Supply Chain Planning: A Strategic Guide for Peak Season
With Q2 wrapped up, companies across the logistics industry are turning their attention to peak season. The next few months are traditionally characterized by soaring order volumes and heightened customer expectations, presenting both challenges and opportunities for logistics companies.
From the frenzy of holiday shopping to the surge in e-commerce activity, this seasonal rush tests the mettle of industry professionals and pushes the boundaries of logistical efficiency. Inaccurate forecasting, weather-related issues, and fluctuations in consumer demand compound the challenges making planning essential to ending the year on a high note.
Reliable data is critical to eliminating operational inefficiencies and reducing transportation spend. With Trax, global organizations can simplify the complex challenges that arise during peak season.
Let’s examine a few key factors to consider and tips to help your organization prepare for the upcoming increased demand.
Peak Seasons for Supply Chain
Like most things in the supply chain, seasonality is more complex than a fixed period of time. Not all industries will experience the same peak seasons, as consumer demand is the driving factor. When you hear the term peak season, it typically means August through the end of November.
These few short months are highlighted by a surge in demand as consumers prepare for the holiday season culminating in events like Black Friday and Cyber Monday. Despite the predictability, volatility is still an issue.
Organizations can adapt and adequately prepare for peak seasons by analyzing consumer spending data.
What is Peak Season in Logistics?
The increased demand that spurs the supply chain also impacts logistics. As the demand for consumer goods grows, the need for capacity solutions also increases. This creates an environment where freight rates skyrocket, and the capacity for loading cargo becomes increasingly tight.
For most in the logistics industry, peak season begins in late September and runs through the end of the year.
During these months, businesses need help finding transportation capacity due to the heavy market demand increase. Price wars, where only the highest bidder wins, are common throughout peak season, resulting in other issues, such as shipping constraints at ports, terminals, and other points along the supply chain.
For the everyday operator, the logistical challenges associated with peak season make information and transparency essential to maintaining the flow of business.
Which Factors Affect Peak Shipping Season?
Stating that an increase in consumer demand is the sole driving force for peak shipping season is an oversimplification. There are a number of factors that spark the peak season rush each year.
In 2019, tension between the U.S. and China caused the rush to begin earlier than expected, as retailers feared shipping challenges and delays. As a result, the peak season started in June instead of August.
Over the past decade, shifts in consumer behavior have also caused a ripple effect that impacted when peak season started and ended. The growth of eCommerce has fundamentally impacted peak season as more consumers are getting their holiday purchases directly from the supplier.
Each added layer of complexity makes it vital that global organizations use tools to help simplify the process and improve visibility.
Over the past few years, a trend has emerged where retail sales peak toward the end of the year, yet inventory doesn’t necessarily adjust accordingly. This is largely due to inaccurate forecasting models and can put companies in a precarious position around the holiday season if demand outweighs the forecasted supply.
Average seasonality accumulates historical data and creates models manufacturers can leverage to better understand future demands. Potential disruptions in the supply chain, such as inflation’s impact on consumer spending, can be accounted for and mitigated based on empirical data and improved forecasting.
Supply Chain Planning Tips
As the industry looks toward peak season for both the supply chain and logistics, putting pieces in place early and having a solid game plan can help maximize profits and minimize the impact of potential disruptions. Consider these helpful tips as you plan for peak season.
Effectively Communicate with Vendors & Suppliers
Communication is essential to business, but it is under the microscope during peak season. Shipping delays, unexpected changes in consumer behavior, and more are all part of the equation, and the better you are at communicating what you see on your side will help you both be better equipped to relay information to vendors and suppliers.
Visibility is an overlooked component, but the more you can see in real-time, the easier it will be to pivot if necessary.
Improved forecasting tools open the door for early shipping. Lower freight costs are the most notable benefit of shipping before the retail rush. Capacity will become tighter, causing freight costs to rise.
This is a perfect example of how data can reduce transportation management spend.
Consider All Shipping Options
Your tried and true shipping options might not be the most cost-effective or efficient. As the logistics industry is stretched thin during the coming months, exploring your options is a great way to reduce costs and ensure timely distribution.
Optimize and Streamline Operational Processes
Efficiency is the key to maximizing your ROI during the peak season. As more organizations expand their operations around the globe, the need for streamlined processes becomes increasingly important. Those with operational inefficiencies will find it more difficult to manage freight during peak season.
Tools like a freight audit and payment platform offer a single-source system that simplifies the process and ensures freight moves quickly and efficiently.
Overflow and Storage Handling
In most cases, overflow happens as the direct result of an influx of inventory. As manufacturers ramp up production to meet the expected demand, having tools to gain visibility on inventory levels at each storage can help you avoid overflow issues.
The best way to mitigate overflow is to address the issue before it happens while also acknowledging that it may be unavoidable at times. Having a plan to address overflow issues will make the process much smoother than if you assume that every precaution you have taken will result in never having an overflow issue.
Commit with buyers or consignees to early shipping & delivery dates
As previously mentioned, accurate forecasting has a host of benefits. One is getting buyers to commit to early shipping and delivery dates. This can help you avoid higher shipping costs or capacity issues that frequently occur later in peak season.
Develop New Routes & Ports of Clearance
The beauty of shipping data is that it can leave breadcrumbs to lead to improved efficiencies. Consumer behavior is constantly changing, and over time data may reveal that utilizing a specific port or a new route can help with transportation spend.
Strong Supply Chain Planning With Trax
Peak season is just around the corner, and there are already a few unknowns. Most notably, the impact of inflation on consumer spending could spark or delay the peak season. The best way to set your business up for success is to put tools in place and have a strategy that focuses on reducing inefficiencies.
Strong supply chain planning starts with reliable data. The better the data, the better your decision-making process.
Trax is a global leader in transportation spend management. Our solutions have helped countless global enterprises manage transportation contracts, gain visibility into transportation spend drivers and performance, and simplify complex business processes.
Contact our team for a consultation today for a closer look at our solutions.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.