your marketing team, customer service, your carriers, distribution centers, or your end user – how you work with each other and keep every point in the supply chain as informed as possible is how you thrive in peak season.
Claire highlights some key tips for good communication at peak periods, saying: “Communication with your team, with the marketing department, and to the end-user is crucial. It’s a good idea to get around the table and have a couple of pow-wows throughout the peak planning period, which should start as early as February. During the peak period itself, I think you should have daily progress reports - internally and externally - to help keep the noise down. If the various different points of your supply chain aren’t talking, you’re introducing risk into your business.”
For further insights into peak planning and industry news, please visit our Knowledge Hub. If you have any questions or you want more information about our services, please Contact Us.
