Featured in Supply Chain Brain.
The coronavirus pandemic has kept everyone at home. Additionally, a reduction in commuting expenses and an injection of large sums of money into bank accounts (thanks to the federal government) has led to more disposable income.
The result? More shoppers buying more things, especially large and bulky items. For many, it’s time to acquire that new couch, buy that bigger-and-better large-screen television, and replace that worn-out, 18-year-old mattress.
However, the enthusiastic desire for more has crashed into serious reality. Namely, global supply chain delays have led to a domestic drought for big and bulky products. Even as pandemic restrictions loosen and logistics efforts ramp up, that news is not necessarily positive. Large items arriving from overseas will lead to a flood of inventory on the domestic market. This, in turn, will put added pressure on last-mile delivery efforts.
But forewarned is forearmed. You can take steps to prepare for that inventory flood and can, in turn, move it quickly out your door, and to your eager customers. Shoring up your “boat” now could help avoid delays that might sink your last-mile strategy.
How it Happened
Where we are now didn’t just happen overnight. Rather, it was caused by a myriad of different factors, that came together in a perfect storm.
The Drought. While items remain stuck overseas, demand for container drayage (delivery) services has outstripped supply. This, in turn, is causing unprecedented congestion at international ports. Transports are behind schedule, while the delays have led to a scarcity of available containers. Such scarcity has led to higher rates charged by container and drayage services. And, once large and bulky inventory arrives at domestic cross-docks, they are subject to sky-high truckload, less-than-load, and intermodal rates; rates that purchasing departments might not be able to absorb. This keeps product sitting in warehouses and distribution centers.
The Heavy Rain. While all of this is happening, newer providers have entered the market. The additional capacity means that lower-cost big and bulky inventory, which has been building like condensation in a developing thunderstorm, is about to break loose into a downpour.
The Flood. These high waves are rolling toward warehouses and final-mile carriers, who had taken on other business during the COVID-19 shutdowns and supply chain stoppages. This could mean severely reduced capacity, both when it comes to returning to previous jobs, and taking on new ones; once again, more inventory pileups.
The Water Damage. Finally, there are the customers. Consumers have been forgiving with overseas delays during the pandemic. However, they will not be as understanding if they have to wait weeks for an item that is sitting in an across-town domestic warehouse, because delivery services are backed up. Given high-end visibility in this day and age, a delay in big and bulky product transport means a retailer’s reviews, ratings and net promoter scores (NPS) will suffer.
How You Can Plan
The good news is that you do have time to prepare for the potential inventory onslaught. Take the following steps now to ensure timely transport of your big and bulky items.
- Diversify your last-mile strategy. Your partner carriers’ networks will be strained, as volumes drastically increase. So, look for additional carrier partners. Get those requests for information and contracts out, and onboard those providers now.
- Don’t sweat the small stuff. Final mile and warehouse capacity might not meet every single requirement on your corporate checklist. You’re fine if those suppliers don’t check every box. As long as those vendors meet your legal, insurance, and delivery requirements, you’re likely in good shape.
- Create on-site distribution activities. Developing mini distribution capabilities in your retail space can help move product that much faster. As these activities are an extension of curbside pickup, you likely already have the resources in place. Even better is that this strategy gives last-mile carriers more time to bring products to customers.
- Facilitate ongoing communication with warehouse providers. Make sure they have the space and manpower available to turn a massive influx of orders. If not, find out why. If those providers have staffing issues now, learn what will happen when volume increases. Depending on those answers, you might have to find additional storage capacity.
- Take advantage of the gig economy. You don’t need to restrict delivery activities to Class 3 box trucks. If your item can fit in a pickup truck, this can be an efficient source to meet your customer demands. Seek out local delivery courier and delivery services that can provide extra assistance, when necessary.
- Ensure total consumer visibility. As you’re vetting your last-mile partners, make sure those providers allow customers to monitor storage and delivery statuses. Consumer survey data shows that consumers are more patient with delays when they are kept informed.
Covid-19 has prompted digital migration, which has included shopping for big and bulky items. But you don’t have to be helpless with the oncoming inventory onslaught. Build and maintain a flexible last-mile network, with plenty of communication. In short, preparing your boat now means less chance of needing sandbags or sump pumps in the future.