How can supply chain planners prepare for Black Friday?

Nigel Greenslade
posted by Nigel Greenslade
25 August 2015

UK retailers were left reeling last November when British shoppers spent online an estimated £810 million in one day, due to a new retail phenomenon imported from the US dubbed Black Friday.

According to the UK’s industry association for online retail IMRG, who compiled the figures, the surprise amount spent on Black Friday eclipsed the £650 million spent by consumers on Cyber Monday. The Black Friday spending frenzy on 28 November last year was said by online shopping tracker Postcode Anywhere to have resulted in 404,835 orders being placed in a single day.

Big retail events are occurring now much earlier in the run up to Christmas and such unexpected peaks in demand are causing immense strains on supply chains – giving logistics planners major headaches when looking ahead to the predicted high pressure sales of autumn 2015.

More so than in previous years, planners will have to put in place contingency plans for meeting such peaks on service requirements and significantly, in a buoyant economy with consumers feeling a little more flush, those peaks and demands are going to be even stronger this year. In fact, research conducted by eDigitalResearch found four times as many shoppers are planning to place online orders this Black Friday compared to 2014. So what can supply chain planners do to meet the challenges of both Black Friday and Cyber Monday?

Competition amongst online retailers is raising the stakes on product availability and delivery performance. Consumers have access to a wealth of information on the best deals through their smart phones and their expectations for efficient fulfilment are high. Logistics professionals wishing to meet those expectations should be planning their inventory deployment now, well in advance of the hectic late autumn rush. Planners should be asking: Do we have enough stock of expected ‘big sellers’ available? Is it close enough to market? Do we have adequate storage space and warehousing to cope? And how will staffing and resources match an expected retail surge on these key sales dates?

August and September are busy months for those looking for increased warehousing capacity. No doubt the first thought for many will be to turn to third party logistics service providers for extra space and resources. But increased demand for space may well impact availability, service capacity and costs, and a logistics service provider may only be able to offer space where it has it available, which may not be the in the most suitable location.

But there is an alternative solution often overlooked by supply chain resource planners. There is an abundance of space available through companies across the country that have underutilised warehouse capacity – and many are looking to put those resources to work. Importantly, as these ‘own account’ warehouse users are not logistics service companies looking to maximise margin, they can be far more competitive on space and service costs. The opportunity for collaboration is far and wide.

So how do you take collaboration forward? Warehouse brokers are well positioned to bring these underutilised resources closer to those who need them and through a broker there is a far higher likelihood of achieving a flexible deal at a well-suited location. Brokers, such as BiS SpaceXchange, have a wealth of contacts with available space on their books.

With Black Friday approaching fast, it may be time to think laterally and collaborate.

Nigel Greenslade is director of BiS spaceXchange

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