Peak Uncertainty: Getting supply chains ready to respond this Christmas

Planning for uncertainty

When UK consumer confidence figures were published last month, they showed confidence at its lowest level since records began close to 50 years ago. But later the same day, retail sales figures published by the Office for National Statistics showed consumer spending had increased during July, which the ONS put down to promotions on Amazon Prime Day that month.

This uncertainty is what retailers are trying to get to grips with ahead of this year’s peak period in the run-up to Christmas. Will shoppers be searching for even more Black Friday bargains as they feel the squeeze of rising energy bills, or will they be forced to budget carefully and put off Christmas spending until the last minute? Will families focus on their children and forego presents for adults, or will Christmas indulgences still make it into online shopping baskets as consumers tire of financial doom and gloom and splurge on much-needed enjoyment?

The new government’s energy price cap has taken away some of the uncertainty for households around bills this winter, but inflation is still hurting shoppers’ spending power – and retailers’ ability to offer discounts, faced with their own rising energy and staff costs. Add in supply chains that are battling with continued global disruption, and retailers need to be prepared to handle a peak that may fluctuate like never before.

Accurate, accessible supply chain data is the key ingredient that will improve retailers’ ability to respond to changes in customer demand – and protect margins – in the following ways:

Identifying improvements

Are you ready for a sudden spike in demand? Is your system prepared for a delay by one of your main suppliers? Retailers can get on the front foot by assessing the accuracy of their inventory management. Our bespoke supply chain software, Vector, brings together stock data from all sales channels and across multiple warehouses and order fulfilment sites, as well as tracking freight status. With a detailed, integrated overview of how a supply chain is performing now, retailers can quickly evaluate where improvements need to be made – before peak hits.

The control tower view

Last year was the first truly omnichannel peak, after the shift to online shopping during the pandemic. But the change is here to stay, and a control tower view is essential for retailers to manage all their channels responsively. Constantly reviewing and acting on data from each channel lets retailers make quick – and profitable – decisions, such as moving stock from stores to an online warehouse, if that is where demand is highest.

Plan – then plan again

Effective supply chains are ready for uncertainty – and that matters more during peak than at any other time of year. Retailers can use accurate stock inventory management data to review multiple scenarios and create models to respond to spikes in demand or disruption and avoid empty shelves.

Demand, perhaps more than ever this peak, will be determined by low retail selling prices, and retailers need to be able to accurately forecast how their supply chain costs will enable – or limit – their ability to compete on price, for example during flash sales by rivals. This will be particularly important this year, as retailers compete to win price-sensitive shoppers without diluting margins to an unsustainable level.

Building in contingencies is another key part of planning for peak, and a clear overview of stock inventory is essential for this too. Planning stock levels on a localised basis over the short term is one approach, and accurate inventory forecasting can ensure reordering happens at the right time, to reduce replenishment timescales without tying up too much cash in stock.

Don’t delay

This festive season retailers must strike an almost impossible balance – protect their margins in the face of rising inflation, but also offer competitive prices to consumers squeezed by the cost-of-living crisis. Using accurate, readily available data to optimise their supply chain and inventory decisions will give them an informed edge.

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