Prepping for Peak Season 2021: Shipping Into Big-Box Retailers
We often hear that the holiday season is “the most wonderful time of the year.” This year though, shippers may want to replace the word “wonderful” with “demanding”.
Peak Season has always been a hurdle for shippers, but COVID-created issues are likely going to make previous peaks look like child’s play. Combining already tight capacities, labor shortages, and increasingly stringent OTIF (On Time In Full) requirements, along with a surge of shippers trying to get their product on the shelf, is going to be challenging to say the least.
Below is a breakdown of things to look for as well as some advice on how to stay ahead and not get left in the dust created by the upcoming holiday season.
Have a Plan Going Into Peak
Typically, Peak Season for shippers starts at the end of September and goes through December, which includes planning for Black Friday and Christmas. It’s vitally important to have a plan going into the holidays.
Some suppliers will only stock certain products that sell during the holiday season. For example, if Walmart is having a major sale on game controllers, we’ll see a push on this product just for Christmas. Electronics, in fact, account for an overwhelming percentage of shipments during Peak Season.
Any type of holiday baking or food cooking item will also see a huge push. When this specific type of product push occurs, it pushes other verticals to order heavy as well. For instance, OTC (over-the-counter) pharmaceuticals know that if they don’t overorder product early, they’ll have trouble getting their normal product on the shelf, even though they’re not a part of peak product.
Therefore, they push safety stock into DCs to make sure there are no inventory shortages. This saturation of over-ordering causes additional surges as well as tightened capacity of all modes of transportation, including LTL, parcel, truckload, and containers.
Because retailers understand staffing constraints during holiday Peak Season, they do offer the ability for suppliers to omit orders during those weeks. However, if the supplier requests not to receive orders during the holiday weeks, the retailer will double up the orders the previous weeks before.
This could cause additional strain on the origin warehouse to meet the demand in shipping this surplus of orders. Therefore, if you take this route, here are a few points to seriously consider:
- We can’t stress this enough . . . be prepared. You’ll also need to talk with your facility or 3PL to make sure they can handle those heavier weeks. You may also decide it’s better to just stay steady and figure out a plan for getting your product to the retailers during the holiday weeks.
- Make decisions well in advance of the holiday season while ensuring all parties of their operation are involved. This includes buyers and sales teams, inventory control management, the warehouse, and the transportation provider. Together, you should talk about forecasting, plan any kind of transportation alterations, if you want to ship early, as well as timing for when orders will be dropped into the warehouses and transportation’s hands.
- Forecasting also needs to be as accurate as possible, while having it ready as soon as possible. Once you have a plan in place, you can start securing capacity well in advance and have a solid shipping schedule in place.
- Make sure inventory is ready first and then send it down. Order review time needs to be consistent. And a cohesive plan with transportation, warehousing, and the customer will ensure that orders are sent down in a timely fashion.
Utilizing LTL Can be a Risky Game
LTL is already over capacity so missing deadlines is not a road you want to take. The capacity is so tight it’s likely that LTL will make pickups late which may not deliver on time.
Historically, GEODIS has seen that when we cut our RCS (Retailer Consolidation Services) program due to lack of advanced customer participation, On Time performance drops significantly through LTL services. Trying to carry on with business as normal during Peak Season could result in a lot of failures and compliance fines being assessed.
While failures should be expected during Peak Season, compliance fines can be mitigated by formulating a plan with the warehouse and transportation teams to ship earlier than usual. Utilizing a program such as GEODIS RCS (and signing up well in advance) can remove the headaches of trying to get these plans in place yourself. Having a good relationship with retailers and understanding the intricacies with each is a huge advantage.
Because of COVID, driver shortages, equipment shortages, and over-commitment, we’re already seeing LTL companies having embargos. Companies can’t get product because the delivering DC is backlogged or holding on to drop trailers.
We anticipate seeing an increase of embargos across the board as shipments won’t be able to be fulfilled with the capacity and timing constraints in place. When using LTL without a premium service, your chances of On Time delivery significantly drop.