How to Strengthen Supply Chains During Retail's Peak Season

The period stretching from pre-Halloween to Christmas represents a 'golden quarter' for retail, offering an opportunity for businesses to boost profits and end the year on a high. 

But what if their supply chains are letting them down?

Here, Rob Shaw, Managing Director for the EMEA region at Fluent Commerce, speaks to Supply Chain Digital about the strategies companies can employ to ensure a prosperous festive season. 

Tell us a bit about you and your role 

As General Manager for Fluent Commerce in Europe, Middle East and Africa, my focus is on helping organisations in these regions maximise the potential of their stores and fulfilment locations with smart use of inventory, intelligent order management and fulfilment.

I have more than 20 years’ experience in technology sales, including a decade in fast-growing, consumer-facing e-commerce and customer experience applications.  

For those unfamiliar with Fluent Commerce, what are the company's main activities? 

Fluent Commerce is a global software company focused on inventory data management at scale and distributed order management (DOM) for commerce.

Both B2C and B2B organisations rely on our cloud-native, highly-flexible and fully-scalable solutions to transform fulfilment complexity into a competitive advantage.

Fluent Order Management provides accurate, real-time inventory availability across all locations, order orchestration, fulfilment optimisation, fulfilment location management, in-store pick and pack, customer service and reporting. This enables retailers, brands, and B2B organisations to ensure they never oversell or undersell and to deliver their orders profitably every time. 

The golden quarter offers a huge opportunity for retailers. How can supply chain issues impact profitability and CX during this period? 

There are a number of potential issues to address. One of the most significant is the risk posed by outdated order management systems (OMS) that fail during periods of high demand, which can have a very serious impact on profitability and CX. Even small periods of downtime can cause thousands in lost orders as customers look elsewhere or share their frustrations online. This can have a knock-on effect where orders are delayed and stock levels aren’t monitored correctly, leading to issues such as overselling and damage to brand reputation. 

To assess the levels of vulnerability to these supply chain issues, retailers should carry out OMS load testing to identify system weaknesses and be able to assess the ability of their system to handle extra transactional pressures. This should be accompanied by a strategy to streamline inventory and supplier processes to efficiently meet demand, backed by contingency planning that provides the monitoring and communication processes required to manage unexpected supply chain challenges. 

How can retailers strengthen their supply chain to make the most of the peak season? 

Building resilient retail supply chains can have a transformative impact on the ability of retailers to make the most of peak season. Key objectives are enhancing inventory visibility and management to ensure products are available when and where customers demand them. Additional steps should include implementing intelligent order routing, ensuring technology infrastructure can be scaled to handle spikes in demand and leveraging data in real time to ensure continuous improvement.  

Advanced DOM solutions offer a range of capabilities, ranging from real-time inventory visibility and smart order routing to the scalability required to handle high order volumes seen during peak season. For example, they enable retailers to take customer orders and direct them to the designated fulfilment centre, warehouse, store or third-party logistics provider. A DOM also provides information on inventory across all business channels and locations so retailers can see the available products in real-time and where they are located. This insight is critical to ensure that customers can always find the products they want and that you can fulfil their orders quickly and efficiently. 

Without an effective DOM, retailers must manage orders with a legacy system, ERP or commerce platform, which can be time-consuming and error prone.  ​​​​​​​

How can retailers manage split shipments during the peak season so they don't kill margins? 

Whether it’s increased shipping costs, high order rejection rates or poor fulfilment efficiency, split orders present retailers with a multitude of potentially expensive problems. There are several steps they can take to minimise this. For instance, real-time inventory updates can minimise the impact of outdated stock information, reducing the need to resort to split shipments in the first place. 

Retailers should also adjust safety stock at each individual SKU location level based on item velocity to avoid unnecessary split shipments. Analysing SKU metrics can help retailers make informed decisions about where to fulfil orders, reducing the need for split shipments and optimising inventory turnover. In this context, resources are dynamically allocated to ensure delivery from the best-suited location based on specific criteria.

After Christmas, we typically see a huge flux of returns. How can retailers make them profitable without alienating customers? 

Returns add significant levels of complexity and cost to retail supply chains by requiring reverse logistics, additional handling and inventory management. This can put a strain on resources and profitability. 

To address this challenge, retailers should make their returns process easier: Publishing clear and fair return policies, implement efficient return logistics and use incentivised offers to encourage customers to exchange items rather than return them outright. Analysing all relevant data also allows retailers to refine product descriptions, sizing guides and product recommendations to minimise the likelihood of returns. 

Over the last year, a number of major retailers like ASOS have started charging for returns to try to balance this issue. Research from Shippit shows that, while nearly half of all retailers offered free returns six years ago, less than 20% do so now.

However, while fees can substantially decrease the number of returns, alleviating the strain on reverse logistics and the supply chain, the strategy needs to be carefully managed to prevent alienating high value customers. One option is to introduce two categories of customers: ‘verified’ ones with a low returns rate who can still access free returns and a second group for new customers or customers who have a higher returns rate and will need to return at a fee. That way you don't alienate your best customers but discourage serial returners from buying and sending back their 20 unused New Year outfits.

Explore the latest edition of Supply Chain Digital and be part of the conversation at our global conference series, Procurement & Supply Chain LIVE

Discover all our upcoming events and secure your tickets today

Supply Chain Digital is a BizClik brand