Back-to-school has always been a big season that seems to happen in the blink of an eye. As soon as teachers send out the school supply list, consumers scramble to buy all the things students will need. Whether you shop in-store or online, starting the new school year with the right items always comes with a bit of anxiety. After all, by the time students receive their first homework assignment, retailers have already moved on to the next season, swapping out school supplies for Halloween and the holidays.
When supplies run out or are back-ordered, it adds to the stress on students, teachers and parents, but also retailers, shippers and logistics providers whose planning started months prior getting ready for the back-to-school event.
There’s only a narrow window to get everything right. Items typically associated with back-to-school shopping fall into two categories. They have different characteristics, which impact the timing in which they flow through the supply chain. The two types differ in how and when they are ordered and start the process through the supply chain. First, there are new items which are being brought to market for the first time. With these items, the pre-planning period takes longer for the retailer and requires more lead time with the supplier. For replenish items, also known as never out of stock, the retailers need to increase the volume to support back-to-school promotion. These are items like folders, notebooks and pens and pencils – commonly available products that require less lead time.
Retailers forecast based on anticipated customer demand for products and sales channels like in-store or online. Depending on the mix of new and never out of stock items needed to meet anticipated customer demand, retailers start their assortment planning and ordering at different times. Retailers are communicating to the supplier who will manufacture or procure the items, but it's only part of the process. The transportation planning is also a critical component because the items must hit the shelves on time to meet customers’ expectations and don’t interfere with the flow of future orders the retailer has placed. If the shipment arrives late, it could interfere with the merchandising plan for the next floor reset that comes behind it.
In many cases, shippers leverage logistics service providers (LSPs) to find capacity with carriers and make ocean freight bookings, relying on their expertise in global logistics, which can be complicated and nuanced if it’s not your core competency. For LSPs to properly secure capacity for an event like back-to-school, especially when demand for containers is high, retailers should provide early visibility to their forecasts and spikes in demand projections for both new and replenished items. Collaboration and transparency between the LSP and shipper are critical to maintain clear and updated information to deliver on customer’s expectations, such as ship dates and ETAs, which may change due to unforeseen circumstances.
When the supply chain cycle follows a traditional pattern, retailers may send their back-to-school assortment plans and buy orders to suppliers as early as 6-12 months in advance of the event. This would give the suppliers enough time to manufacture or source the new category items and plan for the extra volume of never out-of-stock items, which require less lead time. The different stops along the supply chain are orchestrated based on when the retailer needs product in the store or distribution center. Sounds easy, right? Well, it was easy, until it wasn’t.
The past 18 months haven’t been easy. It’s been especially tough if you are a LSP preparing for the back-to-school season. When so many aspects of the supply chain are out of their control, they can still increase their service levels despite the chaos occurring in global supply chains.
Even in the best of circumstances with traditional demand forecasts and a normal shopping year, managing the supply chain to support back-to-school shopping must be orchestrated with precision between all parties. But, what happens when everything changes? When you don’t own the ships or the containers, control the prices or have visibility into what carriers are doing once a booking request has been made, you find yourself between a rock and a hard place.
For every system and technology available to assist shippers with supply chain planning and procurement, warehousing, transportation and the last mile, when freight changes hands from a vendor to a carrier, the process is still highly dependent on manually intensive coordination between multiple parties. This middle mile, where freight is expected to move swiftly and seamlessly from origin to destination, is the domain of logistics service providers, who bring expertise in navigating the complex and nuanced landscape of global shipping. But, even for these specialists, the rise in demand and crunch in capacity brought forth by the pandemic has exposed the need for more digitalization and better accountability of the people and practices that govern ocean shipping.
Make everyone show their work by digitalizing ocean booking processes
So, what can LSPs do when their business is based on demand patterns outside their control?
They must embrace the messiness. They can optimize their own processes and quickly identify missing information their customers will need through automation, data extraction, exception management and what-if analysis. The faster transportation updates can be communicated to the shipper, even if it’s a later estimated arrival time, the more time they have to navigate the supply chain disruptions and lessen the impact on their business operations.
Forward-thinking freight forwarders can dive into critical shipment data and leverage the structured and unstructured data to gain efficiencies and insights. Although data is still passed through transportation management systems, often the most critical data is exchanged through unstructured data outside a system of record like emails, PDFs and spreadsheets where it can sit unnoticed in an inbox causing unintended ripples of havoc across operations. This can slow down business operations as information may be overlooked since it is not digitalized in their system. By gaining more control of the data that lives across multiple systems and in unstructured formats, freight forwarders can extract insights like carrier performance, exception rates or missed bookings which helps level the playing field when carriers are less than forthcoming with information. By elevating this data, logistics providers and shippers can hold carriers more accountable.
By streamlining execution processes, delivering key carrier analytics and providing missing information by digitalizing unstructured data, LSPs provide transparent real-time data that will help drive critical business decisions.