The Christmas season is the most important time of the year for the majority of the retail sector, and can determine a business’s financial health. It is reported, for example, that John Lewis makes 80% of its annual profits during the Christmas period, largely driven by its terrifyingly popular festive advert.
For customers, one of the most important things to consider when doing Christmas shopping is delivery times - whether it be food for celebrations, or gifts. If these come after the day itself, customers are left hugely disappointed, and there is often fallout in the national press if a firm lets down a substantial number of customers at once, as FedEX did in 2013, and UPS did last year.
Unfortunately, supply chain leaders are faced with more challenges at this time of year than at any other time. Not only do they have a huge rise in demand, there is also the issue of weather. Maybe it wouldn’t have been so bad if someone would have had the good sense to put the holiday season in July, but December is plunged bang in the middle of winter for many countries, and, as such, supply chains are forced to deal with turbulent, unpredictable weather patterns.
Weather patterns should be at the forefront of supplier chain leaders minds this time of year, and they should be looking at predictions as early as possible in order to set in place plans to mitigate them. This includes both getting goods to customers, and getting goods on their own shelves. The dramatic floods witnessed across the UK over Christmas of 2013 is a classic example of how unpredictable weather can creep up on you and make it impossible to deliver anything. In these instances, it may be impossible to re-route distribution so it may be just that you have to communicate delays, be as transparent as possible, and regroup.
In terms of getting goods onto their own shelves, a flexible demand model that accounts for any changes is important. Accurately forecasting demand for products that have a long, and well documented sales histories from previous Christmas seasons. Products like turkeys, for example, are often ordered far in advance, whereas something like chocolate will be purchased more in the run-up to Christmas. After forecasts are made, specialists must be ready to make adjustments based on factors that are not present in the sales history.
To make sure that these forecasts are not wasted, it is also necessary to prepare your supply chain to be reactive, or ideally proactive, during the season. Choosing trusted transportation providers with a history of delivering high levels of customer service is needed to ensure your products arrive safely and on time, and that carriers and 3PLs can scale to accommodate extra freight volume and help you look for creative solutions when capacity becomes tight.
The key to managing an efficient supply chain at Christmas is to start planning as early as possible. Collecting and analyzing as much data as possible should make sure that demand forecasts are as good as possible, and building a supply chain that is as scaleable and flexible to adjust to last minute changes is also a year-long process. Finally, you should prioritize. Around Christmas, there are some goods that customers want more and non-delivery can lead to bad press - particularly in an age of social media - and retailers must build an accurate picture of what these are, what the demand will be, and any issues that could arise with getting them on the shelves or out to customers.