Aligning promotion and production will be critical to ensure retailers’ festive season planning does not fall victim to the ‘golden quarter’ plights, claims Crimson & Co, a leading end-to-end supply chain consultancy.
As the festive season creeps closer, organisations, especially those operating within the retail sector, are ramping up their supply chain processes in order to cope with the influx in demand, it said. Supply chains are pushed to their extreme limits and retailers are all too aware of the fact getting it wrong at Christmas is the cause of many retail casualties, according to Crimson & Co.
With Christmas supply plans being put in place anywhere between two weeks before Christmas to 18 months before, depending on the sector, it’s a process which requires much thought and analysis in order to perfect it, said Crimson & Co. The run up to Christmas is characterised in the supply chain by trucks being unavailable, warehouses being at full capacity and product flows up to double normal rates.
Crispin Mair, founding director, Crimson & Co, said: “Christmas supply chain planning is no mean feat and every year, organisations face the challenge of getting supply and demand aligned. The key to ensuring this is a success lies in two areas:
- Seasonal planning must form an intricate part of the medium and long range business planning, which done properly involves a robust S&OP process with full business engagement
- Collaboration with key customers in order to understand their Christmas promotional and sales plans, as well as their inbound plans – these need to be aligned with projected product availability
“Every year, there is much talk about when the peak-shopping day will be or when ‘Mega Monday’ will fall. Organisations therefore need to make the right decisions on which day consumers will be shopping, through which retailing channel, and which products and promotions will drive maximum profit. If forecasted incorrectly, these challenges can cause queues, stock-outs of critical items and potential huge losses in revenue,” said Crispin.
With the right planning in place, organisations should be able to cope with these extra demands. For example, short shelf life suppliers need to make sure they have the raw materials available, either in stock or readily available, in order to respond to daily sales feeds.
Crispin said: “The normal ‘linear planning’ of mechanically turning forecasts into production plans is replaced during the festive period with contingency planning. Organisations should turn to understanding the risks, keeping the optimum mix of responsiveness to capacity and inventory, track sales developments and respond to the unexpected.
“Most goods companies have ‘slow twitch’ planning processes which analyse data over the year, but there are also ‘fast twitch’ planning processes which analyse data, to make key decisions on an hour-by-hour basis. Businesses which tend to have slow twitch processes for much of the year, but then switch to fast twitch at Christmas are those who tend to experience more problems,” said Crispin.
At Christmas, getting your product through to the store shelf is absolutely critical, and although it is a gruelling struggle perfecting the supply chain, it is essential organisations properly assess theirs and understand how to get the most out of it through efficiencies and best practise processes, said Crimson & Co.