What are the challenges for the Supply Chain at Christmas?

It is known that the times of the year when the supply chain faces many challenges are, without a doubt, the demand peaks accompanied with holidays such as Black Friday and Christmas. In recent years, because of the changes in the economy caused by the pandemic, the supply chain has made changes at a dizzying level to adapt.

While noting the challenges that the supply chain will face in the coming year, it is equally interesting to analyze the challenges that are particularly relevant at critical times such as the Christmas holidays. In this way, it is possible to carry out good demand forecasting studies and implement the necessary measures to keep the supply chain operating optimally.

If you want to know the supply chain challenges for Christmas, take a look!

Increase in reverse logistics

It is already known that reverse logistics activities are much more active when the volume of orders is also high. If the cost of returning goods is already high in terms of logistics costs, the numerous challenges involved during peak demand threaten the profitability of the supply chain.

To understand the importance of reverse logistics, one must consider its own challenges whether they are internal or external causes of the supply chain. An example of an internal factor is bad practices in product packaging that cause damage and, consequently, customer dissatisfaction, while an external factor is the tendency of certain consumers to bracketing. 

Longer peak demand

It has been observed that, as the years have passed, the campaigns that drive holiday shopping have spread out so that this year it starts even months in advance. From e-commerce giants' own discount campaigns such as Amazon's Prime Day to Black Friday and Cyber Monday weeks, the supply chain starts to operate at a dizzying level earlier and for a longer period.

This is because problems related to the supply of certain materials and delays in shipping them (such as the maritime crisis) cause uncertainty in ensuring that a product is in stock and arrives in time for the holidays. For this reason, consumers are opting to do their holiday shopping by taking advantage of bargains and making sure they arrive on time.

Last Mile

The last mile has always been a major challenge at any time of the year due to rush hour traffic and the measures that municipalities are beginning to consider to reduce congestion and fuel emissions. Such inconveniences are especially noticeable in large cities where they tend to have more restrictions on the circulation of certain types of vehicles.

Today, consumers are given several delivery options other than home delivery, such as Click and Collect and lockers. Although these are not very popular options as three out of four consumers still prefer home delivery, it is highly recommended to offer these alternatives to simplify more delivery routes. In addition, there are sophisticated solutions capable of planning multiple complex delivery routes such as route optimizer.

Difficulties in modernizing the chain

There is a lot of talk about how essential it is today to implement digital transformation in the supply chain because of the current demands of the industry for greater control and efficiency of the supply chain. However, the difficulties involved in modernizing a mainly analog supply chain are not as widely explored.

At such a critical time in the supply chain as Christmas, many companies may consider making the digital leap. But, one of the most common problems is the use of legacy and obsolete software that meets its objectives but is no longer expandable or too inflexible. This is complemented by a lack of knowledge and real-time information. Therefore, adapting to digital change in a very short timeframe can be complicated.

Conclusion

Consumer habits have changed considerably in recent years and this can also be seen in Christmas shopping. For this, it is necessary to carry out a good analysis of the customer and demand forecasting and to study the measures to be taken in order to meet sales and service objectives. Either by hiring professionals specialized in supply chain management or by integrating new technological tools that help in the management and visibility of the supply chain, such as the Supply Chain Simulator.

At Hedyla we offer logistics solutions that use Artificial Intelligence to calculate the most efficient operations possible taking into account the preferences and constraints of each company.