“It’s all about smart use of inventory – and speed,” says Alyda Le Hane, Senior Supply Chain Advisor in DSV, when asked about the most important supply chain characteristics to focus on when demand suddenly spikes.
These ‘discount days’ which include Black Friday, Cyber Monday, Amazon Prime Day and Alibaba Singles Day present several supply chain challenges. You need to have the necessary staff resources, ensure that your IT systems are robust enough to handle the extra traffic, ensure that you’re stocked up on what your marketing team has advertised, and you need strong visibility of your supply chains. But your number one focus should be inventory.
People talk about ‘the cost of logistics’. I would say that it’s about the cost of logistics as a result of your inventory practices, and your inventory practices are a result of your supply chain strategy
Alyda Le Hane, Senior Supply Chain Advisor in DSV.
She adds: “In a traditional supply chain model, sellers will bring products into a facility where they are stored and later picked and packed to be sent out. This process has not proved effective in terms of the need for high speed, leading many to look more at cross docking, direct ships, cross trade, and similar practices.”
The example of cross-docking involves unloading goods from an incoming truck at a warehouse and loading them directly onto outbound trucks – with no storage in between. What comes in goes out same day!
What’s your omnichannel strategy?
Black Friday and Cyber Monday continue to take large shares of holiday spending worldwide. In the US, more than 165 million people are expected to shop during their five-day, Thanksgiving weekend – with Black Friday being the most popular. In the UK, November online sales have more than doubled in the last ten years.
We can still expect long queues of people in front of shops with irresistible Black Friday offers, but it goes without saying that online channels now take a large share of the sales. A 2018 survey showed that 63% of Black Friday shoppers in the UK plan to shop mostly or only online. As the lines between physical and online shops become blurred, retailers are expected to have a strong omnichannel strategy.
“Depending on the retailer, a good omnichannel strategy could involve click-and-collect where shoppers buy or select items online and pick them up in-store or at a collection point. Or it could involve a warehouse process that consolidates and pre-assembles the individual shopped items into ready-to-ship single shipments instead of picking and packing individual items as orders are received,” says Alyda.
Typically, a strong omnichannel operation has one single database that all employees involved in the fulfilment use and draw data from – as well as the data flow to support it. The data flow between sales channels (such as an app or a website) and the main database needs to be precise and without latency in any direction. Order handling, delivery, financial transaction, marketing reporting and other fulfilment processes need to be connected.
"Finally, if you are going into omnichannel e-commerce, you need different supply chain strategies for your different product groups. The importance of understanding how to segment your product groups for your customer channels to markets, and how to put the right KPIs in place for each segment, will determine your supply chain success," says Alyda.
Learn about supply chain segmentation in our insights report – Forward Logistics 2019
Insight provided by
Alyda Le Hane, Senior Supply Chain Advisor at DSV. Alyda has an MBA from Henley University in the UK, and more than 25 years of experience in logistics. She specialises in strategic and pharmaceutical supply chains, supply chain workshops and training. Alyda was the lead for the Supply Chain Council in Southern Africa and is a certified SCOR Trainer.