Peak Season 2018
Now is the Time to Prepare for Peak Season...2018
Understanding Table Stakes: Part 1 of a 3-part series
NOTE: Parts 2 and 3 will focus on Big Data and Looking Forward, respectively.
A YEAR OF CHANGE
The responsibility of delivering holiday joy to millions of customers is quite a burden to carry. The modern customer expects faster and freer delivery despite your volume and carrier fee increases. Add to the mix the challenge of recruiting new talent, managing space, implementing new technology, and assuring you have the shipping materials to meet rising demand. The icing on the cake is 2017 introduced dramatic change across the parcel industry (see Table 1 for some examples) that were anything but trivial. While we are empathetic to the fact that you have a lot on your plate right now, we predict quite a bit of change in 2018 that you will want to take advantage of; therefore, it's time to start 2018 peak season planning...right now.
Table 1: Trends in the parcel industry continue to point to service expansion
|Carriers:||Postal Service: Expanded same-day delivery
UPS: Introduced Saturday delivery
DHL: Entered the USPS Workshare space with its DHL eCommerce service.
All Major Carriers: Expanding alternative delivery options (see Alternate Delivery Locations)
|Retailers:||Amazon: Launched Amazon Fresh, Amazon Lockers, and in-home delivery for Prime members; also started accepting returns at Kohl's.
Walmart: Introduced Mobile Express Returns and Web Mail. Walmart Associates now deliver packages on their way home from work.
Responding to the industry changes above took a minimum of nine months to specify, design, and make fully operational. And, by the time peak season ends (and you take a little time to breathe and recover) nine months is about all you have until your next code freeze.
Use our Roadmap to Get a Head Start
If you're like most managers, your head spins when you begin evaluate all of the trends to research and improvements to consider. To help you out, we did a little homework. The first four items listed in the below Top 10 considerations are what we call Table Stakes, which we will cover in this part of the series. Others provide more flexibility in choice - which we will cover in future parts of this series.
Table 2: Top Ten Considerations for 2018
|Topic||Description||Questions to consider:|
|1. Volume||Are you ready for an increase in 2018 projected volumes?||Volumes didn't decrease last year and they won't go down next year. What do you need to do to get ready?|
|2. Carriers||Carriers continue to offer a dynamic menu of ship methods, all designed to make your life easier.||Do you have the operational agility to seize new same day and weekend delivery options? Can you shift volume between carriers dynamically?|
|3. Rate Shopping||Advanced, real-time rate shopping across multiple DCs, carriers, and ship methods can save money, while improving on-time delivery.||Does your system provide rate shopping across all shipping process stages? If so, were you able to build Peak Season surcharges into your calculations? Were carrier incentives included in your calculations (or did you miss an incentive?)|
|4. Extreme Weather||Mother Nature seems to be getting more aggressive (as we've seen over the past decade).||Were you prepared for this year's extreme weather, including those that qualified as natural disasters?
When it happens again (and it will), are you ready?
|5. Shipping Alerts||Customers first wanted free delivery. Then they wanted next-day delivery. Now they want to track their order at all times (from you vs the carrier).||Are you ready to accommodate current demands (in addition to those that will surely emerge in the near future)?|
|6. Data and Analytics||You can't analyze your data if it's not centralized, accessible, and structured in a way to answer real world questions.||Have you implemented a Dashboard? Predictive analytics to proactively resolve issues? How about increased visibility and summary reporting you were promised years ago?|
|7. Edge Case Improvement||You may have plans to make edge case processes with the likes of 3rd party vendors or intercompany shipping more efficient (perhaps submitted by a consulting firm).||What is stopping you from implementing your process improvement ideas? Is it your current system constraints? Money?|
|8. The Last Mile||Lots of new ideas are flowing from USPS Metro Post to DHL Parcel Metro, and now drones, lockers, and crowd-sourced couriers.||Will you be ready for what is available in 2018?|
|9. Global||Global markets represent your biggest growth potential, but you haven't yet mastered the countries you already ship to.||What's your global plan? Which lessons learned from one region are transferrable to another?|
|10. Blockchain||While it may not be a viable initiative in 2018 for DTC parcel delivery, you'll look informed (and maybe get a promotion) if you have a plan for when it does happen.||Lauded as the most disruptive innovation since the Internet, have you roughed out a plan for how you'll leverage blockchain?|
Did the wheels fall off your engine this year? If so, how should you respond?If you're like most people we talk to, you were able to manage 2017 volumes, but it was like walking a tightrope due to issues such as latency, system stability, system integration, and/or manual processes. Even something like the size of your label files makes a difference when you multiply milliseconds by hundreds of thousands.
What to watch out for: Commercially available systems are built around best practices, designed for the mass market. But often, such practices don't accommodate the attributes that give YOU business advantage (for example, your uniqueness in product, customers, distribution ecosystem, and capital availability). Make sure your competitive edge is sustained if and when you consider changing your operation to meet someone else's vision (who is not invested in your success). First, explore what you think your shipping solution should do to make you more productive. Only then should you explore alternatives to get what YOU need versus what you're told you need.
Also consider: Shipping system instability can be a real obstacle to success. For example, did you experience regular outages of one of the cogs in the shipping system wheel? Did these network, communication or server outages get resolved in time to make a difference? If not, were you clear who to call? Was identifying the responsible party for fixing the problem at the heart of the issue? Or were you the victim of finger-pointing across software providers, service providers, carriers, and internal parties?
It might be time to consolidate. If you answered 'yes' to any of the questions above, consider a single provider that can manage the entire shipping ecosystem. Get clarity on the root cause of the volume challenges you currently face, including your options for adding capacity. If your shipping solution's configuration is the issue, define your needs; then construct the ask for the change that will give you the extra horsepower to be wildly successful.
AN EVOLVING CARRIER LANDSCAPE
Improve agility through configurability. To accommodate whatever the future brings, shipping systems should always be ahead of your needs. If systems aren't easily configurable, adding Saturday as a delivery option for UPS can create logic and coding nightmares. Rate shopping systems must also accommodate adjustments in carrier transit times (since they can change monthly), carrier pick-up times (since they can be adjusted to fit your needs), and in the case of UPS, carrier delivery days.
Increase competitiveness through flexibility. Your system should accommodate the addition of new carriers on the fly as well as the flexibility to modify carrier priorities. Be aware of systems that essentially lock you into an undesirable carrier contract because you are unable to make a timely change. The option to move volume to an alternate carrier could save you significant dollars. Same-day and next-day offerings will continue to expand in scope and today, there is no shortage of available options. USPS Metro Post, DHL eCommerce Parcel Metro, and a wide variety of carriers/couriers like RRD will be knocking at your door offering viable cost saving options. It is never easy to predict what's coming, but to remain competitive, make sure your system is configurable enough to handle new options quickly and easily.
How much is the lack of a robust rate shopping engine costing you? Too often companies hard-code rate shopping logic into their WMS (or a rules engine or shipping system) versus having a dynamic decision tree/algorithm that leverages real-time information. Rating variables change (peak session surcharges for example, or volume spikes that could affect incentives) and your decision engine should change with them.
Are you using rate shopping to differentiate? Rate shopping should be readily available throughout the order lifecycle, starting with the digital shopping cart (yes, rate choices should precede the "buy" button). Integrating rate shop into the path to purchase lets you use real rate card data in the transaction, versus an estimate. You don't have to show the exact amount it will take to ship an item, but having the data available to adjust systematically before it is presented to a customer is a differentiator.
Recognize more saving with agile ship points that use actual rates. If you have multiple DCs or a Ship-from-Store option, be sure your rate shopping engine accommodates them all; this is especially important if you use temporary or seasonal DCs during peak. Assigning orders to a particular DC with hard coding (that doesn't accommodate rates) will likely increase shipping costs - given that actual rates are necessary to select the best ship point for delivering the available inventory.
For example, Ground may be acceptable for a next-day delivery from a certain DC, assuming your analysis supports one-day historical transit time. You should also have the flexibility to turn this option off during peak to eliminate risk. Real-time rates should also reflect any peak season surcharges, while adjusting to any carrier incentives as needed.
Never stop rate shopping. Even when a rate option is calculated during the purchase process and ship point selection, your system should re-assess the situation at actual ship time, i.e., after the parcel is packed and ready for shipment. Why? If the order was picked/packed slower than expected it will require a ship upgrade to meet your commitment. Or, if the order is ready sooner than planned, you could opt to downgrade (why pay for weekend delivery if you don't have to?). Another scenario: your parcel's weight or dimensions used in the initial calculation may not equal the initial input into the rate shop. If this is the case, you should modify the rate shop.
Were you prepared last year? And will you be ready next year? Three major hurricanes, a massive wild fire, and a very hot summer were on this list of this year's leading headaches. Many shippers of perishables, cold-chain items, hazardous materials, or expensive products had their hands full tracking service disruption alerts and conducting reactive customer service. Being proactive is essential for these retailers. Your system should be able to block 3 and 5-digit zip codes by carrier and ship method. Your system should also have the ability to adjust them the very next day (is Irma going to make landfall on East or West Florida?). Such flexibility would certainly eliminate some headaches.
We realize our Top 10 Considerations, which we call Table Stakes, are actually quite important and challenging. They are often underappreciated by the organization. With some thoughtful planning and business case development, you can successfully sell your management on the investment you need to make your life a little easier, while advancing your competitiveness, in peak season 2018.
Next up: "Big Data" (HINT: the problem isn't getting "Big Data" it's about getting "Big Answers").