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Peak Management – Successfully managing demand peaks

by Editorial Office

Ensuring agility in the supply chain

Optimized peak management is essential in order to benefit from peaks in demand and to satisfy customers in the long term. The goal of any activities should be to ensure that all supply chain processes run smoothly. For peak demand, this means that companies must be able to adapt their processes quickly and flexibly to changing conditions. A certain degree of agility, whether in terms of warehousing, the use of freight capacities or in the selection of transport modes, is an important prerequisite for serving peak demand and operating competitively. “Agile process management should always include human resource planning in addition to pure supply chain processes,” says Ralf Boelicke, Head of Strategic Sales at Hermes International, a division of Hermes Germany.

Forecasting in logistics

Whether seasonal fluctuations or events such as Black Friday – companies should always plan their capacities on the basis of reliable, ideally data-based forecasts. The large-scale evaluation of existing data using Big Data in particular can provide efficient and cost-saving support for those responsible.

If reliable forecasts are not available, companies should adapt as flexibly as possible to different scenarios: Personnel and freight capacities, but also equipment and IT resources should be as flexibly deployable as possible. “Peak management of this kind naturally generates considerable costs,” says Ralf Boelicke, advising companies to rely on a mixture of reliable forecasts and empirical values in order to meet peak demands successfully and cost-effectively.

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Efficient inventory management as a competitive advantage

Logistics managers should also prepare for peak times in the area of inventory management. In the past, many companies have focused on lean production and reducing inventories. Maintaining “just-in-case” safety stocks was considered more of an obstacle to profit due to higher storage costs.

However, against the background of the current pandemic with its numerous effects on the global movement of goods, sound inventory management including well thought-out stockpiling ensures business and delivery capability. Stockpiling, ideally based on precise forecasts, is therefore a decisive competitive advantage (not only) under the current circumstances. “To say that just-in-time has had its day would certainly be too far-fetched,” says Ralf Boelicke. “Rather, it is a matter of finding the right balance – between the greatest possible security on the one hand and the avoidance of costs on the other.” The use of innovative technologies can significantly support those responsible – and thus save costs.

Smart warehousing and diversification: ensuring supply capability

ralf boelicke

Ralf Boelicke – Head of Strategic Sales at Hermes International

Smart warehousing is advantageous in order to ensure delivery capability in the event of demand peaks. However, it is certainly not only a matter of keeping demanded products in stock; the warehouse location is also an important success factor in times of scarce

transport capacities. “It can make sense to keep highly demanded products in buffer warehouses at different locations in order to enable a speedy delivery to the company’s customers,” says Ralf Boelicke.

In general, diversification is a sensible method of avoiding supply bottlenecks, especially in times of high demand. Logistics decision-makers should therefore try to minimize their dependence on individual players. Be it in terms of warehouse locations, supplier companies or means and routes of transport. “Especially in the current climate, with its various restrictions, companies should always have alternatives ready in order to remain capable of acting,” confirms Boelicke.

Peak management for a better business performance

Strategic and holistic peak management not only prevents bottlenecks and delivery delays. The punctual delivery of goods also increases customer satisfaction and, in turn, leads to an improved company performance. Decision-makers responsible should therefore maintain a well-equipped catalog of measures and a transparent supply chain in order to be able to react quickly and agilely to increased demands and to meet the needs and wishes of customers even in turbulent times.

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