Practice makes perfect. Prime Day and other pre-season events matter.
How can you know your supply chain is ready?
In the traditional peak season planning process, you set your plans, stock your shelves, and hope you are right. For many brands, there is a 3-4 month window of sales that will contribute 50% or more of their annual sales plan. A misstep in that sales window can be an existential issue for many smaller firms. But, peak season isn’t what it used to be.
Brands are responding to changing seasonal demand, shifting to a year-round trend for peak. Instead of the drumbeat calendar cadence of avoiding June-July-January and focusing energy on October-November-December, firms are realizing the criticality of being operationally ready for anything, at any time of the year.
Prime Day is a market barometer
With a rising focus on direct-to-consumer and marketplaces like Amazon to extend revenues, the primary sales channel has shifted. You aren’t primarily stocking for full-pallet truckload replenishment of retail stores. Parcel and LTL have become the default mode of getting goods to customers.
Fees are extending the fulfillment network
What has changed this peak season? Amazon continues to raise fees for listings, storage, and fulfillment, meaning many shippers are opting to pull away from a marketplace that dips too far into their pockets at a time when their pockets are shallow.
When combined with new players willing to move in – like FedEx – we’ll see people continuing to sell through Amazon but fulfilling more through their dedicated networks or those of competing services.
Anticipation will be paramount
77% of supply chain leaders expect this year to be more challenging, according to an upcoming peak season report by Industry Dive.
This underscores the fact that even the best plans can face snags:
- Are your people trained and disciplined?
- Can your process handle the temporary surge?
- Is your order management system or DOM (distributed order management) solution ready?
What you can learn about peak season from Prime Day
Prime Days are a boon for many organizations, even Amazon. They present the opportunity to create a predictable surge in demand that will provide a preview of the holiday season on which brands depend for the bulk of their profits.
You’ll learn a lot during these bonus events.
- Which processes broke?
- Which department fell down?
- Which system kept up?
You usually have to pay consultants for these profound insights and you will get them with enough lead time to address them. This will be critical as the market continues to struggle with two issues: the availability of labor and interest rates staying steady, which are higher than businesses would like.
This additional lead time will require thoughtful decisions over rash ones that increase your costs. But is the lead time enough? What if you could predict and take charge of your peaks WITHOUT paying huge consultant fees every year?
Technology gets your process ‘game-day ready’
Stress-testing and preparation is simple with strong tools. For example, OMS software like Deposco’s Bright Order lets you manage multiple sources of orders and fulfillment locations as one cohesive pool of available inventory.
Like sports, there is a self-reflective value to pre-season or invitational games. These ‘games’ can help your team shake off cobwebs and test if your new peak season strategies are sound. Better now than during the retail equivalent of a playoff game.
If your fulfillment systems can’t keep up, there might be something your legacy ERP or WMS vendor didn’t tell you.
Related: 6 Things WMS Software Companies Left Off Their Brochure
Make it a year-round exercise
Focusing on the people, processes, and technology in the warehouse is traditional. But this can ignore the lynchpin of every ecommerce fulfillment operation: how well your systems work together.
Don’t stop at the annual sprint. Continually scrutinize other important functions and systems:
- Did the integrations work correctly to head-off delays and oversells? Did they keep up with all volumes or were there processing delays from your marketplaces? Did your WMS sync inventory accurately to prevent overselling? Did integration problems cause revenue losses, credit card chargebacks, and poor customer experiences?
- Have you deployed an OMS? If so, are your policies creating the ROI outcomes you expect or are they eroding your margins? Did orders go to suboptimal locations you didn’t expect? Did channels sell out early while others stayed stocked?
- Is a planning system automatically learning from this Prime Day (and the ones before it) to give you a bulletproof peak plan? If not, where was your partner?
For Deposco, Bright Suite is greater than the sum of its parts. Individual products stand alone with strong capabilities. When combined, synergies emerge, making your fulfillment solution even better. Those parts are composable for your unique situations. Rather than a one-size-fits-all package — the flexibility just makes it even better.
But, it’s assumed that you are stuck with the systems you have on a yearly cadence.
World-class peak season fulfillment in 90 days
What if a WMS could integrate world-class peak season fulfillment… in 90 days?
You don’t have to carry your existing solution forward into peak; you could deploy Deposco and have an integrated OMS and WMS system built for all the concerns outlined. Make your customers happy and control your margins.
You can’t do that by asking IF you can perform. You can only do that by focusing on flawless execution – all day, every day.
What’s hot, what’s not: DOM solutions can tell
What you put on the shelves, or in your 3PL, is as important as how you process it.
Prime Days help you judge what is and isn’t moving in your assortment. Was the product you were banking on less important than you thought? It could be very important, as Amazon has invested more heavily in spotlighting marketplace sellers in their deals. If Amazon features more of your products, insights into consumer preferences will be invaluable.
What if you got it wrong!?
You stocked your assortment based on an expectation of a specific ABC segmentation. These early Prime Days can highlight that a B SKU was really an A SKU. Or, worse, a C SKU will truly drive your sales.
Amazon has invested in elevating your brand; have you aligned your business on the back end accordingly?
Modern supply chain platforms incorporate demand planning and DOM solutions to inform value-driven decisions during “practice.” So you can make positive changes before your entire peak season hits!
Smooth out spikes
You are practicing. You are honing in on value. But what about the steep demand increase?
Well, that might not materialize as a 1, 2, or 3X increase. Numbers have shown a reasonably consistent ~10% gain in the Prime program for the last 3 years. In addition, the trend of focusing only on Amazon brands is steadily shifting back toward merchants – specifically managing the customer relationship more economically.
Justin Stone, VP of Customer Success for Deposco, noted that we’re seeing some of the 5-alarm fires caused by explosive ecommerce growth leveling off. Maybe it’s not that it has retreated, but it has become more manageable.
“Our customers are focusing on ensuring the Customer Experience (CX) over doomsday prepping for out-of-control demand. This means a return to cost controls, careful inventory analysis, and ensuring every dollar is spent wisely,” Stone said.
What is most likely is a pull-forward of holiday demand. This peak trend could benefit laser-focused retailers in their Black Friday and Cyber Monday execution strategies. Along with early detection of whether your demand plan is on point, shifting some of that demand earlier with DOM solutions can:
- Reduce inventory in the warehouses earlier, freeing up working capital and reducing operational strain
- Move out of off-site storage quicker, reducing costly expenditures that drain margins
- Smooth out peak season staffing and allow for more full-time vs. temp labor at a time when finding peak talent has been peak difficult
- Deploy assistive technologies that make individual workers more proficient, such as MHE automation
Prime Day is almost here, but you can relax
Prime Day should be the same as checking your fire drill strategy. You know when it will happen, and you know what products you’ve listed. All that’s left is seeing how your team performs. But then there’s this…
Greater challenges are lurking. But, the right tools help you welcome the opportunity compared to managing peak in your ERP OMS. Peak is becoming faster and more complex every year. Don’t leave your seasonal success to a system that was never designed for operations.
Effectively managing inventory, handling routing rules across owned and accessible locations, and navigating the rules and cost complexity of shipping orders requires a built-for-purpose solution. The performance improvement is night and day.
Consumers want the very best
Consumer expectations for normalcy in execution are high. Let Deposco help you review your peak season and omnichannel readiness. Our experts can identify critical areas for operational improvement this year (not next!).
Deposco’s recent awards and industry accolades, such as inclusion in the Gartner Magic Quadrant, demonstrate our leadership and commitment to doing what we say we’ll do for our customers during peak season and year round.