As Black Friday gets closer, we can expect an increase in demand for most products. This can easily lead to a supply shortage if retailers weren’t prepared beforehand. To avoid supply chain problems, you must have a strategy.
But seasonal increase in demand doesn’t mean necessarily stock shortage. Another problem retailers can face is ordering during a stock shortage and receiving the items only after the end of the holiday, which can also result in inventory problems.
Avoid supply shortage on Black Friday
A good way to start is trough the employees. Having a team that are trained to deal with any problem that appears will ensure solutions faster and more trusthworthy. So, make sure your workforce is prepared to face the challenge of the holiday.
Also, as the volume of items to stock is higher, it’s good to cross dock. That will optimize routes from supplier to retailer and keep the price of inventory carrying low.
Another strategy that’s been used recently is to expand the customers benefits of the date. That means, start Black Friday sales earlier and keep the discounts longer. That will make the increase in demand spread trough the time and be easier to manage.
A matter of logistics
The higher the increase in demand, the harder it is to keep your logistics stable. So, it’s a good call to take advantage of the third parties involved in your usual process, taking the load of your direct team.
For optimizing the process, it’s good to have a forecasting tool and research throughout the year to establish which items will be more demanded. That will also make your order quantity optimal, securing many ready to go items.
On the other hand, not having a logistics strategy will lead to a shortage of items. King Banaian, economics professor at St. Cloud State University, explains that consumer behavior is decisive in this moment.
Banaian affirms that facing a supply chain problem, customers are used to buy in larger quantities, which makes harder to return to normal conditions, since the whole supply chain will be impacted with the increase.
One of the most effective plans to fix this condition is rerouting goods to less congested distribution centers, which makes transportation easier and faster.
Why start Black Friday earlier?
Supply Chain and transportation problems affect everyone, and retailers wants to guarantee that the customer will receive whatever he buys. So, as mentioned, starting earlier will spread demand and make delivering more efficient.
Big retailers are expanding the discount time and making sure that customers can use it through the whole season. On this strategy, the customer needs to know that the deal will remain.
Another good aspect of beginning earlier is that it reduces the congestion of big items, that are usually the ones that faces more problems with shipping and delivering. The idea is to set bigger discounts on those items before the mode demanding period.
What causes supply shortage on Black Friday?
A lot of causes can lead to a supply chain shortage. As a multilevel operation, it faces uncertainties that cannot be always fixed. So, it’s impossible to list all the reasons to a supply chain shortage. But among the most common there are:
- Factory Closures: a factory that are no longer operating will reduce the quantity of production and therefore the delivery of goods.
- Limited shipping container: you can’t transport all the items bought in the same container, so a great quantity will need more containers and more time.
- Delays at transportation: a lot of problems can happen with truck drivers and transportation equipment and that can lead to a shortage.
The biggest and more important impact black friday has on supply chain is the increase of demand and consequently the possibility of not delivering all the products and shortages.
For this, a consolidated strategy that considers the whole year is necessary. But also, considering the singularity of the holiday season when planning routes and methods. Also, spreading the demand may be a good solution to avoid congestion of products and problems with transportation.
Most of all, it’s fundamental to make demand forecasting and data analysis to establish how your business will respond to the holiday, as it doesn’t affect every retailer and supply chain the same way.