Yes, Consumers Will Spend. Supply Chain Leaders Must Prepare
As the holiday shopping season approaches, one thing is abundantly clear: consumers are gearing up to spend, and the holiday spirit will be in the air.
This anticipated surge in consumer spending is not mere speculation; it’s a trend deeply rooted in long-term consumer behavior data. Surprisingly, despite 2022’s predictions of reduced consumer spending, sales from October to December of that year soared by 8.3% compared to the previous year. Forbes reported a 9.3% increase in nonstore sales, including eCommerce, with some specific categories experiencing a staggering 20% growth.
Many retailers and etailers have pushed early access sales in September and October. Ever since the advent of Amazon Prime Day in 2015, leaders have sought to compete by offering Black Friday in July.
These insightful leadership attempts at demand shaping have reshaped the holiday shopping landscape, extending peak spending beyond the traditional Black Friday and Cyber Monday. In this context, leadership plays a pivotal role in preparing retail, eCommerce and fulfillment operations for the challenges and opportunities of Peak Season 2023.
Warehousing: Well-Prepared – Not Enough
One aspect of preparedness that stands out is warehousing. Over the past year, many companies saw slower sales than expected, which has resulted in accumulations of inventory. The reduction in imports has lessened demand for adding warehousing space. In fact, I do not expect warehousing to be a problem for Peak Season 2023.
However, it’s crucial to recognize that warehousing is just one part of the equation. A comprehensive strategy involves efficiently moving these goods to meet surging consumer demands.
The Challenge: Labor and Transportation
With warehousing under control, insightful leaders need to turn their attention to two critical elements of the supply chain – labor and transportation. In fact, I think supply chain leaders are paying scant attention to those two factors, which could pose significant challenges as we approach peak season.
The labor market has proven unpredictable, with many industries facing worker shortages. For the logistics industry, recruiting and retaining qualified workers remains a daunting task.
Simultaneously, transportation faces its own set of challenges. Escalating fuel prices and logistical complexities make securing reliable transportation more difficult. However, committing to a single transportation solution is risky. A thorough Transportation Diagnostic Evaluation (TDE) can help identify the most suitable approach. Pairing the TDE results with a robust Transportation Management System (TMS) can provide a competitive edge, allowing flexibility and adaptability when demand spikes.
Giants Gearing Up: Amazon and DHL
Recognizing the importance of proactive planning, supply chain leaders at industry giants like Amazon and DHL are addressing their personnel challenges head-on.
Amazon plans to hire an additional 7,600 workers in Nashville and a quarter-million employees across the U.S.
Similarly, DHL eCommerce has inaugurated a $74 million consolidated distribution center near Cincinnati/Northern Kentucky International Airport. This high-tech facility can process 50,000 parcels and packages an hour and unload 20 trucks an hour, streamlining the final mile delivery process. DHL has invested $400 million in U.S. operations to ensure they have the technology, labor and transportation necessary to meet holiday demand effectively – now and for the future.
Your Move: Secure Flexible Solutions Now
At this stage, you likely will not hire a quarter-million workers or open multimillion-dollar distribution facilities.
However, securing flexible labor is achievable. Companies like Task4Pros offer trained warehouse labor in various U.S. locations, with a proven track record of rapid scalability. Unlike many temp agencies, Task4Pros Pros arrive prepared for warehouse work, boasting a 100% fill rate and turnover less than half the industry average.
As mentioned earlier, the synergy of a Transportation Diagnostic Evaluation (TDE) with a Transportation Management System (TMS) is a potent option to navigate the challenges of peak seasons. These solutions can prove invaluable in handling demand spikes efficiently and effectively.
Don’t Wait for the Peak to Hit
In the race to prepare for Peak Season 2023, waiting is not an option. As a supply chain leader, secure flexible labor and transportation solutions now to avoid shipping delays and provide excellent customer service.
Turning the challenges of the holiday season into growth opportunities requires foresight and proactive planning, and Tompkins Leadership is here to help you succeed.