Blog postsFebruary 16, 2016
Supply Chain Marketplaces for Managing Your Spring Sales Peak
Spring is just around the corner. As manufacturers and retailers ramp up inventory for the Spring peak they’re bound to face a number of challenges that come with the sudden demand for products that have been in low demand and supply during the Fall and Winter. Following the retail doldrums of January and February, Spring typically represents a significant jump in retail sales activity and the peak sales season for a wide range of products. While general inventory sales volumes increase 5%-10% over the first two months of the year, manufacturers and retailers also must manage the surge in demand and supply of yard and garden care products, Spring sporting goods, allergy products, summer apparel, paint and other home improvement supplies, cleaning supplies and other products fly off the shelves at the first sign of sun. More than 14 million barbecues and more than 900,000 tons of charcoal are shipped annually (most during Spring). Even bottled water sales increase to annual highs (equal to Summer) in the Spring.
While the seasonal demand is usually supported by well-planned inventory builds, even the best-laid plans are met with surprises or volumes that require flexibility and quick temporary solutions. Often, during seasonal peaks you need additional labor to pick and ship greater volumes of inventory faster. The increase in volume and speed means adjustments in inventory space and distribution schedules and capabilities too.
On the supplier side, companies that produce Springtime seasonal goods know it’s essential that they have enough product in the warehouse to meet demand without carrying too much inventory. That balance can be a real challenge when dealing with a brief seasonal window. Retailers have to strike a similar balance. Because the seasonal window of opportunity is short, they have very little tolerance for supply delays and variability. They can't afford to hold too little inventory and miss out on sales. And they can't afford to carry too much, because at some point, the demand will decline.
The ebb and flow of inventory can get rough when the warehouse reaches its designed capacity and when the pace and volume of inventory shipments ramp up, especially when you layer on other unexpected events. Weather can dramatically affect seasonal demand. If Spring arrives early, consumers may want to buy seasonal items in March, instead of April or May. If weather conditions are severe, shipments can be delayed. And, it’s not unusual for new products to be subject to manufacturing delays. Getting those late releases into the stores for the opening of the season can suddenly become an urgent concern that further burdens your operations.
In every case, warehouse managers need labor, distribution and capacity options that are as elastic as possible, so they can effectively handle the sudden influxes in seasonal product supply and market demand.
Smoothing out the issues related to seasonal peaks isn’t easy. Expanding warehouse space usually requires longer-than-necessary commitments and the cost of additional space is only getting higher. According to a 2015 Industrial Real Estate Report from Cushman & Wakefield, warehouse space has undergone 19 consecutive quarters of declining vacancies. As a result, U.S warehouse rents are expected to grow more than 10% over the next three years. Simply overstocking the warehouse can result in pallets of product stored in aisles, dock areas and rack end caps. Blocked throughways and visibility can create safety hazards, lost inventory and productivity hurdles. In the past, when seasonal capacity challenges have sprung up, warehouse managers would often pick up the phone and one by one start calling warehouses, starting with people they know, to see if they had some available space. This approach, of course, usually isn’t efficient or fruitful. Others have leased trailers to expand capacity. While these approaches have been viable in past years, they typically add significant storage costs, reduce efficiency, increase labor requirements, and introduce security risks. Hiring temporary labor isn’t easy either. Every temporary worker needs to be identified, vetted, trained and scheduled. That can be very time-consuming. And, distribution changes can be anything but trivial, especially when they can’t be accommodated through the usual go-to trucking companies and couriers.
Until recently, the warehouse and distribution industry has had to rely on these slow, old school techniques to solve very real problems in the accelerating, high stakes world of seasonal logistics.
The emergence of supply chain marketplaces is reshaping the way suppliers and retailers address the labor, storage and distribution issues that arise during seasonal peaks. Marketplace solutions provide quick access to a variety of resources and eliminate the time-consuming rigor of back-and-forth searches and negotiation. Through a simple online service, warehouse managers can now use marketplace sites to quickly find experienced temporary labor, available short-term warehouse space and on-demand trucking and shipping services that meet their timing and location needs.
Using a marketplace service puts a broad network of immediately-available, cost-competitive options at your fingertips. If you need to temporarily ramp up labor, you can find experienced workers in your area who are seeking short-term positions. When you need to expand warehouse capacity, marketplace solutions can point you towards a variety of warehouses offering up unused space for a short stint at a fair price. As your distribution requirements change, you can look to marketplace solutions to find available space on trucks that can immediately move product locally or beyond. There are a number of significant cost advantages to using these new marketplace options too. However, when solving issues related to seasonal peaks, the greatest advantage may be speed, because Marketplaces provide many of the resources you need on-demand. If you need it now, you can get it now and move forward. And that may be the greatest financial advantage of all.
Here are some examples of supply chain marketplaces that can help you manage your spring sales peak:
Cargomatic: Cargomatic connects businesses that need to ship goods locally with truckers who are nearby and have available capacity on their trucks. We recently spotlighted Cargomatic in this Logistics 2.0 video.
Convoy: Convoy is a marketplace for local trucking services. They provide instant access to local and regional carriers moving loads of every size, from pallet to truckload.
FLEXE: Through it’s national network, Flexe connects you to warehouse capacity when, where and how you need it.
Flexport: Flexport offers on-demand freight forwarding services and digital tools that provide visibility
and control over your entire supply chain.
Haven: Haven is an online freight exchange that provides direct access to their network of capacity providers for efficient freight shipping.
Loadsmart: Loadsmart identifies available trucking space and provides on-demand full truckload shipping services through their marketplace.
Transfix: provides mobile technologies and location-based load offers to independent over-the-road truck drivers.