Following the inflation shock and subdued consumer spending, as well as the ongoing discount wars in the retail sector, the hopes of many industries are now pinned on the Christmas season. For some years now, the peak season has kicked off with Black Friday on November 25. For companies, these seasonal peaks also stand for increased demands on logistics, fulfillment and inventory management. This year, a tense situation on the global market leads to additional challenges. A timely and strategically thought-out preparation is therefore of particular importance. We introduce strategies with which companies can successfully manage the peak season 2022.
Growth rates in e-commerce
For many companies, the pre-Christmas period with Black Friday and Cyber Week is the busiest of the year. In 2020 and 2021, it was dominated by the Corona pandemic. However, because of the extensive restrictions on stationary retail, in both years online retail produced record-breaking figures – in the end customer segment as well as in B2B retail. For example, from the beginning of October to the end of November 2021 alone, e-commerce sales rose by 15.8 percent to EUR 20,113 million, and in Interactive Commerce as a whole by 15.3 percent to EUR 20,255 million gross. In order to maintain such growth trajectory for the seasonal business this year, it is important to already start preparing for special challenges ahead.
Peak Management: Setting up agile supply chains and transport strategies
Peaks in demand are always a particular challenge for companies – all the more so when they are accompanied by a tense supply chain situation, as was the case this year. In order to be able to serve this increased demand for goods and use it profitably, efficient and agile peak management with optimized procurement and transport strategies is important.
Adapted inventory management is of strategical importance: After years of successful lean production and efficient just-in-time strategy, the disadvantages of this approach are becoming apparent in view of delivery and supply bottlenecks. Under the current circumstances, it is important to be able to react quickly and flexibly to changing conditions. Companies are well advised to adapt their procurement strategy accordingly and to consider increasing safety stock levels in good time before the peak season. At the same time, it is advisable to review storage capacities and identify possible restocking options if the company’s own storage space is insufficient. Another aspect that should not be underestimated is the current tense personnel situation. Due to the pandemic, there were and still are staff shortages, both at the production sites and at the logistics companies that handle the global transport of goods. Among other things, this can be seen in the shortage of truck drivers. In order to meet this multifactorial challenge efficiently and avoid supply bottlenecks, systematic planning and tailor-made measures are required – from procurement to storage and delivery of the goods.
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Diversification of the supply chain
A sensible long-term strategy for coping with future bottlenecks in general and periods of seasonal peak demand in particular is to expand the corporate supply chain network. The aim is to minimize the restriction to specific geographic regions and suppliers. One example is the electronics and automotive industry: Here, the recent past has shown how drastic Europe’s dependence on suppliers from the economic region of China can be. Repeated lockdowns and logistical bottlenecks resulted in missing components such as sensors, semiconductors or LEDs. Production in German and European plants came to a standstill, and large-scale rescheduling was necessary in many areas. With strategies for diversification and – where possible – partial regionalization of supply networks, companies can make their procurement more crisis-proof and better cushion future bottlenecks. Identifying alternative or additional suppliers for a broader network of procurement options is therefore a crucial task.
Efficient processing through optimized fulfillment
Another factor for success – especially in times of increased demand – is well thought-out fulfillment, from order acceptance to warehousing, picking, packaging, franking, and shipping. With well thought-out process optimization, companies achieve a higher quality of service – the basis for satisfied and returning customers. Among other things, a smart fulfillment strategy includes detailed reporting on inventory and demand – this helps to avoid out-of-stock situations as well as excess inventory. Companies with large order volumes can also use external service providers for fulfillment solutions.
Supply chain management: leveraging the potential of digital technologies
Especially in peak times, digital technologies in supply chain management are a guarantee for more efficiency and resilience. Cloud-based systems, automated processes and digital tracking solutions provide all parties involved with insight into the flow of goods as well as possible disruptions and bottlenecks. Targeted analyses via big data bring together a wide range of information on freight, demurrage or location times, stocks and routes, and thus enable forecasts to identify deficits and optimization potential. In contrast to conventional Excel lists, SCM platforms ensure transparent networking and efficient communication between the supply chain partners involved. And through the use of artificial intelligence and the Internet of Things (IoT), location information is transmitted in real time via QR or barcode and product identification via RFDI tags.
Once the right IT solution has been identified, it should be implemented quickly and the active use should be promoted in order to benefit promptly from the progress and the resulting competitive advantage. With efficient peak management, supported by the effective use of digital technologies, companies are ideally positioned for the peak season of 2022.