In order to avoid a repeat of the disastrous 2013 holiday season, retailers attending IRCE 2014 were told to be more proactive in communicating with carriers, start planning now, spread shipments around to multiple carriers and have contingency plans in place.
“Brands that had been developed over decades were severely impacted,” said John Haber, founder and CEO of Spend Management Experts. “With the rise of social media, it went viral all over Twitter and Facebook. Many retailers issued gift cards and refunds to appease customers, but that wasn’t a solution – it didn’t make them happy.”
Leveraging data analytics to forecast holiday shipping volumes, and then sharing those findings with carriers upfront, made a big difference in avoiding holiday shipping snafus for GNC, said Jay Kent, the company’s senior vice president of distribution, transportation and logistics.
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“From a planning standpoint, it enabled us to understand where we were, work closely with the various carriers and execute,” Kent said. “We had no surprises, our season went very smooth and we had big volume growth.”
In a session entitled “Protecting Your Brand from Holiday Shopping Disasters: Supply Chain Planning and Execution,” Haber and Kent shared best practices about how GNC was able to avoid the ill effects of the 2013 shipping meltdown.
“You can’t start planning in November – it’s crucial that you start now,” Haber said. “You need to understand what your volume will be, talk to your carriers about their schedules over the holiday season, and what your equipment requirements will be.”
He also stressed the importance of having contingency plans in place, and of spreading out the volume of shipping over two or more carriers to avoid getting hit too hard if any one of them runs into problems.
“I always recommend having volume with another carrier or two, and give them that volume earlier in the season so if have issues they’ll be able to pick up your packages,” Haber said.
Part of being proactive involves staying on top of any carrier issues in advance. For instance, Haber said, GNC noticed how carriers’ service level performance was running below normal the week after Thanksgiving.
“It wasn’t just right before Christmas,” he said. “If retailers had that information by more closely monitoring service levels, they would have seen (earlier on) there were issues, and had contingency plans in place to divert volume to other carriers.”
Asked about the looming threat of a possible strike by truck drivers at the ports of Los Angeles and Long Beach, Calif., Haber said it’s already causing an impact, with 40% of freighter shipments being diverted to the east coast. The deadline for a settlement is June 30, and a few key points are holding up the negotiations, he said. Truckers staged a two-day walkout in late April.
“Retailers are diverting volume to places like Savannah, Ga., and Charleston, S.C.,” Haber said. “That means (carriers) need longer lead times. The reason why so much freight comes into the west coast is because it’s the end destination. If it’s diverted east, it then has to be shipped west. That will lead to a lot of added cost for inventory.”
He said he talked to a large retail client recently who told him the possibility of a strike doesn’t affect him because they don’t ship any ocean freight. “I told him you might not, but most of your suppliers probably do. If you haven’t had a discussion with your suppliers you may have huge inventory issues.”
“It has a halo effect on every retailer and every consumer,” Kent added. “That’s why we’re making contingency plans upfront to be more nimble than normal. Even if you’re not an importer it will affect you one way or another.”