Don’t Let Complexity be your Christmas Grinch

As the Christmas and Boxing Day sales period approach, peak demand is sure to be at the forefront of many retailers’ minds. The biggest challenge however, for retailers this festive season, isn’t coping with sales volume, but managing complexity.

During peak seasons like end of year sales, the stakes have never been higher for Australian retailers. With 87 percent of Australians shopping online for Christmas gifts last year, e-Commerce channels cannot afford any type of outage during the ‘silly season’, whether these are via their payments gateways or their supply chains.

Bricks and mortar stores also have the same challenges. They are certainly not exempt from heightened consumer expectations. The same survey found that more than one in two consumers are turning to e-Commerce to avoid in-store crowds, suggesting that a growing number find instore retail inconvenient and are dissatisfied with their physical retail experience.

Most retailers already have solutions in place to handle sudden surges in peak demand, from rapidly scalable cloud hosting to additional courier delivery options. But when orders get increasingly complex, it’s the retailers with agile processes and efficient supply chains that will be most able to avoid falling short on delivering the promise of a great shopping experience.

How complexity steals Christmas

During peak season trading, complexity is caused by the two“V’s”: variety and velocity. Coping with peak volume is relatively simple if a retailer’s inventory is only limited to a small number of products, delivery options, or points of sale. Extra inventory can be procured well ahead of time with minimal risk, while extra staff can be appointed to points of sale in anticipation of consumer demand – like the inevitable surge in last-minute orders and deliveries a few days before Christmas.

But the more choice a retailer offers to their consumers, the larger the variety of orders they have to process and plan for, and the greater the number of potential points of failure in the supply chain. This is particularly prevalent in e-Commerce, and also caused by the increasing tendency of products that go viral thanks to social media.

When this happens, retailers must often scramble to provide additional inventory, staff, and resources at multiple points along the supply chain, while also keeping up with the high volumes of orders coming in.

When retailers are unable to keep up with this surge in complexity, they can find themselves effectively hamstrung during what should be their most profitable time of year. The damage to a retailer’s reputation as a result of unfulfilled orders and delayed customer service can have a devastating effect.

Unlike a site outage, the reasons for supply chain breakdowns are far less visible to consumers, and often occur after the order has been placed. putting even greater pressure on retailers to respond quickly and transparently. 

Tackling complexity with agile supply chains

The best way to prepare for peak complexity is to have supply chain processes in place that is agile and able to keep up with rapid change. A supply chain that is fully integrated with all points of sale, delivery channels, and inventories is essential during these periods. However, retailers should ask themselves these three questions to see just how agile their supply chains and the software that runs them really are:

  1. How much visibility do you have? Clear end-to-end visibility of supply chains means retailers can better understand what’s going on during times of peak complexity, and identify what they need to do to take control of the situation. This is best achieved with a single ERP (emterprise resource planning) platform that can extract comprehensive, realtime data from all stages of the supply chain, and present them in a dashboard that will deliver up to date business insights in a simple concise way that store or operations managers can quickly act on.
  2. How automated are you? During peak season trading, responses to changes in demand need to be quick and precise. The software platforms governing these should be able to respond automatically to certain conditions, for example, when ordering new inventory from the fastest supplier or when orders reach a certain predefined threshold. Other processes that benefit from automation include order fulfilment (sending delivery information to logistics providers) and payment (pre-filling customer preferences via e-commerce channels).
  3. How simple is your customer service process? Although retailers don’t usually want to reduce the range of products or delivery options which they offer, they can streamline customer service processes to make things simpler for their staff. Customer service representatives, both in-store and offsite, should have access to ERP platforms that immediately give them the intelligence they need about a particular customer’s order or query. Retailers should also consider reducing the number of customer service channels they offer, or implementing more scalable ones, like social media, that are prominent during peak season.

Retailers will never be able to predict exactly what shape or form peak demand will take, whether at Christmas or any other high volume trading season. With an agile software enabled supply chain, however, they can ensure that their people, processes, and resources can respond as quickly as possible, turning high volumes of orders from stumbling blocks to opportunity.

When retailers plan for peak complexity instead of just volume, they can give themselves the best gift they can hope for in anticipation of the festive season, and that is, peace of mind.

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