Few industries experienced such record-breaking growth like that of e-commerce in 2020. As the world came to terms with the reality of the 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 and results in increased demand for e-commerce shopping in the upcoming holiday shopping season, time moves forward. 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, e-commerce growth is almost unsustainable, leading to a massive strain on freight capacity, and navigating freight growth amid peak season planning is going to be challenging at best. 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 the students prepare to return to the classroom. Often overlooked, this gradual return to educational facilities heralds the beginning of a buildup of logistics capacity, resources, inventory, and personnel and anticipation of the coming peak season. Unfortunately, e-commerce grew six years’ worth in a period of mere months, says John Koetsier of Forbes. That is quite simply 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 handoff 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.
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. According to DC Velocity, a recent survey of “1,000 consumers across the United States about their 2020 holiday shopping plans and found that, despite the pandemic, most do not plan to change their spending significantly or shop earlier compared to 2019. The survey revealed a stronger preference for online shopping this year, however, with 66% of shoppers saying they expect to increase their online purchases this holiday season.
The results indicate that this peak season may be more hectic than ever, as pandemic-induced e-commerce 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, noted by Koetsier, 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. Why?
The uncertainty revolves around what will happen with the US economy. Remember that this is an election year. And if the pandemic continues to worsen than 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 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:
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 fruition.
While the pandemic continues, there is no excuse for not engaging in basic peak season planning practices. These include preparing for uncertain expectations, judging the market, reviewing existing operations and supply chain performance, benchmarking freight rates, and reconsidering your existing contracts with supply chain partners. Now is the time to plan accordingly and hope for the best. If the worst does occur, your supply chain will be better equipped to handle the sway.
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