November 2000 | Commentary | Checking In

Happy Holidays! Are You Ready?

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Is all your product staged for this holiday season? Some companies were not ready for the shopping frenzy last year, and it wasn't just the failure to execute and deliver in time. Low inventory levels and faster moving supply chains, given the growing practice of inbound logistics, offer high rewards but there are high risks of failure as well.

A survey by the National Retail Federation (NRF) shows that we could be in the same boat this Christmas. Election jitters, high energy prices, fears of inflation, and stock market gyrations did little to dampen the expectation that consumers will buy more presents this year.

The NRF survey was released this month, and gives us a heads up on what to expect this holiday season. In the 15 years since the survey captured this information, results released Nov. 1, 2000 show the expectation of the highest holiday spending ever. The NRF is predicting a possible 5.5 to 6.5 percent increase in holiday consumer spend over last year. Nothing can stop the urge to splurge, it seems. The top three gift categories are apparel, toys, and entertainment items—predominantly imports. Is the importation infrastructure up to the demands of high holiday buying expectations and the rigors of a low level, fast moving inventory strategy? It depends on whom you ask.

For example, the article on page 28 shows how stateside consignees are driving improvements and advances in IT, U.S. Customs clearance, value-added logistics, and transportation infrastructure. By working through responsive port authorities and leveraging the port's resources, controlling the increasing complex flow of inbound materials may not be easier, but at least achieves a higher level of reliability.

But even before being able to leverage the port's assets, the importer must first adopt the "inbound" philosophy. Who do you let control the move? You or your offshore vendor or manufacturing plant? It is easier to acquiesce and let your vendor or offshore plant push the process at you, but unless they can read your mind, and your customers' minds, they won't deliver the same control, accuracy and reliability that you could yourself. That differential translates into higher inventory costs, greater reliance on expedited shipments to fill in the failure gaps and (get out your dancing shoes) more tap dancing around your customers' complaints.

No one can plan completely for unexpected demand like the NRF is predicting, but another benefit of you controlling the inbound flow from offshore is agility—you can scale up or back with greater alacrity. Consider your pipeline almost like Santa's magical bag: he reaches in and another gift materializes. He can't afford the surprise of wondering if he'll come up empty because the elves have not been informed of a grinch caused glitch.

We can all use that level of certainty, especially if you are feeding the retail demand (doesn't that make you an elf?) around the holidays.

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