Supply Chain Problems to Reach Crisis Point This Black Friday
For consumers, Black Friday is a day where you can grab a pre-Christmas bargain. For retailers, it’s a logistical nightmare.
Black Friday, itself an import from America, has swiftly become synonymous with shopping and retail anxiety. Traditionally the day which follows Thanksgiving in America, it’s set for 24 November this year and is closely followed by Cyber Monday on 27 November. Not without its set-backs for consumers it is both heaven and hell for retailers. Every year Black Friday and Cyber Monday break new records. The statistics are jaw dropping. In the US last year, over 100m people shopped over the Thanksgiving period. Spending an average of $967 per person, equating to $682bn spend in 2016 alone. In the UK the trend shows a 12% increase in volume sales with £6.45bn being spent over the Black Friday period.
For retailers this creates some daunting and specific challenges. Even the largest retailers are struggling to meet demand over this period. Even seasoned retailers suffered issues over this period. Marks and Spencer experienced problems last year after having launched a new distribution centre which wasn’t fully set up and able to cope with the influx of orders. BooHoo.com experienced web page time outs.
Most retailers are not well equipped to deal with this influx – even though they encourage it through promotions and advertising. Put simply, their systems and processes are not designed to cope.
Web Outage
It is simplythe volume of sales which impacts the retailers and their suppliers and partners. Web stability is one problem which many retailers suffer from. In 2015, 1 in 5 online retailers (including the giant John Lewis) websites went down before 9am. Last year Curry’s PC World and Argos both suffered outages during Black Friday as bargain hunters rush to get online deals. This is despite increasing their customer service reps by 40% and adding to their delivery and freight staff. Overheated servers struggle to cope with the large amount of traffic. Retailers really need to be investing in strong, cloud based systems which can cope with millions of daily web calls.
Bottlenecks
Whether your retail business manages its own logistics or whether you outsource it isn’t too early to start thinking about how you are going to manage the Black Friday bottleneck.
This year, in an attempt to avoid the bottleneck, retailers like Marks and Spencer and Boots are spreading the Black Friday deals across the full week. Expanding your sales over a longer period of time helps you to throttle your logistics and warehouse shipping routines so that the bottle neck is widened for that period of time. Make sure your e-commerce system is robust enough to offer multiple types of deals and offers which can be switched on and off automatically on demand.
Other tactics can include cross training logistics staff and cross docking of stock. Cross docking is a really useful way to set up during the peak season, as physical stores ramp up their inventory to keep their shelves stocked. High volume cross docking operations lets you route goods from your supplier to the retailer at a high speed whilst simultaneously keeping inventory low and stock costs down.
Your warehouse and inventory management system should be able to support your cross docking procedure. Make sure you are using a warehouse management system which is flexible enough to manage this process even it if an organisational scheme you only use during peak season.
If you sell kits or pre-packaged items it could help to increase the kitting on the run up to Black Friday. Your ERP system should be able to anticipate the increase in demand and make intelligent suggestions about how many kits need to be built and over what period to meet that demand.
Omni Channel Logistics
It also makes sense to utilise omni-channel logistics for online purchases. An ecommerce purchase might just as easily be fulfilled from any physical location whether it’s a retail outlet or a warehouse. Using a system which allows you to monitor, control and track stock levels across all physical locations is a must for any retailer wanting to beat the Black Friday blues.
Don’t Forget Outstanding Customer Care
Make a plan for things going wrong as well. Even with best will in the world and impeccable planning, you may still experience things beyond your control. Make sure your case management software is top notch so that if your customers do experience any issues over the Black Friday season, you can handle their concerns efficiently, effectively and with compassion.
Read our blog on how NetSuite supports customers through Black Friday
To talk to someone about e-commerce, warehouse management, inventory management and case management software – get in touch.
