Economic projections for the second half of 2022 range from somber to grim. As consumer spending continues to trend downward, major retailers are shifting their focus from inventory building to liquidation.
Whether you operate a business that surges during peak season or not, your supply chain is invariably impacted as capacity dries up and carrier premiums hit, especially near port markets. With 2022 potentially gearing up for a curveball that hasn’t been seen in the last decade, it’s critical to assess your peak season plans through the lens of multiple possibilities.
Five things to consider when reviewing your peak season plan
1. Can you make the most of an excess trailer pool?
Trailer pools offer more than just outbound capacity flexibility, it allows you to reduce in-warehouse inventory or to clear space for high-velocity goods. Consider flexing portions of your inventory that don’t move as quickly to any extra trailers to keep your operations lean.
Bonus Tip: See if your WMS or YMS software allows for SKU-level visibility in the yard — that will help not only with rapid retrieval of inventory flexed to the trailer pool, but also to rapidly cut retrieval times for trailers waiting to be unloaded.
2. Do you plan to combat increasing ocean detention and demurrage charges?
While consumer spending this holiday season may be unpredictable, the Port of Los Angeles is already seeing an uptick in imports and 18-month highs for exports. If you’re an importer fighting for trans-Pacific capacity, you should be prepared to see continued acceleration in detention and demurrage costs in the second half of 2022. Proactive management of ocean freight before it starts incurring charges is key to success.
Bonus Tip: Make sure you have a handle on each individual container your business interacts with. As your volumes surge, you may find it difficult to juggle detention clocks.
3. Will network performance be a problem?
Even though consumer confidence is waning, the holidays aren’t canceled. But with uncertainty you can expect your retail partners to tighten their reins on performance, which means an increased need for modal flexibility. Optimize your lead-times to convert non-critical shipments to slower, more cost effective modes of transportation.
Bonus Tip: Need a hot item? Make sure you can see inventory in-motion throughout your network before you place an expedited order with a vendor. Who knows, you may even have it sitting in a trailer somewhere nearby.
4. Is your workforce optimized to do more with less resources?
If your business has been impacted by the labor shortage, your gameplan needs to accommodate for lean resources. With more aggressive seasonal hiring happening around the holidays, you can be assured that this trend will continue. Be sure you have systems in place that can keep a pulse of your assets and people across your operation in real-time.
Bonus Tip: Even with the most accurate planning for your teams, the chaos of daily activities can quickly undo even the most robust efforts to organize. Be sure to evaluate management systems that can use passive RFID tags to automatically keep a clear view of what’s happening on the ground.
5. Are you ready for returns?
Consumers returned approximately 13% of the goods they bought during the holiday season, partly due to extended return windows. This reverse logistics peak season created a long tail to the normal holiday peak season that lasted well into spring peak season. Premium rates stayed high even after the holiday season as carriers kept surcharges in place. Be sure you have ample flexibility within your carrier network to accommodate potentially 1/8th of sold inventory needing to go back to a sorting center.
Bonus Tip: While tracking returns back to retailers is important in providing credit to consumers, it is equally, if not more important, that retailers get credit if shipping back to the manufacturer or OEM. Tracking that truckload or container back upstream is crucial for retailers to get credited, where necessary.
The Time to Plan is Now
While it’s easy to get caught with your head down putting out today’s fires, keeping a line of sight to the seasonality of your supply chain allows companies to be proactive and more successful than the competition. The strongest part of any supply chain solution stack is the ability to track each asset, item, load, PO and SKU as it crosses your supply chain. Managing expectations is critical when entering a period of uncertainty.