Peak Season Planning: A Year-Round Venture
It's never too early to start planning for peak season supply chain capacity. To meet customer demand at a reasonable cost, it is best to plan ahead as much as possible with a lean, flexible supply chain.
Many retailers do an inordinate volume of business—some as high as 70 percent—from Black Friday until the end of the year. This can be especially tricky because lead times for some items can be as long as six months.
How can you deal with these challenges without disappointing the customer or blowing your budget? It's best to consider—on the aggregate, tactically as well as operationally—your demand and supply options.
Pick Your Process
Aggregate or sales and operations planning is an industry best practice that attempts to meet forecast demand with adequate material, manpower, and machine capacity while minimizing cost over a medium-term planning period. The output of this process is the aggregate plan or net production (or purchasing/buying in the case of wholesale and retail) requirements.
The process includes coordinating demand forecasts with functional areas and the supply chain. The solution also integrates the internal and external resources necessary for a successful aggregate plan.
This type of forward-looking, integrated approach nets many benefits, including:
- Higher inventory turns
- Lower fulfillment costs
- Improved customer service
- Shorter lead times
- Improved market intelligence
- Earlier and faster decision making
General strategies to consider are known as demand and supply options. You can implement them in the short, medium, and long term, depending on which options you use.
Demand options can shift demand from peak periods to off-peak periods. They can also create demand during off-peak periods so that overall demand corresponds more closely to capacity in the planning horizon and can include adjustments to pricing, promotion, back-ordering, and new complementary, counter-seasonal products or services.
Supply or capacity options allow planners to change supply by adjusting labor, inventory, and subcontracting. Other supply options can also include using a just-in-time (JIT) strategy, drop trailers, and direct store delivery.
Communication Ensures Visibility
Many manufacturers start assembling products, mapping out product specs to determine capacity needs, and working with their transportation and distribution partners on reliable and cost-effective logistics solutions up to six months in advance.
It is critical that you stay in constant communication with suppliers, transportation and warehousing partners, distributors, and retailers to ensure complete visibility into product demand, truck and warehouse capacity, and potential supply chain disruptions. All supply chain participants should establish a contingency plan in case of weather issues, product demand surges, port closures, or strikes.
As the saying goes, "to be forewarned is to be forearmed." As we head into 2018, start your peak season and holiday planning earlier, using a more structured methodology.