How to manage peaks during high demand seasons in logistics
If peak seasons exist for businesses, specially retailers, they also exist for freighters and loaders. In broad terms, this season begins with the school start and encompasses Black Friday, Cyber Monday, the Holiday Season, and end on New Year’s Eve.
Arguably, the last months of the year are the best season for shopping. In fact, some retailers find the holiday season can represent up to 30% of their annual sales and, of course, everybody wants their products available for the peak in sales.
This is a season when demand grows so much it can limit capacity, make freight more expensive, and give logistics a headache. Nonetheless, since this is a phenomenon that happens every year, companies should foresee it before the madness sets in.
Efficient planning allows us to survive this difficult season. How to help the supply chain work properly during these peaks? These are some tips:
Forecasting and prevention
The first step to take when heading into a high demand season is to have a clear forecast of how it will be for our business. Ideally, we should use data from previous years to forecast sales and relate them to the industry’s trends so we can find out what, and how much of it, will be demanded.
This is how we can, for example, lower non-essential shipments. In other words, this is how we can focus on moving the goods that are key for our business instead of moving products with an unproven sales appeal.
Assigning priority to full load shipments
If there are specific products that need to be delivered at a precise time, especially if they are a little bit more in demand than other products, these should be the first we consider when managing the distribution and transportation, because during the peak season, shipments tend to get delayed due to the increase in risks inherent to the season.
To do this, freighters must know which crates or containers carry the high-priority goods and let third-party freight forwarders know before they ship the orders to help guarantee high-priority products are protected.
Send whatever you can, whenever you can might be a good mantra to embrace during the peak seasons. Splitting the shipments help us ensure at least some stock, regardless of possible delays.
For example, if several containers are shipped in a single shipment, splitting them up in several invoices yields better chances of getting some of them if other are stuck along the way. Likewise, for a 100-boxes shipment, we can send 30 by plane so we can have them in a few days and send the rest over cheaper means of transportation. Even though air freight is more expensive, and the double shipment seems more complicated, it is more important to have a safety stock.
Some freighters depend on transfers or indirect shipments. Even though some of these shipments may save us some money, there is the risk that they may be thrown twice, once for the first leg, and then again for the second leg. This is more likely during the peak seasons.
Buying freight insurance means being protected from the start
The importance of having insurance for all shipments is particularly relevant during the peak seasons. With more cargo and more freighters, the risk of something going bad tends to rise. In addition, freight theft tends to increase during the high season. If products never arrive or are damaged during transport, companies may end up with big losses; therefore, it is much better to have a comprehensive insurance policy to keep the cargo protected against any risk (it should include air and sea freight, if needed).
Hiring the services of a trustworthy 3PL partner
Among all the decisions we must make when shipping orders, choosing a reliable logistics partner is essential for ensuring the profitability of the operation, especially during the peak seasons.
Diversifying the options of suppliers opens a combination of freight contracts, different transit times options, and different levels of service. However, companies want to hire a partner that understands their business, and thus they must choose wisely. Setting up a system to manage the string seasonal demands is complicated; instead, an outsourced logistics supplier will help with that so companies can focus on their core business.
Of course, the right time for hiring the services of a logistics partner for the high season is before it arrives.
Securing drivers and capacity
The lack of truck drivers will remain a challenge during peak seasons. The lack of drivers and, therefore, a lack of transportation capacity will result in longer transit times and inefficient logistics.
When we outsource the operation, we can take advantage of the contractual rates to avoid the market’s volatility and uncertainty with spot rates for the peak season. Working with a 3PL to take advantage of its shipping network is the smarter choice for facing seasonal demands.
Having a realistic budget
It is essential to head into retail peak seasons having a realistic budget and a plan. For this, we must expect shipping rates to rise and consider scenarios of what would happen with the set budget. We suggest reexamining the shipping costs in relation to previous years, exploring potential benefits of contractual rates instead of the market’s spot rates and consider using less demanded – and therefore less expensive – routes.
Using technology for the best
Transportation Management Systems (TMS) can help us optimize routes, especially during shipment-heavy periods. TMS keep track of your products and monitor when they should arrive at key destinations. This level of visibility of the supply chain lets us have efficient communications with commercial partners and even lets us simulate shipping scenarios so we can visualize alternate routes and split shipping options.
Implementing a reliable capacity plan can help us avoid many of the issues inherent to peak seasons. Thus, everyone gets the best of the season which, in the end, should be about good news for businesses.
About the autor
El contenido de esta publicación es brindado por el autor y no representa la posición de la empresa respecto al tema