Streamlining the supply chain to maximise festive season profits

The Christmas season presents the opportunity for many businesses to boost their profits by a substantial amount. But, due to poor production and distribution strategies, far too many companies fail to translate the proportional increase they experience in turnover into bottom-line profits.

“Unless companies plan properly to cater for the additional stress on their supply chains during the festive season, they will be unlikely to be in a position to maximise profit,” says Grant Marshbank, COO of supply chain specialists, VSc Solutions.

This means that even if turnover doubles, profit might only amount to a fraction because of the temporary need for additional fleet vehicles, staff members and the ordering of additional supplies.

“And, if companies don’t manage to scale up adequately to cater for the increased demand, they also run the risk of damaging their reputations if they fail to satisfy their customers’ requirements.”

Here’s what companies should do now to be prepared:

Determine optimal stock for upcoming demand

“Figuring out how much stock you need is critical to seasonal success,” says Marshbank. “Too little and you lose out on sales. Too much and you’ll incur additional costs as a result of ad-hoc and overtime labour and machinery.”

To this end, he says inventory management tools that enable accurate forecasting are critical.

Ensure logistics can cope with extra capacity

Once you’re sure you’ve got enough stock, figuring out how you’re going to deliver it on time is the next major challenge, according to Marshbank.  “The trick is to ensure that you maximise your existing fleet. If this is done properly, one might not even have to bring in ad-hoc vehicles.”

This is made possible by using planning software that enables one to determine optimal vehicle loads. Another consideration is whether enough warehouse space is available to cater for overflows.

In addition, a bay management tool is critical to reduce congestion in busy warehouses.

“Advanced planning tools help one to determine the sequence of warehouse pick ups based on the estimated time of arrival – as indicated by the route management tool – of delivery vehicles. This enables one even to book bays and dictate exactly what needs to be loaded onto which vehicle and at a particular time,” he says.

Route Optimisation

Determining the best delivery routes in order to save fuel, time and avoid having to employ extra vehicles and drivers is possible using route optimisation tools. “However, even if one needs to hire ad-hoc drivers, their efficiency may be optimised by the using GPS systems with pre-planned routes.”

Keeping track of stock

“The extra rush and confusion can create optimal conditions for thieves to help themselves to stock,” says Marshbank. “However, by using technology that creates visibility of what is on each vehicle, it’s possible to virtually eliminate pilferage and improve accountability for stock.”

Billing efficiency

Another excellent innovation is installing printers in vehicles that enable drivers to print proof of delivery, get it signed and invoice almost immediately. “Such technology helps to increase visibility and even speed up the sales process, which is critical particularly at such a busy time of the year.”

Reverse logistics

As a final consideration, Marshbank recommends including in the Christmas planning the prospect that a percentage of sales generally result in returns. “January returns can be quite high and this is something that needs to be managed in advance, just so they don’t eat into year-end profits.”