Peak Season: the great challenge for Supply Chains
Holidays and special occasions present a valuable opportunity to boost business for retailers, both traditional and digital, as well as for manufacturing companies adopting a direct-to-consumer model.
At the same time, however, these events pose a major challenge for supply chains, which are put to the test.
With the rise of digital technology followed by the pandemic, consumer habits and expectations have changed entirely. Regardless of the purchase channel or the time of year, customers now expect to receive their desired products quickly and at the lowest cost.
Peak Season used to be predictable. Now it isn’t
Throughout the year, there are several “predictable” demand peaks tied to specific occasions and calendar events. Generally, November and December are the most “critical” months for shopping, with Black Friday and Cyber Monday officially kicking off the holiday shopping season, followed by winter sales.
Black Friday nowadays is very popular, especially thanks to discounts offered by Amazon and other e-commerce giants such as Alibaba, AliExpress, eBay, which have successfully moved what was historically an in-store shopping experience online.
In addition to these predictable demand peaks, other entirely unpredictable events, known as “black swan” events, frequently emerge, such as the COVID-19 pandemic.
Peak Season: no sector is exempt
Whereas in the past, sectors such as fashion and consumer electronics were most affected by demand peaks due to their connection to “consumer-driven” events, today no sector can consider itself immune to this phenomenon.
During the COVID-19 emergency, for example, fear of infection generated unprecedented demand for health and personal care products, as well as items in categories like home goods, clothing, and sports equipment.
These are sectors that did not anticipate a surge in demand during that period and were faced with supply chains that were not integrated, either upstream or downstream, making them rigid and unresponsive to market changes.
This has led us to reconsider how demand peaks, both predictable and unpredictable, are managed and how companies prepare to face them. There is now a growing awareness of the need to build better supply chains: more integrated, resilient, and flexible, which ultimately makes businesses stronger and more successful.
Managing Peak Season is a team effort
Today, no manager involved in a brand’s value creation and supply chain can overlook the need to plan for new hybrid demand peaks, in addition to seasonal ones, when planning and managing their activities.
Even though, in most cases, these are planned demand peaks, they are not necessarily easier to manage. Misjudgments, often-overlooked elements, or new consumer priorities can alter the landscape and turn a promotional event into a potential setback for a business.
From the Operations Director to the Purchasing Managers, the Sales Director to the Chief Technology Officer, from the Marketing Director to the Supply Chain Manager, everyone must collaborate to avoid the so-called “relevance gap” – the discrepancy between what consumers want and what they actually receive, both in terms of product and experience: shopping, delivery, and post-sales service.
Our tips for managing Peak Season effectively
Here are some tips for effectively managing demand peaks:
1. Don’t underestimate warehouse automation
It may seem obvious, but it’s worth repeating. To achieve high performance in accuracy and speed during the order consolidation and shipping phases, it is essential to automate and digitize intralogistics processes.
2. Don’t overlook any logistics costs
Often, when discussing logistics costs, the focus is solely on transportation. However, there are many more activities to consider in this cost category: from the arrival of goods in the warehouse (raw materials or finished products) to storage, from picking activities to order consolidation, from packaging to shipping, and even returns management.
3. Recognize the value of collaboration along the retail supply chain
The entire retail supply chain must be fully integrated, both upstream and downstream. Errors or delays caused by a lack of data and valuable information sharing among various actors can turn promotional opportunities into black moments for everyone.
Building strategic and continuous relationships with upstream suppliers and downstream logistics operators creates an integrated ecosystem where everyone collaborates towards a common goal: ensuring the best customer experience for the end consumer, year-round, both offline and online.
4. Don’t lose sight of the customer journey
The customer journey is the path a consumer takes, offline or online, before, during, and after the purchase. Delivery times and methods are a crucial stage of this journey and contribute to defining the overall shopping experience.
If the consumer has a poor “delivery” experience, the blame won’t fall on the courier but rather on the company from which they purchased the item.
5. Protect the brand identity
Brand image is a strategic asset for companies, and it must be safeguarded, especially during demand peaks like Black Friday, when the risk of inconsistency between different physical and digital touchpoints is heightened.This contradiction can damage a company’s business by quickly eroding customer trust, who won’t hesitate to share their negative experiences online.
6. Don’t forget the value of sustainability
Consumers are increasingly focused on sustainability and are opting more and more for brands that, even during demand peaks, offer sustainable delivery options that reduce road congestion and ensure better urban livability for citizens.
Automated storage solutions for agile, integrated, and streamlined supply chains
In this context, where omnichannel sales models are proliferating, demand unpredictability, and new challenges posed by unforeseen emergencies strain supply chains, adopting automated solutions becomes strategically important. Such solutions can integrate and harmonize the physical flow of materials with the digital flow of information across all actors in the retail distribution ecosystem (producers, suppliers, logistics operators, and customers).
For internal warehouse management, the SILO² VLM, a multi-column automated storage system, can be an invaluable ally. While optimizing storage space, it enhances the speed and precision of material flow, enabling multi-order picking for simultaneous preparation of multiple orders, essential in demand peaks. This supports order fulfillment, making operations fast and error-proof for timely deliveries.
Additionally, to quickly respond to demand peaks and make products available when and where needed, under the right conditions, in a flexible, sustainable, and secure way, the BuyBox system was developed.
BuyBox is the innovative “phygital” self-service solution for proximity logistics that enables the creation of dark stores, proximity warehouses for micro-fulfillment, automatic parcel pickup points, Click & Collect service points, or self-service stores, overcoming the limitations of traditional locker vending machines or automatic dispensers.