warehouse racking

Supply Chains cracking under pressure

There is still a faint echo from the tills ringing on Black Friday and the mouse clicking on Cyber Monday, but that sound is being drowned out by the sighs of frustration from customers waiting for deliveries to arrive. We predicted that some retailers supply chains and processes wouldn’t be able to cope with the volume and frustratingly, we were proved right.

The volume of orders far exceeded expectations, for Tesco and for other retailers including Argos and Marks and Spencer, and the price of that success is the cracks that have appeared in their supply chains: deliveries to customers are late.

The reasons for the delays are varied, anything from shortage of pick and pack hours in the DCs, over capacity for the couriers, or lack of actual stock to fulfil the order. And it isn’t just home deliveries that are affected; there are delays in click and collect too, pointing to logistical capacity constraints.

Added to these woes are in store click and collect processes. For instance, the grocer’s click and collect desk in many stores is at the front door. The queues that build up at peak times impede the entrance and exit, and the boxes that pile up at the desk make working the whole experience frustrating.

The growth of online sales and click and collect as a delivery option has been steep but one that could be predicted. Quite simply retailers haven’t planned for the growth that has so far materialised and are now failing in terms of customer service. An easy shopping experience online, to avoid the crush of shopping in store, results in a crush in store to collect the parcel.

Planning and process are the keywords for the next 2 weeks, and then beyond. Stores must be planning for best/worse case scenarios, whether that adds cost to fulfilment or not because the cost of a customer who hasn’t received their delivery in time for Christmas is far greater. In store processes for click and collect must be as efficient as possible. The physical volume of boxes as well as the quantity of orders and therefore customers must be managed to make the collection (and returns) experience as smooth as possible. Assign a runner to get the parcels from the stock room, and take them to the customer’s car to get them out of the shop.

The cost will be in terms of man hours, which reduces margin, but as Tesco has experienced, a rebasing of margin in order to deliver customer service is an investment worth doing. The Christmas peak may be less pronounced this year as sales have been brought forward thanks to Black Friday, Cyber Monday and Manic Monday but there will still be a peak. Retailers have time to put provisions in place to manage that peak if they are agile enough. If not, expect a peak in customer complaints as well.

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