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The spooky reality of the holiday supply chain

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The spooky reality of the holiday supply chain

Happy Halloween! We’re officially rolling into the 2022 holiday season, which means the import supply chain is about to get pretty “spooky.”
There’s a whole lot to think about when it comes to this time of the year, with one of the most pertinent questions being how to ensure products are sourced, ordered, and arrive on time for peak selling season. To understand how this can be done, it’s first important to first look at the effects the holiday period can have on the import supply chain.

A lack of preparation leads to ruined holidays

As you would expect, the holiday period is a critical time of the year for most seasonal businesses. Months of planning and preparation goes into making sure ghost lawn decorations and 6-foot tall witch inflatables arrive on store shelves in time to be taken home and enjoyed by the annual migration of trick or treaters.

It would therefore be considered a catastrophe if, for example, Walmart’s pumpkin-themed party napkins and value bags of assorted themed candies were to arrive even a week late. Yet this is a reality for many retailers, as products become “out of season” within a matter of days. Businesses are subsequently forced to either put them in storage for another year until the following Halloween rolls back around (racking up expensive inventory costs), sell them to consumers or to other wholesalers at a drastically reduced price, else destroy them and take the hit to their bottom line.

These "worst case" scenarios are what thousands of professionals working across the supply chain industry spend the majority of their time trying to avoid—unfortunately, many still don’t get it right. If you’ve ever walked into a store during the holiday season and noticed a distinct lack of festive goods, it’s highly likely that something has gone drastically wrong during the planning, sourcing, manufacturing, and shipping of goods—i.e. the upstream operations that account for around 80 percent of the import supply chain.

Of course, the holiday season is about more than planning for Halloween alone, and is just as easily affected by the traditional disruptions to the supply chain—from a drop in consumer demand, to weather disruptions, to natural disasters—all at a time when pressures are already extremely high. However, with planning being the key to success, meeting expected sales can just as easily be met with good preparation.

Challenges that can cripple the import supply chain

It’s important to note that the core challenges surrounding the holiday season are driven by the fact that each year is fragmented into fluctuating time periods. In the first half of the year, there are few holidays or occasions that drive surges in demand and require special attention in quite the same way the holiday season in the latter half of the year does. Importing professionals refer to this as the “slack” season—a time where it is usually much easier to get space on a ship and leverage lower tariffs and prices.

This is a stark contrast to the second half of the year, where the inner workings of price elasticity causes prices to spike, and shipping containers and warehouse space become the currency of note.

To meet this seasonal calendar, most manufacturing takes place between January to July, with the peak shipping period from Asia to the USA then falling between June and September. Whilst on the one hand this brings some predictability to import operations, it can also create its own set of challenges:

  • Recurring competition – as virtually every importer frantically tries to source and produce their products, the finite number of suppliers makes building the right (and best) relationship tricky.
  • Supplier relationships – finding the right vendor is only half the challenge; ensuring that the relationship works and that clear communication channels are established to ensure product changes and demands don’t get lost in the mix can be the difference between products on shelves, or empty shipping baskets.
  • Shipping complexities – the shipping season too, brings inflated prices as demand for space to move freight surges. Importers must decide whether to gamble and rely on the slower, but (relatively) cheaper option of ships, versus the faster but more costly alternatives, such as air freight.
  • Fixing errors – when managing vast quantities of products, things are naturally going to go wrong. As many importers have discovered over the past few years, having the right mitigation strategies in place is becoming increasingly critical to address a complex array of adverse situations that can affect even the most seasoned business.

The holiday guide to success

So what can importers do to prepare for this tumultuous time? Here is Mercado’s holiday guide to help you make this holiday season the best yet:

  1. Digitization drives sales
    Everything in your supply chain starts with the way you handle orders. And currently…importers are still handling overs like it’s the 1980s. Digitization ensures effective order management before goods even get on a boat or plane. Bringing the first mile of the supply chain into the 21st century is a crucial step in making sure your processes run efficiently and effectively for any season coming your way. Not only that, but it benefits you in ease of booking, documentation, customs, warehouse management, logistics, and (most importantly) sales.
  2. Communication is key
    A successful supply chain is rooted in supplier relationships. They’re the fundamental link to whether or not you get your products in the first place. Keeping constant contact and that line of communication is crucial to ensure what you order is what you get—particularly when it comes to very specific seasonal products during the holidays. Make sure to gather insights from your suppliers, like which products take longer to manufacture, and change up your strategy as needed. Otherwise undervaluing and underappreciating your suppliers can cause a divide and disconnection between expectation and reality.
  3. Start planning your 2023 holiday season strategy ASAP
    One thing we’ll never understand is why importers are so fine with playing with fire when it comes to hundreds of thousands (even millions) of dollars worth of products. A huge amount of forecasting is required to make sure that your products arrive on time and in safe condition, and it’s crucial to ensure all parties are up-to-date with the plan of action and status. It’s never too early to get a strategy in place for everyone to follow, especially when it comes to holiday planning. By planning now, you avoid unnecessary mistakes that can lead to costly problems later.
  4. Connection is critical—implement a modern platform
    We’re going to say it again; Excel and emails have no business managing trillions of dollars worth of manufactured goods in 2022—regardless of slack OR holiday season. Get with the times and connect your supply chain digitally, so that everyone is working from one source of the truth. If that sounds good to you, check out our Mercado Platform - it’s what we do best.

Got the holiday blues?

Mercado was designed to change the way the world trades, transacts, and interacts. The purpose-built import order management system connects brands to the people who make and move their products. Driving greater transparency, increased efficiency, and improved time to market.

Find out how you can thrive during the holiday season with Mercado. Get in touch to find out how you can get started.
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