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.

Meritxell Vázquez

SEO & Inbound Marketing
Video Game Design and Production graduate currently training in Digital Marketing with a focus on SEO and Inbound Marketing.

Creating articles of value and supporting communication to the technology sector.

hedyla.com

This translates into a supply chain that is less pressured by the bottleneck generated by a peak demand originally focused on a single day. However, there is a key element in peak demand strategies: reverse logistics due to the nature of the purchases and their expected high volume of sales, of which another large number of returns are expected after the holidays.

If you want to know the important points of reverse logistics on Black Friday and other demand peaks, take a look!

Packaging damage

According to this DS Smithstudy, it was estimated in 2021 that e-commerce shoppers would receive more than 14 million damaged and spoiled products and 64% of online shoppers had already claimed to receive their purchase in poor condition before. This results in a high volume of merchandise returns, especially if the price is more than 25 euros, and high consumer dissatisfaction.

This problem can be avoided without much mystery by applying the right packaging for each product or order. Either choosing the right package size without being unnecessarily bulky, applying suitable protectors for them and closing the box properly avoiding spaces that can be opened. Besides it is necessary to avoid overpacking because, sometimes, it turns out to be more counterproductive for the protection of the article and generate more waste of materials.

It should be noted that staff must follow instructions on how to handle packages, as quick but careless handling could cause knocks and damage the item. In addition, not all products are eligible for return because, if the shipping costs turn out to be higher than the price, it is decided not to take the package back to the warehouse and, instead, alternatives and compensation are offered to the affected customer.

Package delivery failures

In some U.S. states such as California, Black Friday has been declared a holiday, while in most countries it is a working day. However, in the event that the offers are extended days or weeks before, customers are more often absent from their homes, which means many failed deliveries that must return to the warehouse and one of the great challenges of reverse logistics on Black Friday.

Among the most popular options to deal with this more common inconvenience is the click & collect, giving the consumer the option to pick up his order when he can. Another alternative is to deliver purchases in lockers and delivery points such as post offices, especially in the case of e-commerce without physical stores or marketplaces. Whichever of these options, they directly avoid the return of the package by the delivery person and, therefore, more attempts of reshipment that entails more transportation costs.

Free returns and Bracketing

The bracketing is a trend that has emerged in recent years in which customers buy online the same product in multiple colors or sizes and then keep one and return the rest. Although this behavior emerged from retail giants offering free returns and convenience to the consumer, the reality is that it is a headache because of the high costs involved in returning the product suitable for sale, from transportation to reintegration into stock.

And times such as Black Friday are not exempt from this behavior because, according to UNO Logística, return rates are 24.5% and increase between 5% and 10% in times of high sales volume.

To this end, solutions are already being implemented to mitigate the financial and environmental impact of a high volume of returns. The simplest and most popular option among large retail companies is to offer free returns in the physical store, although others are opting to drop free returns and start charging for them according to their own policies. Even artificial intelligence can help to study the cases and decide whether or not to return the product based on its profitability. 

However, there are other measures that prove to be more drastic on the part of the consumer, for example, not allowing returns as in the case of small e-commerce that cannot afford to have the item returned. Even some industry giants such as Asos and Amazon have implemented blacklists of consumers prone to bracketing to disallow free returns.

Conclusion

Reverse logistics in itself is already a major challenge in terms of managing costs, resources and even environmental impact. At a time when offers and other conversion strategies are increasing a (dwindling) number of impulse purchases, so too will returns and therefore reverse logistics management. Consequently, a TMS will enable efficient and visible transport management, even in the most tricky moments such as rejects and returns.

At Hedyla we understand the importance of providing optimal customer service, as well as reducing costs, which is why our solutions come with built-in communication and incident reporting tools for any situation that may arise, whether it is a failed shipment or a return.

Meritxell Vázquez

SEO & Inbound Marketing
Video Game Design and Production graduate currently training in Digital Marketing with a focus on SEO and Inbound Marketing.

Creating articles of value and supporting communication to the technology sector.

hedyla.com

If last-mile delivery is a challenge for companies at other times of the year, at a time when shipments are skyrocketing, it will be even more evident. If you want to know how to prepare your capillary distribution for Black Friday, take a look at the following tips:

1. Prepare well in advance

Companies specializing in capillary logistics distribution have been preparing for months for the disproportionate increase in sales and possible saturation of the system. Everything that you organized 15 days or a month in advance will have to be structured twice as far in advance.

This is because the possible setbacks and errors that you may encounter in your planning will be easier to correct. Besides, you can continue adjusting the preparation as the trends of this Black Friday are known.

2. Analyze past exercises

It has already been mentioned above that the pandemic has driven e-commerce and, consequently, last-mile delivery to unexpected levels. But how has your logistics been affected during previous Black Fridays, and has your industry been impacted to a greater or lesser extent?

In order to clarify all these doubts, there is nothing better than looking at the logistics exercises of previous years. Has a noticeable or very gradual increase been detected? Are pick-up points being used more or do you prefer home delivery? With all this data, a rough estimate can be made of what will happen on Black Friday with last-mile delivery.

3. Make an estimate of delivery times based on actual capacity

Optimizing delivery routes alone is not enough to be able to deliver efficiently and on time. You must calculate the maximum delivery capacity to be able to match the amount of shipments affected by your customers due to Black Friday with the usual distribution volume.

For example, let's say your fleet of vehicles has a capacity of 10,000 shipments and you usually have an additional gap of 10% in a relatively stable season. Well, in this case, add the extra 10% and the equipment could already carry up to 11,000 packages.

4. Reinforce staff if necessary

This is a very common practice that transport companies, couriers and warehouses do to meet the peak demand for shipments. To do this, you must always have updated information on drivers, warehouse managers and other profiles at hand.

If it is feasible and you have considered temporarily expanding the staff, it is highly recommended to carry out the whole process well in advance in order to train them and be ready for the Black Friday logistics.

5. Maintain real-time communication

Finally, as is often said, communication is very important. It is even more so at critical moments in any project. Alerting and receiving warnings of mishaps encountered in transportation is crucial for customer satisfaction.

Existen computer programs that help monitor, track and talk to drivers in real time. If you have not yet incorporated one into your logistics management, now is a good time to consider and implement it.

Faced with an increasingly demanding customer, logistics must be not only fast, but also effective in resolving potential problems, and also sustainable.For this, good planning, preparation for setbacks and, above all, communication is essential to avoid being left behind and to meet an increasingly high increase in sales.

Logistics during Black Friday is of vital importance, we must take advantage of online sales and not wait for our customers to receive their orders late.

Meritxell Vázquez

SEO & Inbound Marketing
Video Game Design and Production graduate currently training in Digital Marketing with a focus on SEO and Inbound Marketing.

Creating articles of value and supporting communication to the technology sector.

hedyla.com