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Companies are now more than ever having to adapt the way they manage their supply chain in order to meet consumer demand during peak periods. The development of the online market over the last 10 years has brought with it many challenges for logistics infrastructure. Consumers are demanding goods and services at their complete convenience. The importance of efficiency in logistics operations is enhanced over the festive period, especially days such as Black Friday in the run up to Christmas.
This year due to the continuing surge in online demand, major parcel provider Yodel had to suspend collections of parcels from distribution centres for two days. The volumes on Cyber Monday and Black Friday far exceeded analysts’ forecasts. Huge shifts in volume demand away from high street retail to e-commerce channels (home delivery and click and collect) have left existing logistics infrastructures struggling to cope.
There are a number of reasons for this, one being a lack of qualified drivers at the industry’s disposal. This problem is accentuated during periods of increased demand and therefore output suffers. Many argue this shortage is due to low pay and long hours, making it an undesirable profession. Others argue it is just due to demographic changes in the economy. The bottom line, however is that no trailer or container moves without a truck driver and so the industry must look for a way to increase the number of drivers available.
As well as delivering goods another key area to consider is processing the orders. Major online retailer The Hut Group has pre-let a 690k sq ft warehouse in Warrington on a 15 year lease. This is a good example of a company planning ahead to ensure they have suitable logistics infrastructure in place for future demand. The ability to process orders efficiently for a very varied product range and volume profile is paramount in e-commerce at Christmas.
The solution to the seasonal problems may seem elusive as year after year they seem to occur. The supply chain must communicate more effectively and efficiently in order to allow for a smoother process, whether this means implementing better communication systems, or simply getting better staff in key operational roles.
Five examples of how you can better plan for Christmas peak are as follows:
- Employ staff on a flexible annualised hours basis, this way the ‘fixed element’ of your labour force can be utilised when you need them i.e. in line with sales demand.
- When renewing your vehicle fleet consider overlapping the take on of new vehicles with disposal of old fleet during peak. This way you have more vehicles for the short period when you need them.
- Consider in advance simulating your peak transport requirements in a route scheduling software package. This can help you to plan what extra driver and vehicle resources you would need.
- If you have returnable packaging make sure you have enough units in reserve to cope with the peak throughput – management of this can be outsourced.
- Above all plan early and communicate needs to suppliers. Get your requirements in early as the festive season is the peak for the majority of organisations!
If companies can solve these fundamental problems of early communication and resource planning, then they are likely to experience a much smoother festive period. If customers are able to receive the goods they desire over the festive period, at the right time and in the right quantity then the logistics industry has done its job effectively.
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December 19, 2014
Published by: Go Supply Chain Ltd