Planning Ahead (Already) For Supply Chain Shortages This Holiday Season (Part 2)

Click here for Part 1 of this post.

In the first part of this post, we began to tackle some important advice from a Electronic Buyers News that can help procurement and supply planning organizations in all industries better prepare (and have back-up plans) for the holiday season for getting product into the right place at the right time. Planning, no pun intended, is of the essence in this case (just as it was in 2010, which proved challenging for potentially fewer reasons than we face in 2011). One commenter to the original column in EBN has already observed that "for consumer electronics, I think this could very well be the most difficult holiday season to predict in recent memory...The economy -- both domestic and worldwide -- is so somewhat up-in-the-air right now: this holiday season could be a complete disaster; it could be a huge improvement over last year."

Here at Spend Matters, we're banking on the fact that the season won't be one season, but many -- for some companies with hot products, supply chains won't keep up and lost revenue will be the challenge of the day. But for many others, inventory will become a four-letter word, as organizations hedge their supply chain bets by tanking up on more capacity than they need. Regardless, there's no financial model for predicting demand (and subsequent precise supply planning requirements) that is anything but an educated spin of the roulette wheel (or perhaps, if you're really good, an early hand at a Blackjack table at which you've just begun to count cards).

Still, there are some preparations you can make, just as a skilled card hand does his homework on a facility before plying his trade. Consider, for example, as EBN suggests, the importance of identifying and relying "on the right logistics partner" such as a SPL, who can "help companies identify the smartest strategies for planning and executing peak-season preparations." How, you ask? "For example, 3PLs can help companies scale back superfluous inventory as necessary without jeopardizing safety stock through supply chain design, planning, and implementation." The piece then proceeds to wax eloquent on 3PLs as if they can do no wrong (which is not entirely fair, in our view).

Indeed, 3PLs are often very good at helping organizations reduce uncertainty at specific points in the supply chain. But their general knowledge of sourcing and supply management on the global playing field outside of trains, boats, planes and trucks (not to mention customs clearance) is rarely at the level it needs to be, except in highly domain specific situations like CAT Logistics (which cut its teeth serving internal procurement and supply chain stakeholders). Here at Spend Matters, we believe that there's an untapped opportunity for next generation 3PLs to focus as much on supplier management, including supplier development and on-the-ground auditing and planning, as the logistics management and brokerage component. With a set-up such as this, 3PLs might have the ability to take a much larger chunk of the risk out of holiday planning uncertainty.

Jason Busch

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