Sales ‘holidays’ highlight supply chain weaknesses

Press release – September 26, 2015

By Siamac Rezaiezadeh, Strategic Accounts Executive, for Supply Management

£1.46 billion. That’s how much the UK spent over Black Friday and Cyber Monday combined in 2014.

As the UK public gets to grips with what was originally a very American phenomenon, these numbers are likely to grow and grow. These ‘sales holidays’ are proving to be a great way for retailers to reel in consumers with a bargain and boost revenues. In fact, it might be the success of Black Friday which encouraged Amazon to launch its very own event: ‘Prime Day’.

The flip-side of these sales is that they lead to a significant spike in activity, sales and deliveries. The latter of which has already incurred something of a backlash from logistics firms who have borne the brunt of blame when it comes to shoppers not getting their deliveries quite as quickly as expected. Yodel for instance, has stated its intent to put a cap on Black Friday deliveries this year, while FedEx and UPS both decided to limit the number of deliveries they would take on over the holiday season following their own troubles last year.

In many ways, this is understandable, the reputational damage a bad holiday season might have on a delivery firm could be worth much more than the loss of potential revenue incurred by cutting their delivery volumes. That said, are these firms – and they’re hardly likely to be the only ones to take this course of action – guilty of treating the symptom rather than the disease? Limiting deliveries is a rather short-term reaction to the problem and while it might make these sales periods more manageable, the reason they have struggled to meet demand in the past is down, in part, to much more fundamental operational issues.

Were they to look internally at how they operate the logistics supply chain instead, they would be able to identify inefficiencies which, if addressed, would make it possible for them to better meet demand around holiday periods and spikes in demand. The key lies in improving communication.

SMS and mobile messaging for delivery alerts is well-established and this alone can go some way to creating a much leaner supply chain, not least in cutting those missed deliveries which can cost around £6.50 each. The impact that communication technology can have on the running and management of the entire supply chain is much less discussed but potentially greater. 3PLs can take advantage of SMS to manage deliveries to and from warehouses and retailers, with key stakeholders and personnel being kept up to date throughout the day. This would ensure turnaround times are reduced and exceptions are appropriately managed.

This could even be taken one step further, integrating your communications platform with a big data engine to pre-empt demand and plan accordingly. For instance, if a retailer’s website is seeing large amounts of traffic on certain product pages, a message might be sent to the warehouse manager so that they can be better prepared to manage the increased demand for those items. Warehouse staffing levels can be increased by using SMS as a recruitment and employee engagement tool, enabling management to pull in staff quickly and easily while also allowing staff to sign up to shifts at the touch of a button and at a moment’s notice. Implementing a robust system will allow them to better handle the swells in demand that dictates today’s shopping environment.

The fact is that many companies are running their supply chains in such a way that while they could meet the demands of Black Friday and the holiday period, they are too inefficient to do so. By improving communication throughout the logistics supply chain, from SMS to rearrange and avoid missed deliveries to warehouse automation, a vastly improved online shopping experience that meets consumers’ expectations can be created.

Siamac Rezaizadeh is a strategic accounts executive at OpenMarket

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