Ho Ho Ho or Oh No for Your Supply Chain

Twas two months before Christmas and all through the supply chain, no one was sleeping and nerves were on edge. At least that is the message coming from the recent survey by the global technology company, Pitney Bowes. The reason for this increased level of nervousness? Consumers are indicating their intention to have it their way.

The Pitney Bowes’ 2015 Holiday Shipping Survey reveals consumers intend on doing what it takes to get more and pay less this year. For example, those thinking the brick-and-mortar store era was over may be shocked to learn that 94% of shoppers still plan to visit their local retailers. This doesn’t mean they have abandoned online shopping as 92% also plan to shop via computer and mobile device.

Shoppers demand flexibility

The bottom line is while shoppers are willing to spend again; most are doing so in a manner that gets the biggest bang for their buck. And, the big factor that has most supply chain executives a little nervous is the increased interest in shipping options. Compared to those surveyed last year, shoppers place high value (93% versus 70% in 2014) on shipping flexibility.

Most consumers expressed interest in free shipping. According to the survey, 88% value free shipping with 5-7 day delivery times as more important than paying a premium to receive items in 1-2 days. Consumers are also more willing to spend more if it means there is no charge for shipping.

Some may take this data to mean delivery times are not as important as overall cost. This would be incorrect as nearly all (98%) shoppers track deliveries once an order is processed. The survey not only mentioned how consumers track deliveries, but also projected when people will watch for their deliveries based upon shopping times.

Traditional shopping times no more

Black Friday, while still an important shopping day, has lost some of its luster with only 26% of respondents indicating they will shop at during this time. Many (41%), will combine brick-and-mortar shopping with online, doing so from Thanksgiving through Cyber Monday. Still others (30%) are shopping right now. Lastly, 34% still wait until the last minute and shop in December.

The opposite of shopping is the ritual of returning gifts. This also affects the supply chain. Here also, shoppers (or in this case, returners) have split opinions on the best method. A majority prefer returning to the nearest store location whether purchased there or online. However, 38% say they use the shipping provider.

The impact on my supply chain

Interesting, right? But, what do Christmas shopping habits have to do with the supply chain or specifically, my supply chain? This latest shipping report by Pitney Bowes illustrates the ongoing change in the habits of business and consumers. We as consumers want what we want and when we want it. Manufacturers have the same needs but call it just-in-time and similar buzzwords. As a result, your supply chain requires flexibility and the ability to change direction quickly.

This starts with careful planning, an understanding of your market, and a warehouse/distribution center designed for efficiency. Having a plan based upon the industries you cover helps in forecasting peak and off-peak times allowing for better inventory and staffing control.

Once you have a handle on the business forecast, look to your warehouse/distribution center for increased efficiencies. Is your warehouse management software out of date? Consider updating or upgrading. Next, look at the floor plan. Because increased speed and efficiency translate into greater profit, the flow pattern based on a plan from 1995 is likely hampering your operation. Other physical assets including racking or picking systems may also hold opportunities for increased performance.