Managing the Supply Chain this Holiday Season

We are now on the final approach to the end of the 2019 holiday season. By all accounts, it’s been a ripper. As was said last time around, overall shopping is on track to increase roughly 4% with online shopping accounting for 23% of all holiday sales. That’s up from 18% in 2018. What a lot of packages!

That sounds good. But is it really? The answer all depends on where you are in the online holiday supply chain at any given moment. And, yes, your position does change even if you shopped exclusively at brick-and-mortar stores.

Consider this.

You are on the front end of the supply chain when you place an online order.

You are in a different spot, however, when traffic is snarled because of that delivery truck up ahead unloading someone else’s order. (The assumption is you aren’t quite as bothered if the truck is at your house.)

And you are still in another place when you were planning on same day or next day delivery, but find out, too late, that it will be much longer because there is only one DC in some remote, isolated location.

What we’re all most interested in is -- get it today. Or tomorrow at the latest.

As little as a year ago, two-day sounded pretty good. Now it’s passé, at best. For most of us, deliveries just happen. But for those fulfilling the orders, there’s a lot more to it than click-pick-ship.

Regardless of who is playing the get-it-today game, the answer is always to ship the order from a DC as close to the recipient as possible. That’s the first step in minimizing transit time from shipping dock to front door. There’s also the matter of traffic congestion caused by all those delivery trucks. The supply chain is far closer to an answer on the latter than the former.

There’s a good reason that warehouse space is so scarce these days. Lots of online players are leasing even small DCs just to be closer to a given customer base. Neither the space scarcity nor the drive to get closer is going to relax anytime soon.

In fact, there are a couple of interesting developments here. Most ironically, there are failing malls being turned into DCs in part or in full. Then there’s healthy brick and mortar. Increasingly, retailers, including grocers, use stores to fill online orders. You may have already heard of micro-fulfillment -- filling orders from a 5,000 sq ft DC attached to the store. We’ll get into all that in early 2020 in this blog.

As to traffic, oh, boy. The New York Times recently reported that NYC receives 1.5 million packages a day, a recent increase. And that was before the holiday season kicked off. It’s even more intense this week and next. How exactly can such a surge be managed?

Five years ago, Ben Montreuil of Georgia Tech offered an answer when he was trapped in traffic at 9 am in downtown Atlanta behind a tequila truck. Quite simply, he said certain goods should be cleared for delivery only at certain times of day to ease traffic flow. He’s not alone and many cities have already put such ordinances in place. As they say, this story is still developing.

Clearly, online orders do have consequences beyond the closing of 9,000 stores in 2019. The supply chain will be working to solve those situations for some time to come. And we haven’t even mentioned the R word – returns. Look for more here on that in 2020.

Meanwhile, Happy Hanukkah, Merry Christmas, Happy Kwanzaa, Happy Festivus for the Restivus and Happy New Year from all of us at OPEX to you and your families.   

Gary Forger is the former editor of Modern Materials Handling magazine and the Material Handling & Logistics U.S. Roadmap to 2030. 

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