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

Ya se conoce que las actividades en la logística inversa son mucho más activas cuando el volumen de pedidos es elevado también. Si la devolución de artículos ya supone de por sí  gastos elevados por el coste logístico, sus numerosos desafíos presentes en un pico de demanda amenazan con la rentabilidad de la cadena de suministro.

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.

Entre las opciones más populares frente a este inconveniente más común de lo pensado es el click & collect, otorgando al consumidor de recoger su pedido cuando pueda. También otra alternativa es entregar las compras en lockers y en puntos de entrega como oficinas de correos, especialmente en el caso de e-commerce sin tiendas físicas o marketplaces. Sea cual sea de estas opciones, evitan directamente la devolución del paquete por parte del repartidor y, por lo tanto, más intentos de reenvío que supone más gastos de transporte.

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