It may be no surprise to learn that the seasonal period with the biggest impact on the supply chain is the holidays. However, according to Statista, buying spikes during the holidays surpass all other seasonal events combined? In addition, the National Retail Federation (NRF), the world’s largest association of retailers, says retailers rely on the holidays to generate upwards of 30 percent of their annual sales.
Indeed, for many businesses, planning for seasonal demand shifts can make or break their profitability for the year. From an inventory planner’s perspective, any recurring spike in demand represents a seasonal shift or product seasonality. Product seasonality occurs due to a multitude of annually recurring events, such as back-to-school, Mother’s Day, Halloween — or actual seasonal changes during spring, summer, fall and winter. Even health care providers prepare months in advance to have the right supplies in time for the dreaded flu season.
Within the holiday season, the Christmas tradition of gift-giving generates billions in revenues. According to a survey from NRF and Prosper Insights & Analytics, consumers plan to spend an average of $1,007.24 during the 2018 holiday season, a 4.1 percent increase over 2017. Analysts believe this is a result of renewed consumer confidence, low unemployment and higher take-home pay. However, this study was published in October 2018 — far too late for most businesses to react to this information.
Demand planning is key
Making sure the right products are in the right place at the right time means new levels of complexity when it comes to planning for the huge demand spike that accompanies the holiday season. Demand planning starts early as retail orders for products are submitted months in advance. Manufacturers and wholesalers engage in requirements planning for goods that will ultimately be delivered within a relatively short timeframe.
Once manufactured, the ‘right’ amount of product must be delivered to the ‘right’ place. Most retailers restrict the delivery of products to a short window by specifying an early receipt date as well as a cancel-by date. With online sales reaching new heights, the question of where to deliver the goods is paramount.
Predicting top sellers
So, what is the ‘right’ amount of product? Which product lines are likely to be most successful? Looking at historical data is important, but planners must examine other factors as well. There are many tools available to analyze structured data, but what about the gold mine of information contained in unstructured data gathered via social media? What are consumers sharing via Twitter and Facebook? These platforms contain valuable insights into the consumer appetite for various products. This is where AI tools can really contribute to your logistics plan.
Thriving in the age of omnichannel distribution
Not only do retailers worry about how much stock to maintain in their brick-and-mortar stores, but they must also concern themselves with physically delivering the product to online shoppers quickly and at the lowest possible cost. Modern omnichannel strategies allow retailers to provide a continuous user experience across any device or location. In fact, this is the new gold standard, and intelligent routing can determine the fastest and cheapest method of shipment to meet consumer expectations. Here again, AI tools can mine unstructured data to provide a real competitive advantage.
Despite the intensity, the holidays bring to businesses of all kinds, modern supply chain practices, from demand planning and distribution, and onward to last-mile logistics, have evolved to enable the movement of billions of dollars in goods right down to the consumer’s front door — and into those Christmas stockings.