THE CHRISTMAS SUPPLY CHAIN: MORE ‘HO HO HO’, LESS ‘OH NO NO’
In the United States the day after Thanksgiving is known as Black Friday. Originally it earned its name because of the disruption caused by the post holiday crowds. Lately, however, Black Friday earns its moniker because it’s the day when U.S. retailers supposedly hit profitability for the year. Falling as it does in late November it’s become the busiest shopping day in the American calendar.
Managing seasons and public holidays is a never-ending task for retailers. If there isn’t a public holiday then there will be a new season starting, or another one wrapping up with a sale.
Of all these special events, Christmas is undoubtedly the most important, and puts enormous pressure on supply chain managers to ensure products are available and that everything moves smoothly through the season. After all, it is the weeks just before Christmas that, in many retail sectors, determine a business’s financial health; John Lewis, for instance, reportedly generates 80% of its annual profits during Christmas period.
The challenges that retailers face during Christmas naturally vary according on the sector and from company to company. For many specialty retailers, having to cope with long lead times, Christmas challenges centre around estimating the season’s demand both well in advance and accurately; not an easy task. For grocers the problem is less about lead times and longterm forecasting but more the sheer volume of everything, which requires careful capacity planning and good execution. Lastly there are those retailers for whom Christmas is a nonevent – in fact, one that might even cause sales to drop as customers spend their pennies elsewhere.
Yet while plenty has been written about the Christmas retail season and pages are devoted to analysing Christmas successes and failures, there’s very little been published about the underlying supply chain challenges. So, to address this deficit, here is an overview of the Christmas-related hurdles that supply chains face, with some suggestions on how to tackle them.
Supply chain problems are generally most readily solved one at a time, by continuous improvement of the process, and not by trying to fix everything at once.
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