With massive discounts and promotions flooding the market, great anticipation surrounds Black Friday and Cyber Monday (BFCM) every year. Behind the scenes, however, supply chains face a whirlwind of challenges that can either make or break a retailer’s success.
As a result, supply chain planning takes on heightened significance during Black Friday and Cyber Monday. A surge in consumer demand during this period can quickly overwhelm underprepared businesses. Furthermore, the limited timeframe for shopping necessitates precise timing and efficient operations to capitalize on revenue-driving opportunities.
This article will delve into the five biggest supply chain challenges during this high-stakes period and provide expert insights on conquering them. Understanding and overcoming these challenges is crucial, whether it’s your first BFCM event or your 20th. Here’s how to navigate these supply chain issues and ensure a successful and stress-free Black Friday and Cyber Monday.
1. Rising Cost of Goods Threatening Profits
A significant challenge looming over supply chains this Black Friday and Cyber Monday is the rising cost of goods. According to Anvyl research, 31% of retailers report that the cost of goods increased by 5-10% this year. An additional third say they’ve experienced an increase of 10-20% or more.
The pressure to offer competitive discounts while maintaining profit margins becomes daunting in the face of rising costs. Brands must balance the need to attract customers with an obligation to manage costs effectively. This requires meticulous planning and strategic decision-making.
How to Manage Rising Costs
Reducing the impact of rising costs requires a multifaceted approach that includes innovative sourcing, pricing optimization, and resource allocation. Strategies to consider include:
- Strategic Sourcing: Rethink your sourcing strategy by diversifying suppliers, exploring alternative materials, or renegotiating contracts to secure favorable terms. Developing strong relationships with suppliers can lead to cost-sharing initiatives and volume discounts.
- Efficient Inventory Management: Fine-tune your inventory management processes to avoid overstocking or understocking. Implement data-driven demand forecasting to ensure you have the right inventory to meet customer demand without surplus.
- Cost-Effective Transportation: Optimize your transportation and logistics operations by consolidating shipments, using more efficient routes, and negotiating favorable freight rates. Implementing technology solutions can provide real-time supply chain visibility into shipments and help you make informed decisions.
2. Inventory Struggles Impacting Stock Count
Maintaining accurate inventory levels is another challenge for global supply chains. The surge in customer demand during these events can lead to inventory discrepancies, stockouts, and overstock situations.
85% of retailers are at least somewhat concerned about inventory shortages during BFCM. Yet, 83% admit that economic factors like the rising cost of goods have forced them to adjust their ordering quantities and/or be more hesitant when placing orders for Black Friday and Cyber Monday inventory.
How to Prepare Stock Levels
Ensuring accurate inventory levels requires technology, processes, and proactive management. Here are some steps to help you maintain precise control over your inventory during BFCM.
- Leverage Data-Driven Demand Forecasting: Leverage historical sales data, market trends, and predictive analytics to forecast demand accurately. A well-informed estimate of future demand helps align inventory levels with expected sales during BFCM.
- Lean on Supplier Collaboration: Establish clear communication channels with suppliers to receive timely updates on incoming shipments. This enables you to adjust your inventory levels based on the availability of incoming stock.
- Adopt Inventory Management Software: Invest in an advanced inventory management system that offers real-time tracking, automated alerts, and comprehensive reporting. Such software can help you monitor stock levels, track sales trends, and make informed decisions.
3. Data Inaccuracies Disrupting Lead Times
Data inaccuracies are also posing a threat to supply chain lead times. Access to precise information regarding order processing, inventory levels, and shipping schedules is paramount to meeting customer expectations for timely deliveries. However, inaccuracies in data entry, communication breakdowns between departments, or glitches in software systems can lead to supply chain disruptions.
Anvyl’s research found that 30% of retailers rely solely on information provided by their suppliers. This raises the risk of data accuracy challenges, potentially leading to delays in order fulfillment, transportation bottlenecks, and misaligned inventory projections.
How to Overcome Data Accuracy Challenges
Retailers must ensure accurate information flow and uphold efficient lead times during critical shopping events. Here’s how to tackle these challenges:
- Data Validation and Verification: Implement stringent data validation processes at every stage of the supply chain. Ensure that data is entered accurately and regularly verified for inconsistencies or errors. Automated validation rules and checks can help flag potential inaccuracies in real time.
- Centralized Data Management: Maintain a centralized repository for all supply chain data. This minimizes the risk of fragmented information and enhances data accuracy by providing a single source of truth that all stakeholders can access.
- Strengthen Your Tech Stack: Deploy advanced technology solutions systems like purchase order (PO) management software, AI-powered analytics, and blockchain for enhanced data accuracy and transparency. These tools can automate data entry, reduce manual errors, and provide insights into potential inaccuracies.
4. Quality Control is Under the Microscope
Maintaining rigorous quality control is both imperative and challenging during Black Friday and Cyber Monday. Rushed manufacturing processes or inadequate quality checks can lead to an increased risk of defects, subpar items, or even safety concerns reaching customers.
Ensuring consistent product quality requires meticulous oversight, adherence to established quality standards, and effective communication across the supply chain. Failing to address this challenge can have long-term repercussions on brand reputation and customer loyalty, underscoring the importance of maintaining quality standards amidst holiday demand.
How to Ensure Quality Control
Here’s how to establish and maintain effective quality control measures:
- Clear Quality Standards and Guidelines: Define and communicate clear quality standards for each product category. Establish detailed guidelines covering materials, manufacturing processes, finishing, packaging, and labeling. Ensure that all suppliers and partners understand and adhere to these standards.
- Conduct Regular Supplier Audits: Conduct regular supplier audits to assess their production processes, quality management systems, and compliance with industry standards.
- Post-Purchase Feedback Analysis: Monitor customer feedback, reviews, and returns data to identify recurring quality issues. Use this information to refine your quality control processes and address emerging concerns.
5. Outdated Supply Chain Management Systems Can’t Track POs
Relying on outdated supply chain management systems presents a significant challenge during the high-pressure Black Friday and Cyber Monday weekend. Legacy systems like email and spreadsheets lack the capacity to track and manage the increase in purchase orders (POs) made in the lead up to BFCM.
As a result, crucial order information, such as quantities, delivery dates, and supplier details, may become convoluted or lost in the process. This can lead to errors in order fulfillment, delays in procurement, and disrupted supplier relationships.
How to Upgrade Your Supply Chain Management Technology
Brands must invest in modern supply chain management systems that offer real-time insights, seamless integration, and scalability. Anvyl’s intelligent purchase order (PO) management software manages the entire PO process with one tool. This means brands don’t have to shuffle between email, spreadsheets, and other tools to keep purchase orders on track.
PO management systems allow retailers to:
- Always Know the Status of POs: Streamline how teams collaborate with access the status of your PO and all relevant documentation in one central location.
- Boost Efficiency With Automated Workflows: Customize and monitor deliverables with auto-check-ins, auto-escalations and auto-reminders designed to communicate everything your team needs to know.
- Plan Inbound Capacity With Accuracy: Know when your goods will be delivered without relying on your suppliers’ and freight forwarders’ best-guess estimates.
- Identify Delays Before They Happen: Anticipate delays based on historical and current information. See around corners for at-risk orders, eliminating the need to scramble and preventing costly adjustments.
Boost your Black Friday and Cyber Monday supply chain operations with Anvyl! Book a demo of our intelligent PO management platform today.
