Now is the time…

PEAKS AIN’T peaky like they used to be, but it’s still a massive challenge. Retailers tend to spread their promotions these days, giving operations time to fulfil without too many glitches, but you still have to get your ducks in a row, from the right staff to the right technology partners, and above all a coherent, overarching strategy.

John Gallemore, chief operating officer, THG

“We could argue that there are only two types of forecast that we can look to with any confidence with respect to 2024 Peak: those forecasts that admit to not knowing and those that don’t yet know that they don’t know.

“External events have a bearing on activity. For example, courier industrial action in the UK in December 2022 hugely impacted service and consumer confidence, driving substantial demand away from the online channel to the benefit of physical retail. This pattern normalised the following year. Similarly, in the past, adverse weather has impacted on the online channel to the benefit of physical retail.

“The ability to predict 2024 is also impacted by the fact that the UK and Eurozone, indeed, the global economy, are suffering lower levels of consumer confidence as a consequence of macro economic policies in place to tackle higher levels of inflation. How consumers, and retailers, react to this broader economy is yet to be seen.”

Gavin Williams, managing director, GXO UK&I

“In 2023 we saw lower volumes overall as consumers responded to the economic climate, and this was reflected in a smaller peak than previous years. Despite these lower volumes, many customers continue to see peaks of demand for November and December, ranging anywhere between 30% to 200% of their normal outbound demand across the year. 

“We see many of our customers using proposition management tools, including discounting and free returns, to extend or prolong peak periods to help them drive efficiencies.

“Many of our customers face not one, but two peaks a year, with levels of demand in July and January similar now to November and December, as consumers exploit seasonal sales. This means that retailers need to have the agility and flexibility to ride a bow wave of demand across the course of the year. For example, last year one of our customers’ July peak of 5 million outbound units was equal to their December peak. Outside these two months their outbound volume averaged 2m less, so you can appreciate that retailers with these bow waves two or three times a year must have flex and agility built into the core of their fulfilment proposition.

“Peak isn’t just about managing outbound demand, it’s also about the ability to manage a peak in goods returned. Any retailer who can’t process a peak of returns in January is going to have a lot of unsold inventory and waste by February. The key to fulfilment success is resilient, flexible people and plans that can quickly and smoothly manage big variables in demand, efficiently and with minimum waste.”

Russell Lewis, assistant general manager, Uniserve (Felixstowe Mega DC)

“Peak is all about the detail – accurate forecasts from your customers are key. You then need to ensure that you have adequately trained staff to manage the increased volumes and if this means bringing in temporary staff to assist then we would look at six-eight weeks before peak for onboarding depending on the activity required and if they require training on the WMS and processes etc. 

“You also need clear communication channels between the customer and Uniserve with key stakeholders, with escalation points to ensure successful execution for peak periods. Involve all levels of the operational management team to ensure that risks have been mitigated and blockers identified – the lower levels of the management team are the ones on the ground seeing the operation in real time so use their knowledge. 

“Temp staff availability and quality is an issue for the industry and provides us with a huge challenge – I would say on average we need to bring in five heads to find one that is of the standard we require even for simple pick and pack operations. This industry is just not a popular choice for the younger generation and with the reduction in the availability of migrant workers we are feeling the pinch. 

“Last year, in some cases, customers were discounting for up to six weeks post-event due to relatively poor sales performance on Black Friday – this is obviously un-forecasted as they make the decisions based on numbers for the previous week and then push the sale. This means we are constantly reacting with little time to pre-plan – this pushes our costs up as we have to retain staff that are not 100% utilised all of the time to ensure we can meet demand when it arrives.”

Phil Reuben, executive director at SCALA

“Recent history has taught us that supply routes from the Far East can no longer be relied upon entirely. While it is fair to say that the Suez Canal blockage of 2021 may be a very occasional hazard, and the Covid-19 crisis once in a generation, there are other factors which have the potential to be destructive.

“The problems in the Red Sea, while not deterring all shipping, have continued to disrupt journey times and capacity. However, there is still time for an event to occur that suspends all shipping through the area. The key is to get products into the UK early. Yes, this could bring about cash flow and storage cost issues, but if feasible, it is a valuable risk reduction strategy.”

Dan Myers, managing director – UK and Ireland, XPO Logistics

“Work with good partners – which provide a good service but can offer wider support creating a more agile base. Every peak is different, volumes and dates have changed and will continue to do so. Our 2024 peak stock building started earlier due to customers pulling orders forward due to geopolitical uncertainty, working on the principle of having stock in-country provides more certainty.”

Dave Howorth, executive director at SCALA

“While AI can be valuable for planning and forecasting demand, ignore the importance of people at your peril; it is still critical to have the right people in the right roles in the right numbers, motivated and focused on the same objectives.”

John Shah, UK head of warehouse operations at Europa Worldwide Group

“My top tips would be to employ advanced planning, establish strong partnerships and strengthen communication with all relevant stakeholders. Employ efficient inventory management strategies, which will lay the foundation for informed decision-making, help you to anticipate fluctuations and allocate resources judiciously. Investing in technology – whether this be automation, robotics or advanced WMS – further enhances efficiency, with advanced inventory tracking and automated picking empowering companies to streamline processes, minimise errors, and optimise stock levels with precision.

“Consumers live in a ‘convenience culture’, which may also drive a higher number of returns. Therefore, 3PLs and brands need to have well forecasted, timely solutions to be able to provide a responsive, flexible and trustworthy service.”

Natalie Frow, managing director retail, DHL Supply Chain UK 

“Looking ahead we can expect retailers to continue to pull stock through early, to counteract uncertainty and volatility. Businesses will need to ensure they can manage the arrival of early stock in warehouses, as well as excess remaining products (for example summer equipment that might not have sold as well) and potentially secure additional storage space.

“Effective planning for peak periods is crucial for any business wanting to maximise performance and maintain customer satisfaction during high-demand times. Whether it's the holiday season or a major sale event, thorough preparation ensures that operations run smoothly and efficiently.”

Emile Naus, partner, BearingPoint

“Retailers are getting wise to the costs of Black Friday. Over the years, Black Friday has evolved into a longer term promotional period with reduced commitments to lead times, to try and smooth the peak requirements on logistics. However, if sales numbers are lagging against forecast, retailers typically respond by discounting to make their sales targets. Customers have become wise to this, so 2024 might be a case of ‘who blinks first’.”