For supply chain planners, the ongoing disruption to supply chains caused by the global pandemic reads like a script for a disaster movie. Sick workers, shuttered factories, packed container ships waiting days to unload their freight at clogged ports, panic buying, empty shelves, plummeting sales.
With the holiday shopping season in full swing, these pandemic-driven slowdowns and disruptions, combined with the annual spike in demand from holiday shoppers, are expected to have an unprecedented impact on the availability of many sought-after consumer products.
Everything from toys, clothing, shoes, and sports equipment are predicted to be in short supply, along with the latest gadgets that rely on computer chips, such as smart phones, Xbox consoles and most other consumer electronics products. Even traditional holiday staples like Christmas decorations and turkeys may be hard to find, further adding to the bleak holiday outlook.
For retailers, the stakes couldn’t be higher. After more than a year and a half of lockdowns, store closures and volatile sales results, they’re looking to rebound in a big way this holiday season.
The good news is that despite these dire predictions, some retail industry experts are forecasting double-digit growth this year based on consumer spending plans. According to AlixPartners, 88 percent of consumers plan to spend the same or more than last year, while only 12 percent plan to spend less. All the more reason for supply chain planners to use the full range of concurrent planning tools and best practices at their disposal to mitigate supply chain bottlenecks and get their products in the hands of enthusiastic holiday shoppers as quickly and efficiently as possible.
Focus on the factors you can influence
Facing a holiday shopping season like no other, supply chain planners need to do whatever they can to make the best of a bad situation. With so many aspects of the current supply chain predicament beyond their control, that means focusing on the factors that they can influence.
If you happen to work for one of a handful of retail industry giants like Walmart, Target or Ikea, that might involve chartering your own cargo ships to make sure that your goods are delivered on time. For most companies, however, the approach will be somewhat different.
Take panic buying, for example. Given that retailers are likely to experience at least some product shortages this holiday shopping season, it’s critical to be prepared to handle any panic buying scenarios that may arise. During the early days of the pandemic, nearly everyone saw the negative impacts of panic buying of toilet paper and personal protective equipment (PPE), from consumers and retailers to distributors and manufacturers. To avoid reliving the same nightmare, early preparation is critical, because by the time the shelves are empty, it’s too late to do anything about it.
Embrace demand sensing and scenario planning
In addition to heading off any panic buying catastrophes, supply chain planners can use demand sensing to anticipate and plan for other potential shifts. Demand sensing involves leveraging real-time external data sources to capture the leading indicators that can have an effect on demand, including point-of-sale inputs, weather reports, news alerts and social media trends. During the busy holiday shopping season, insights provided by this real-time data will help planners greatly improve the accuracy of their demand forecasts.
Another proven best practice for de-risking supply chains during heightened periods of uncertainty, involves building a scenario planning playbook, which captures as many scenarios and forecasting models for disruptions as possible. Some potential “what if” scenarios to cover include:
- What if demand spikes?
- What if a plant goes offline?
- What if there’s a raw materials shortage?
- What if there’s a delay in shipping?
- What if there’s an increase in freight costs?
By documenting in advance how to react when faced with any of these scenarios, planners can act quickly to mitigate the negative impact of any disruption when it’s thrown their way.
Ongoing supply chain transformation prepares companies for the next disruption
The pandemic has taught us many important lessons about supply chain planning, but a key one is that companies that are actively engaged in supply chain transformation will be better prepared for the next major disruption when it occurs.
Take Mars Inc., for example, one of the world’s largest candy and pet food companies. A commitment to supply chain transformation has enabled the company to improve its forecast accuracy by as much as 35 percent. What’s more, Mars has successfully augmented customer data sets with consumer inputs from social listening and geographical data around pandemic openings and closures, a key capability that will help it to avert future supply chain challenges.
By embracing supply chain transformation, biopharmaceutical leader Ipsen was better prepared to tackle the many planning challenges that arose during the pandemic. Using sophisticated demand sensing capabilities, the company was able to focus its manufacturing efforts on products for markets where inventory levels were weaker and volatility was higher. Incredibly, the company has experienced no stockouts during the pandemic.
The historic supply chain disruptions triggered by the pandemic over the last year and a half underscore the need for greater transparency and agility across the supply chain. As a result, it's time to get planners away from the repetitive, time-consuming tasks, like data cleansing, and back to what they do best: planning!
Learn more about how supply chain disruptions will impact the holiday shopping season and what retailers can do to prepare in this episode of Logistics Matters with DC Velocity.