Ready, Set, Shop: Holiday Shopping Season Begins—But Not Without Cause For ConcernBy: Mark Bell | November 5, 2020
Congratulations retailers! The 2020 holiday shopping season officially kicked off a couple of weeks ago with Amazon’s Prime Day marking the start of what will be a very different holiday season. We’re all used to seeing malls and stores packed on Black Friday and the days leading up to Christmas, but this year the focus will be on staying at home and shopping online. Retailers are having to pivot and react to these changes to stay ahead of the competition and make their offers stand out from the crowd.
Here are some pressing questions and answers to help you get a better grasp around this unusual holiday season and the impact it will have on retailers like yourself and the supply chain:
Q: How is 2020 so different?
Without stating the obvious, COVID-19 continues to disrupt all of our lives. According to the latest statistics, there are now over 46.6 million cases reported worldwide, 9.28 million of those are reported here in the United States. As we head into phase two of the outbreak, we are seeing more countries and U.S. states take drastic measures to stop the spread. The UK will be entering their second lockdown later this week, and all eyes are on key cities and epicenters like New York which suffered a devastating first wave back in April.
Q: What does this mean for retailers this holiday season?
It means significant disruption. As we enter the holiday season, retailers are scrambling to pivot to meet demand. Black Friday is expected to become the new pack and ship Friday with many customers opting to shop online rather than in-store. With Prime Day kicking off the season much earlier this year, we are seeing other retailers offer similar promotions and sales starting now and running through Christmas. Savings.com recently released their retail index which highlighted that this year’s eCommerce shopping will be the biggest and longest holiday shopping season ever. Deloitte’s annual holiday retail forecasts states that holiday retail sales are likely to increase 1-1.5% with eCommerce sales expected to generate between $182 billion and $196 billion this season.
Q: What will be the impact of these forecasts on our supply chains?
If we pause for a minute and take a short walk down memory lane to the height of the first phases of the pandemic in April, we saw that retailers were struggling to maintain healthy stocks of essential goods on the shelves as consumers began to panic buy. This had a major knock-on effect on supply chains as they were pushed to capacity.
Today is no different. CNBC recently reported that global supply chains are expected to be pushed to 5% over capacity as eCommerce sales continue to boom. Inventory and stock replenishment is a major concern for retailers as they try to keep up with demand.
Freight and shippers are also being impacted. According to a forecast by Salesforce, over 700 million holiday packages are at risk of not arriving on time this holiday season. Back in September, UPS announced that they were planning to hire over 100,000 seasonal workers to deal with the holiday season demand, but it’s simply not enough. Just last week there were reports that the transportation industry is now in the midst of a stress test scenario from the recent Amazon Prime days.
The United States Postal Service (USPS) was already seeing holiday volume back in August due to the pandemic and were struggling to keep up with on-time deliveries. Amazon recently reported that from April to mid-September, only 70% of Amazon Prime deliveries were made within their stated 2-day KPI compared to 95% for the same time frame last year. So what is the scale of issue? 78 million packages were shipped per day in 2020 as of mid-September. An estimated 122 million packages are expected to be shipped per day during the holiday shipping season via UPS, FedEx, and the USPS.
Q: How should retailers be using data to get visibility into their supply chain and inventory?
Having full visibility into your supply chain and being able to seamlessly monitor your inventory is key this holiday season. Here are some shocking stats: only 6% of supply chain professionals claim to have full supply chain visibility, while 17% claim to have partial visibility. Let’s just think about that for a minute. Could this be one of the reasons why we all experienced the last of essential goods on the shelves? Now has never been a more fundamental time to be using data to glean the insights and visibility you need. Ask yourself:
- Where does your business currently fall on the spectrum?
- Are you closer to the 6% or the 94%?
- Where do you want to be and how do you get there?
Here are 5 ways retailers like you can ensure supply chain visibility and efficiencies this holiday season:
1. Understand your suppliers’ side of your orders to manage inventory levels. Inventory management this holiday season has never been so important. Effectively and efficiently monitoring discrepancies between orders, shipments, and receipts should be a key priority for retailers. Knowing exactly when the goods you’ve
ordered are going to arrive on your shelves and if you need longer inventory days, safety stock and excess inventory to keep up with demand.
2. Execution problems undermine the best forecasts. The chances are you have a good forecast in place. You have a stellar replenishment model and are efficiently calculating how much to order and when. But this all falls apart if you can’t see and respond to suppliers’ changes to your orders. That’s why it’s important to stay on top of suppliers’ fulfilment of your orders in real-time. Each individual quantity reduction and fulfillment delay undermines your demand planning.
3. Collaboration is key. Collaboration with your teams, suppliers, and partners is critical. It enables you to solve supply chain problems as they happen and cultivate a data-driven culture around your supply chain. Try to leverage a tool that empowers everyone in your organization to share information, work together, and solve problems collaboratively, via a single version of the truth.
4. Data doesn’t help if your team doesn’t use it. Data scattered between different systems is hard to use. Providing it in static reports means only your most skilled analytical employees can put it into action. But when it’s easy to use and understand, data drives strategic action and self-sufficiency for everyone in your organization
5. Drive supplier improvement through data. Track fill rate and lead time KPIs by supplier and product and have an efficient way of sharing those KPIs with your suppliers. Calculate and prioritize the products which need the most improvement. Use data to decide when the benefits outweigh the time and risk of switching suppliers, and most importantly, prioritize partners who have the skillset, tools, and knowledge that align and enhance your capabilities and objectives, and of course help you minimize risk. Now is the time to pivot and make changes to keep up with demand. However, make sure you are making data-backed decisions that align with your business objectives.
Q: Is there a solution that can help me with all that?
As a matter of fact there is! We have been working with retail and consumer packaged goods companies to help them use data to better understand their business and identify supply chain execution problems before they occur. This is why we developed Syncrofy for Supply Chain, an all-in-one solution that empowers supply chain professionals to:
- Efficiently and effectively monitor your suppliers across all tiers
- Track a full order lifecycle from purchase order to invoice
- Accurately calculate and monitor fill rate and lead times for orders and shipments
- Collaborate with internal teams and external partners
Interested in learning more about Syncrofy for Supply Chain? Schedule a demo with us.
Q: Are you a Tableau user within the retail or CPG industry?
We have a dashboard for you to help you track your supply chain and inventory management. This dashboard is designed to help and support retail and CPG companies by empowering them to:
- Monitor and track high demand goods across your stores & warehouses by geography
- Know when your next shipment is due
- Track on-time delivery and inventory growth KPIs
- Drill down into individual product lines based on demand
Q: Why is this dashboard important to retailers?
This dashboard is designed to show how data can be used to pivot quickly and smartly to meet changing demands while continuing to monitor your potential supply chain impact and inventory levels. Easily see how COVID-19, paired with the 2020 holiday season, may impact your business and inventory levels.
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