The post pandemic supply chains are continually changing to meet demand. As we approach this Holiday season, we will see some improvements from last year, but the supply chains will remain challenged. We have a better understanding of the “new normal”, however, improvements now come incrementally versus large scale, primarily driven by:
- Material availability
- Labor availability (primary driver)
- Manufacturing Capacity
- Transportation and Warehouse Capacity
How Supply Chains Work
Supply Chains were based on JIT (Just in Time) methodology; everything coming together just when needed (lowers cost). It has now changed to a “Not on Time” reality. Manufacturers now face different decisions. Due to shortages, they may not be able to produce the item in demand. The decision may be to make a similar product or worst case scenario, make something with parts in stock.
Once through the manufacturing challenges, the supply chains face transportation and warehouse challenges. To a lesser degree, we will see some of the same issues encountered last year:
- Port congestion. Product at the dock, but not available to unload
- Transportation. Driver shortage of 80,000
- Warehousing. US vacancy rate is under 6%, west coast port cities are under 2%
Holiday Demand Tips for Retailers and Ecommerce Businesses…
Now that we are aware of the challenges, there are steps you can take to still make your holiday sales season run smoothly and be profitable:
Start early. Develop your list of inventory items, however, also have alternative items. Place your orders early; talk to your suppliers. Determine which items may sell quickly and purchase accordingly.
Source locally. Avoid overseas shipping if you can. Local wholesalers and distributors should, but may not always have an up-to-date website listing the stock they have on hand.
Inflation and commodity prices are on the rise. Keep in mind, crude oil is at a high and climbing. It goes into many items you may not be aware of. For example, anything that contains plastic. Again, consider your inventory.
This is the first of a series of 3 articles on Planning for the Holiday Season Demand. Next, “Pricing for Profit” and lastly, planning your marketing strategy and tactics.
If you need help with planning for the holiday season, a SCORE mentor can help you for free. Click here to set up a free mentoring session….
One of our new SCORE mentors, Bruce Milem, contributed to this article.