This is the first entry of a multi-part series on successfully executing and delivering the critical, Holiday selling season.
The Holiday selling season is often the most critical for retailers, not only because a significant portion of their full-year revenue is derived from the season but also because their brand reputation and equity are at stake. A successful Holiday selling season may lead to increased brand awareness and revenue momentum, while out of stocks and late gifts can cause customer dissatisfaction. Diligent logistics pre-planning is prudent to prepare for both the opportunities and threats of the season.
During the Holiday selling season, many retailers find themselves facing numerous challenges in their distribution centers. Specifically, insufficient storage, processing, and staffing can impact a retailer’s ability to handle exponential, holiday volumes and serve customers. These challenges have only become more acute because of COVID-19, with dramatic changes to both order profiles (digital/re-pack vs. store/DC and full case) and health and safety measures (physical distancing, PPE).
To safeguard and drive logistics operations, organizations can proactively plan and implement key strategies to build resilience. For example, to alleviate inventory capacity constraints (and improve throughput), consider leveraging off-site storage locations, dynamic yard management planning and automating inventory storage and retrieval processes. These efforts to reduce friction in the goods-flow process often work well with strategies to increase processing capabilities. Off-site processing, third-party logistics (3PL) fulfillment, DC flex-space utilization and even retrofitting existing DC footage can all support increased seasonal volume requirements, often best when deployed in tandem. Lastly, consider leveraging flexible shift scheduling (including round-the-clock operations) and hiring temporary, seasonal staff to increase processing capabilities; keep in mind both the lead-time to find qualified staff and your organization’s ability to adapt the work to the available skills.
As your organization enters this critical planning phase, consider these guiding principles to ensure your logistics capabilities are sufficient to deliver the critical Holiday selling period: 1) Focus in-house tactics on your organization’s core competencies (expertise takes time and investment), 2) Stay lean and reduce long-term waste wherever possible (avoid making short-term decisions with long-term consequences) and 3) Consider 3PL providers to manage overflow and support non-core activities (the incremental CPU can be viewed as insurance for delivering the season).
The holiday selling period is critical for retailers and often acts as a springboard to full-year financial success. As brand strength consistently aligns to customer satisfaction, supply chain and logistics capabilities should be sufficient to deliver the vision of the organization, exceed customer expectations and build valuable brand equity.