Managing Supply Chain Volatility During Festive Season

The overall market usually experiences a surge in energy and a different vibe during the festive season irrespective of the occasion or place. The weird connection between festive season and consumers’ demands put the supply chain of businesses in a tough spot. Logistics Insider, in this exclusive feature, puts forward the supply chain hiccups during festivities and the ways to pacify them.

India’s rich culture and heritage make it a country full of festivities all year round. However, the months of October and November are the busiest shopping months of the Indian calendars and help businesses hit the profitability of the year.

In preparation for the festive season, Amazon India had significantly scaled its middle- mile operations across the country. This year, despite the economic slowdown, the festive season turned out to be profitable, especially for online retailers. The festive season which brings in sales for the retailers and satisfaction to customers also brings with it many responsibilities for logistics professionals.

As a result of the e-commerce driven turnaround in sales during the festival season, Indian logistics companies have transitioned from being just transport and manpower facilitators to focusing on optimising sales, storekeeping and product delivery for clients.

Supply chain hiccups and management during the festive season

The bright and shiny festivities bring in many hiccups making the jampacked season of consumer needs and demands difficult for supply chains of businesses.

The major hiccups in managing a supply chain during the festive season are:
• Running out of Inventory
• Less workforce
• Shortage in storage-space and
• Last-mile friction

Enhanced Inventory Management

Managing inventories is complex at any given time and the major peaks in demand and supply of products make it even more challenging for the retailers. Industries such as apparel and FMCG have to be on their toes to meet with the needs of consumers.

“Max’s customers typically visit stores every 3 to 4 weeks; more frequently during the festive season. There are several consignments of fresh merchandise being supplied every 2-3 weeks to Max’s retail stores.”

~Dr Anil Chinnabhandar, Sr VP – Retail Planning & Supply Chain, Landmark Group

Also Read: In Conversation With Dr Anil Chinnabhandar, Landmark Group

During peak times, the worst nightmare for any retailer is running out of popular inventories and having a surplus of the less popular ones.

“To mitigate the risk of stock out situations, we need to have a robust demand planning mechanism in place with involvement from sales, service and marketing department. Considering production and delivery lead times as well as sales forecast, we should draft our procurement plan and execute well in advance, as festivals are always known and dates are available for the complete year.”

~Anil Dalvi, General Manager – Supply Chain & Logistics at TATA Sky Ltd.

The consumption trends and forecasts tell us about the product life cycle, season length and lead time of purchase help in managing stocks and prepares oneself ahead of time.

Tackling The Manpower Crisis

The big expectations and demands of customers require a large workforce to cater to those needs. However, the holiday season leads to a shortage of workforce, building an internal pressure on the companies.

Dipanjan Banerjee, VP – Sales (Express Division), Ecom Express Pvt Ltd believes, “One key thing in managing supply chain during the festive season is the extra manpower and how you manage the expectations of the internal guys.

He adds, “With time, the industry has learned to reduce supply chain challenges. However, managing workforce expectations remains a big challenge here.”

To maintain the flow of the supply chain during the festivities, companies have to motivate their employees to work extra hours and deliver higher productivity than usual or hire a new workforce.

Winning Storage Wars

In the supply chain sector where the company depends on the distribution of goods from factories to the shops, warehouses act as pillars. The surplus demand during the festivities often leaves companies with less storage space. The smaller and mid-level businesses with inadequate warehousing infrastructure and space are often in a mess.

They are unable to manage the inventories and have things lined up outside their companies’ hub spilling over, leading to delay in deliveries.

However, large scale and financially stable businesses have learned to fight the problem of shortage in storage space over time.

P.V. Shehadri, CEO, Future Supply Chain says, “We have multiuser warehouses, which help us plan the space required for the inventory arriving at our facility. This reduces the stockpiling at warehouses and avoids the potential delays in deliveries.”

To overcome the shortage of space and reduce the gap between demand and supply, India has already taken its first step. According to reports, there will be 344 million ft of warehousing space in India by 2022, more than double the current capacity of 169 million sq ft, and triple the capacity that existed in 2015.

Going The Last Mile

The last part of transportation is very crucial for customer satisfaction especially during the times of gift-giving. Customers’ expectations in terms of timeliness of deliveries are changing rapidly. They now look forward to same-day deliveries irrespective of the geographies. The surplus orders with courier companies put them in a tough spot at the times of festivities.

According to Saahil Goel, Co-founder, Shiprocket, “The choke ends up
happening at the last mile, where given the COD orders and discounting, the volume just goes through the roof and after a while, the demand planning goes for a toss as companies are not able to clarify and prioritise orders.”

Apart from this, customers unavailability at times of delivery also creates a
fuss in the last mile. The courier companies unlike usual don’t hold the reattempt for a week and rather than re-attempting, send back the orders to
get ready for the next stuff coming.

Goel adds, “We as an aggregator try and avoid that thing. We have discussions with the courier company and prepare a demand plan with them beforehand.”

Technology To the Rescue

Technology has been a painkiller in the industry and helped maintain the flow of supply chains throughout. Amazon India has developed advanced technology-driven products and ‘Value Added Service’ program to strengthen its operations network across the country during the festive season.

These initiatives will help small and medium businesses within the middle-mile operations of Amazon India. The objective behind introducing new products and program is to provide a safe, fast and reliable fulfilment of customer orders during the festive season.

Some of the main aspects in which technology has helped ease the business during festive season include:

Better inventory management: With technology advancements, one can use RFID technology to track and manage goods. It is free of human errors and the scanners and tags help us track the items going in and out of the warehouse. Also, it helps us trace each item’s exact location per second.

Last-mile route management: Another gift of technology ‘Delivery route optimisation’ helps in fulfilling customer’s demand and thus customer’s retention.

Mr Banerjee from Ecom Express said, “The ML apps we use tells the delivery boy which route is more apt and hassle free at the time and help deliver faster. This adaptation of technology has improved overall productivity by 30-35% as compared to the manual process.”

Improve storage space: Adaptation of automated storage and retrieval systems is the prime solution to deal with the shortage of storage space. This technology consists of lifters and conveyors etc., which help in reducing space occupied by aisles and at the same time minimise labour and maximise the utilisation of space.

Visibility in supply chain: Technology has enabled the tracking of shipments in real-time and alerting customers if orders will be delayed. Also, the overall visibility helps businesses see the bottlenecks clearly and work for improvements. Mr Sheshadri from Future Supply Chain said, “The capability of package tracking gives us better visibility throughout the supply chain cycle. Vehicle tracking and real-time uploading of delivery receipts give us the edge over many players in the market.”

Clickpost, an integrated logistics platform, surveyed 2 million orders to reveal online order and return trends around Diwali sales. Here are some of the findings from the survey:

In terms of metros, the highest number of orders came from New Delhi, followed by Bangalore, Mumbai, Kolkata, Hyderabad, and Chennai.

In Tier-2 and -3 cities, the top six cities are all located in the central belt of the country – comprising Ahmedabad, Jaipur, Lucknow, Indore, Patna, and Surat.

The top ten states by order volume are Maharashtra, Uttar Pradesh, Karnataka, West Bengal, Delhi, Andhra Pradesh, Tamil Nadu, Gujarat, Haryana, and Rajasthan.

The survey aimed at understanding the factors impacting Return to Origin (RTO) rates on e-commerce deliveries across India. Upon analysing, the survey highlights a number of proactive steps that can be taken to drive RTO numbers down:

Through the implementation of an intelligence logistics Non-Delivery Report (NDR) Management platform, shippers are able to reduce turnaround time for logistics partners by one day due to real-time syncs in place.

The escalations management platform can help shippers in reducing delays in supply chain and timely delivery of the shipment.

Measures such as detailed visibility of shipment status to end customers,
accurate estimated delivery date on product pages and on shipment dispatches, proactive notifications on failed delivery to end customer to collect feedback, and same-day NDR calling to customers all contribute to driving down RTO rates.

RTO rate decrease to 60 per cent for shipments where a re-attempted delivery is made within 36 hours in an informed manner.

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