Holiday season : the fear of a stockout

Since the end of the summer, each sector has announced the difficulties they would have to face during winter: the toy sector, the textile sector, the household appliances sector, the high-tech sector and even the furniture one, are forecasting empty shelves and production delays.

But the brands reassure us, there will be no general crisis. Only a few missing references out of the thousands offered by toy and furniture stores. There will always be an article to fall back on, substitute products available instore.

To satisfy the customer and help him find a specific item in these times of disruption, stores must take advantage of the omnichannel strategy, create bridges between their sales channels and know in real time what is happening along the production chain.

Store salespeople are on the front line with dissatisfied customer and have a crucial role. Equipped with tablets to access the customer's profile, loyalty account and product information, they will be able to find a missing item, know when it will be available and where, and propose a substitute product as a last resort.

In general, the new strategy of omnichannel and unified commerce are necessary to help the customer: online reservations, pre-ordering, ship-from-store, etc. But in the warehouse, a new organization and some anticipations are also required.

The quality of the vendor/supplier relationship is essential to adapt the production schedule and to know which products are on their way, in production, or late. This information has an impact on many steps afterwards, from logistics to customer service and newsletter, the teams must reconsider their plans every week and therefore regularly interact with suppliers.

But where do these supply problems come from? There are several reasons. The shortage of raw materials does a lot of damage. Products made of raw materials have the highest inflation in supermarkets. In the construction sector, the shortage is increasing delivery times and inflating prices.

This is due to the unexpected and brutal recovery of the general activity after several seasons of lockdown due to pandemic. Everyone has tried to get supplies, which has pushed up prices. The price of wood has increased since the Americans now also get their supply in Europe, after a tax on Canadian wood introduced by Donald Trump at the end of his term. 

To protect themselves from such large disruptions, companies must adapt their production strategy. Some opt for the buffer stock method - they place some security stock at different points in the production chain - because it is better to bear the additional costs of warehouse stock than to run out of products.

The toy store Jouéclub have learned from the pandemic and have already anticipated the holiday season. By starting shipments in August, the company has about 20% more inventory in stores than it did at the same time last year. Other distributors also plan to extend their advance - up to three months for the E. Leclerc in Lunéville - to avoid supply problems.

In parallel to the anticipation and changes in production methods, some also want to review the location of their production in their Supply Chain. Asia is bringing difficulties, so other countries in Eastern Europe or North Africa are starting to attract some.

The goal is to diversify its supplies and spread the risks. Since Asia is a threat from a health point of view but also from a diplomatic point of view after tensions with the United States, it becomes important and logical to choose another Asian country or to think of a completely different continent to guarantee its value chain.

In the long term, it is the problem of containers that arises. We are paying $17,000 for it compared to $1,500 a year and a half ago. Prices have gone up overnight. This leaves no time to negotiate contracts with distributors. To transport the containers, some people opt for the big way and buy them directly. Others are thinking of alternatives such as the train or the plane.

These initiatives show a certain renewal in logistics strategies and ways of thinking about the value chain. Instead of thinking far and cheap, we are starting to think differently by accepting the costs.