What the Holidays mean for Supply Chain Risks in 2020

Photo by Marcin Jozwiak from Pexels

1) Its going to be a long one

We’ve all heard the complaints — or made them ourselves — about Christmas season coming earlier every year, but this time it’s actually true. Nearly half of US consumers have already begun their holiday shopping, no doubt in part due to the widespread embrace of online purchases during pandemic mitigation restrictions. Amazon Prime Day’s late date this year on October 13th was another factor, becoming a new starting pistol for this year’s holiday promotions.

2) Shipping will have last-mile problems

While we’ll all be tired of Mariah Carey by the end of it, the stretched-out season may actually be a saving grace for shipping providers. Consumers have high expectations for on-time delivery thanks to Amazon’s outstanding performance in that area, but transportation providers have now spent most of 2020 adapting their operations to a high volume of home orders. With the holiday demand being teased out over multiple months, shippers may see sustained raised demand for their services rather than a December spike, allowing them to maintain higher performance throughout. Where problems will arise will be in the last-mile areas of their networks, where projections indicate that capacity may be exceeded by up to 5%. Many brands can alleviate this by using their physical locations as pick-up centers, and companies that don’t have a brick-and-mortar presence should consider partnering with those that do for this purpose. Gig apps like Uber or Roadie offer the potential to provide a significant amount of flexible last-mile capacity, which may also help with this final link in the supply chain.

3) B2B spending endures, but dangerous waters are ahead

Holiday discussions tend to skew towards consumer-oriented industries for obvious reasons, but the implications for this year extend into the B2B realm as well. So far the effects of COVID-19 containment efforts have been most sharply felt by consumer-oriented businesses that rely on household discretionary spending. Luckily for the B2B environment, during this recession the US Gross Output has moved in tandem with the GDP unlike in previous recessions, where the Gross Output losses were two or three times that of GDP (for those unfamiliar with Gross Output, it is a measure of total spending at all stages of the supply chain, while GDP measures only finished goods and services).

Stimulus, a relationship intelligence software that helps companies build more valuable vendor and supplier relationships.