The months leading up to the holidays have always been a mad dash for shippers – even before COVID-19 upended global supply chains.
Coming off a chaotic year and an unprecedented holiday shopping season in 2020, businesses have barely had time to catch their breath as they grapple with changing consumer preferences, labor shortages and rising costs brought on by the pandemic. But as the 2021 holiday season swiftly approaches, businesses looking to capitalize on the upcoming shopping season need to prepare now.
U.S. holiday retail sales are expected to rise 2.7% from last year to top $1 trillion, and e-commerce will account for a record 18.9% of all holiday season retail sales. Meanwhile, many shippers are struggling to reconfigure their distribution and fulfillment networks based on how customers want to shop today.
For shippers, the holidays will be a major test of their ability to compete in a post-COVID era. Here are five ways to get ahead of the holiday season and optimize supply chain operations as we emerge from the pandemic.
Take E-Commerce Strategy from Ad-Hoc to Agile
The pandemic completely transformed supply chains, with shoppers rushing to purchase everything from groceries to electronics online. E-commerce sales grew 32.4% in 2020 and don’t seem to be slowing down anytime soon, with second-quarter e-commerce sales up 9% over the same quarter last year.
Massive changes to online shopping require massive changes to the way businesses manage their supply chains. But don’t make the mistake that many businesses did last year, scrambling to meet demand by creating a patchwork distribution and fulfillment plan. While this approach may be faster to get off the ground, it’s less efficient and more expensive in the long run. Taking the time to develop a cost-effective and comprehensive e-commerce strategy will better prepare you for the holiday online ordering surge and beyond.
Design for Customer Experience
Your customers are everything, and their expectations have only grown higher during the pandemic. Customers want lower prices, a broader selection, more convenience and a more personalized experience. There are also shifting trends to consider, with demand for certain goods plummeting and others rising during the pandemic, such as the athleisure boom.
This all adds complexity for shippers, especially traditional brick-and-mortar businesses that are getting a crash course in e-commerce fulfillment. A thoughtful approach to network optimization can help businesses improve delivery speed and quality, creating positive shopping experiences that customers will remember heading into 2022.
Maximize Available Warehouse Space
Meeting the rising surge of holiday orders will be difficult without adequate warehouse space. In fact, CBRE predicts that the United States will need an additional 330 million square feet of warehouse space for e-commerce fulfillment by 2025. On the other hand, unstable market conditions also put shippers at risk of overbuying space as needs continue to fluctuate.
To develop a successful warehouse space strategy, businesses need to consider current and future requirements. Identify all existing facilities and consider areas to optimize, including redesign, expansion or relocation. Finding the gaps and areas to streamline will increase your company’s agility and help prepare for the holiday season.
Focus on Optimizing Fulfillment Operations
The shift to e-commerce is creating significant new pressures on distribution networks. E-commerce fulfillment requires three times the labor and space of traditional operations, according to research by Prologis. Coupled with market pressures like price hikes and parcel limits, it’s imperative for shippers to build greater flexibility and efficiency into the last mile of the supply chain journey.
Staying on top of fulfillment requires a mixture of smart planning, automation, network visibility and the workers to get it done. Fixing simple warehouse inefficiencies can scale your business faster, like reconfiguring the warehouse layout to reduce the amount of time it takes employees to get from one place to another and reducing high-trafficked zones.
Automate to Offset the Labor Shortage
As of June, 1.2 million retail jobs remain unfilled, including 460,000 jobs in the transportation, warehousing and utilities sector. Not having enough workers can hinder your company’s growth and ability to meet customer demands.
That’s why a holistic labor strategy has never been more essential. Consider automation solutions like robotic goods-to-person solutions, which can reduce travel time for workers while increasing accuracy. Companies should also assess floor operations to increase efficiency and limit unnecessary product handling.
Looking Toward the Future of Supply Chain Operations
There’s no going back to pre-pandemic operations. Building a strong, resilient supply chain starts with looking toward the future – and Tompkins Solutions can help.
Our experienced supply chain consultants partner with your team to understand your unique business model and goals, designing custom end-to-end strategies that improve efficiency, cut costs, enhance the customer experience and position your business for greater success. Learn how we can help your business tackle holiday shopping season challenges and thrive in the years ahead.