Get rid of excess stock, take a breather, start looking towards the next challenge. The usual modus operandi of retailers is understandable but counter-productive. By breathing a sigh of relief, you risk forgetting the important lessons Christmas provides about your supply chain. By analyzing the lessons and making informed tweaks to your processes, it’s possible to make a significant difference next year and every year to come.

A final Christmas present left to unwrap

As discussed in previous blog posts, we believe that Christmas is not an event – it’s a process. This is perhaps best illustrated after Christmas. Once the rush is over, it would be easy to consider your work done.

We would, however, advise the opposite. This is when you have the opportunity to look at all the data you’ve accumulated during the holiday season. Your goal is to establish key learnings you can then use to make informed optimizations to your supply chain. Keep in mind that your goal is not to look for errors or wrong assessments. Your goal is to improve the efficiency of your supply chain in order to make next Christmas more profitable.

Time to analyze

It’s useful to look at a timeline of the entire season. If you haven’t already, create a list of things you want to chart, evaluate and compare. In addition to KPI’s, look for anomalies, ie. differences in performance between stores, forecasts, products, product groups and suppliers.

Evaluate how well you succeeded in forecasting. Good indicators of this are, of course, on-shelf availability during the season and the amount of potential stock still sitting around, waiting for you to get rid of it after the season is over. Look at ad-hoc events: were you forced to make sudden corrections like flash discounts or relocation of supplied stocks?

Comparative data

Having data on the performance of multiple stores, forecasting methods, suppliers or products, is beneficial. Once you connect differences in performance to differences in processes or circumstances, you can make informed decisions about changes to implement for the next holiday season.

For some metrics, getting comparable data is relatively easy – take, for instance, different stores and their performance. With other metrics, like forecasts, you need to consciously aim towards creating comparative data during the holidays. This is valuable work, as being able to compare different processes and performance informs you how your decisions affect sales, replenishment, availability and other matters.

A systematic approach pays off

Human insight is invaluable, but it’s also human to misjudge. Incorrect forecasts are typically caused by biases as man-made predictions give too much weight to current events, even though they might be statistically insignificant.

Ideally, you have a large set of data accumulated over many holiday seasons. Analyzing all this is a sizeable task each year, so systematic analysis is key. A statistical forecasting solution allows for an objective overview of developments over time. It also provides ways to predict sudden changes. A functional forecasting solution combined with human insight affords companies the best of both worlds – a bias-free statistical overview combined with experience, sensitivity to changes in trends and even instinct.

If you have the patience to look at the usual KPI’s, evaluate comparative data, assess sudden events and make adjustments based on your findings, you’ve gone a long way towards ensuring an even more profitable Christmas season next year. Besides, the same drill works for every season – the processes you’ve just created work as a guideline for all your seasonal prediction needs.

We have created an infographic illustrating how a successful Christmas supply chain should be managed. Have a look: The Christmas Supply Chain

Mikko Kärkkäinen

Mikko Kärkkäinen

Group CEO, D.Sc. (Tech.)

Phone+44 7802 658 237

Mikko Kärkkäinen is the Group CEO at RELEX and the author of more than thirty papers on logistics and supply chain issues delivered at conferences or published in leading magazines.

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