The Peak Season is upon us and if you have not prepared early enough your supply chain might suffer. The Logistics Point spoke to Antony Francis, Consultant, Endava, who looked at how Peak is going to be different this year and why he expect problems to continue well into 2022. The conclusion is that companies need to start planning for Peak 2022 now.
How have retailers prepared for this peak season and do you think it will be enough, considering the general supply chain situation in the UK and worldwide?
No one could have predicted the impact of the pandemic on the supply chain. However, I believe that things like better forecasting, or the development of alternative plans in case of extreme tension or breakage in the supply chain, could have mitigated some of the issues we are experiencing today.
We are now a few weeks from Thanksgiving and a few more from Christmas – the biggest retail (and therefore supply chain) season of the year. We know from the congestion in ports, whether on the inbound side in UK (Felixstowe), Europe (Rotterdam) or USA (POLA and POLB), or outbound Asia (Ningbo, Shanghai, etc) that, unless orders
have already shipped from Asia, there is little chance products will hit the shelves in time for the holidays.
Consumers are understandably panicking as they rush to fulfil holiday wishes before stocks run out. Retailers and supply chain vendors need to be ready for the forthcoming spike in demand, in order to accurately forecast and plan not just stocks, but the movement of goods globally.
How can retailers predict volumes in a volatile market and what is the role of consumer behaviour for the success of peak?
This is, of course, a very difficult question. Let’s address consumer sentiment and behaviour first. Consumers will of course have a great sense of frustration from not being able to buy gifts during the holiday season. However, it goes further than that. We are already seeing significant shortages of products and empty shelves of basic products and supplies.
Consumers are being told to shop early. Fine. That just means that there will be less product available down the line. In my opinion, the consumers are not the issue. They can only tighten their belts and hope that the Elves have another solution. That is not going to happen.
Retailers, as they develop alternative mitigating plans, need to add some buffer into the supply chain. Part of that solution might include bringing production back to the countries of consumption. However, with the current rates of inflation and labour rates being driven up by the huge increase in e-fulfillment compounded by the shortage of labour, we are still making it a better economic solution to produce in low-cost countries.
What is the role of technology in the current crisis?
We know that there are three supply chains (physical – informational – financial) and that these are inextricably interconnected. I put ‘informational’ in the middle for a very good reason: it is the pivot in today’s supply chain.
Nothing in today’s supply chain can work without good data. Timely updates from the manufacturer to the outbound forwarder, to the carrier, import forwarder and distribution network assists custodial hand-off on the physical side and then, once proof of delivery is available, allows for correct invoicing and payments.
Technology has become the great enabler of more efficient supply chain operations and companies need to address gaps in their data architecture and accelerate migration to real time cloud based systems.
Do you believe disrupted peak operations would have an overall negative impact on the supply chain coming into 2022?
Absolutely! As long as consumer demand is maintained at current levels and the current crisis in labour availability continues (with or without the pandemic), there will be supply chain disruption and delays.
Some people say that extending labour hours will help absorb the backlog. This is true to a certain extent, but we are already seeing cases of burn-out from long arduous hours. Employees need time off, which simply cycles the issue.
My prediction is that we will see these disruptions well into mid-2022 and companies need to start thinking of early ordering for the peak season of 2022.✷