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The Most Wonderful Time of the Year: Plan Ahead for Maximized Profits & Minimal Pain Mid-Peak
The weeks and months leading up to Black Friday through Christmas tend to spike the blood pressure levels of business and operations leaders at brands that typically enjoy strong surges in order volumes around the holidays. And for good reason: as order volumes jump exponentially, so too does customer demand for very fast shipping and custom fulfillment touches – adding yet another layer of complexity to an already demanding process.
While the logistical challenges are real, working with a smart 3PL, investing in proper planning, and clearly communicating with your 3PL partner can alleviate much of the pain. This helps to eliminate unforced errors, placing you in a position to best navigate the dizzying holiday season.
Our seven tips below can keep you in control when it comes to peak, by putting in place proper planning and safeguards well before the sounds of jingle bells and carolers are all around you.
In order to ensure your 3PL is appropriately prepared to help you handle peak, we advise creating a daily forecast of expected orders, as well as any new inventory to be received. This is a vitally important step during the period leading up to Black Friday through Christmas, as there is typically very little slack throughout the entire supply chain: trucks, warehouses, and labor markets are all at peak utilization.
A daily forecast not only helps your 3PL to build the capacity and allocate the resources needed to support your business, but it also helps to create a shared plan from which all parties can operate – which in turn fosters accountability on all sides. By making a daily plan, each party will have a granular and detailed understanding of what to expect, as well as a basis for quickly detecting when demand or production deviates from those expectations, so that corrective actions can be taken as quickly as possible.
Extra capacity, when created in a cost-effective way, provides an insurance policy for sales that come in above expectations. Examples of how to build in buffer capacity include: (1) ensuring that extra equipment is on hand for picking and packing, and (2) budgeting for the ability to run overtime shifts. It's also important to keep in mind that extra capacity is not just about tangible physical resources like warehouse equipment and additional workers; the right technology creates capacity as well.
Extra capacity as facilitated by a technologically savvy 3PL operation is critical. This will look like a robust software system with strong quality controls that will allow an operation to quickly add new staff that can operate as productively as possible, as soon as possible. The act of simply adding new staff to the warehouse floor is not enough: your 3PL needs to have the technological infrastructure in place to standardize and simplify processes, allowing new staff to immediately add value without draining existing resources and manager bandwidth in the form of lengthy training and significant oversight.
Having a flexible set of marketing and promotional plans available to deploy that can take advantage of any extra or unused capacity is also helpful in maximizing sales during the peak holiday demand period. For example, if Black Friday orders are filled sooner than expected, unleashing a well-timed marketing campaign targeting last-minute gift ideas can aid in lifting demand. Crucially, this step relies on partnering with a 3PL capable of processing the backlog of orders from Black Friday in a timely manner, freeing up space to allow fulfillment of demand generated later in the holiday season.
Similarly, working with a 3PL that can reliably fill same-day orders (coupled with low-cost shipping - more on that below) can allow brands to maximize sales in the days leading up to Christmas by promoting and promising fulfillment in time for Christmas.
Working to reduce out-of-stocks is an obvious way to take advantage of extra demand and fulfillment capacity. A good 3PL partner can support you in this endeavor, helping to identify potential out-of-stocks before they happen and also helping to prioritize stock replenishment to maximize sales during the consequential holiday selling period.
A nice win for increasing stock levels is to prioritize the processing of returns based on items that are both in high demand and low on stock. By prioritizing these returns first, you can convert unsellable inventory quickly into a sale without spending to process returns that will only add cost to the bottom line. When you work with a 3PL utilizing sophisticated returns management software, the 3PL can automatically apply this prioritization for you.
One of the biggest sources of heartburn facing brands with direct-to-consumer fulfillment during the holiday season is of course managing deliveries that have to arrive in time for Christmas. All brands know that telling a customer their gift will not arrive on time for the holidays when you’ve promised that it will is among the very worst customer experiences. Brands are thus understandably conservative in these promises. At the same time, if a brand is too conservative regarding fulfillment-by-Christmas promises, they can miss out on a lot of potential sales.
Developing a sophisticated shipping strategy powered by an intelligent software platform is necessary for effectively managing these competing priorities. For example, it's important to track and monitor carrier performance, and update and evolve the mix of carrier and shipping methods as Christmas draws closer. The closer Christmas is, the more frequently you should look at changing the mix of carrier and shipping methods you employ. Depending on the average order size and inventory levels, it may be worth spending more on premium shipping methods if it aids in maximizing overall profit.
But please note: these sophisticated shipping strategies and profit maximizing opportunities are only available to those that have appropriately planned for peak. These strategies are not viable options if capacity was not effectively planned for and executed to earlier in the holiday season; if your 3PL is running with a high backlog, they simply won't have the capacity to effectively capture last minute orders.
We are big advocates of frequent communication with your 3PL throughout the year, not just during peak, but during the holiday season it is especially mission-critical. No matter how diligent you are with regard to planning for the peak season, there will always be unexpected surprises that pop up to be navigated on all sides. Establishing frequent and regular brief check-ins can help both the brand and the 3PL to collaboratively troubleshoot issues together. Video or phone check-ins are often far more effective than email during this busy period, as decisions often need to be made very quickly and everyone is already stretched thin with a plethora of competing priorities.
As with the other tips mentioned above - this peak season communication schedule should also be planned for in advance! The best advice we give to brands is to establish a schedule for these check-ins that begins before the Black Friday sales hit. Clear communication is an integral part of successfully navigating the holiday season with your 3PL, and it is what allows the other strategic planning pieces to successfully come together.
Peak season can be a LOT. But with careful planning and the right 3PL partner, it is absolutely possible to minimize the pain and leverage this busy time to strategically maximize profits in a significant way. With a disciplined approach to forecasting and inventory management, savvy returns and shipping strategies, and a strong partner with the technology to support this high-volume season, it can in fact be the most wonderful time of year for you and your brand.
Want to learn more about how we can help you ace this holiday season? Schedule a call with us.
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