It’s crucial to efficiently capitalize on customer satisfaction in managing the temporary popularity of a product. A lot has been said about enhancing supply chain flexibility to respond to demand trends. Some of these capabilities include leveraging social media analytics and AI-based tools to forecast demand surges recorded on social media trends and implementing a Just-In-Time (JIT) inventory management system with a robust safety stock strategy. In reality none of these seem to be effective when a product goes viral because the spike in demand can come as a surprise, leaving you scrambling to fulfil a sudden influx of orders. Sometimes products go viral for no predictable reasons hence creating a sudden spike that could not have been forecasted.
The inability of the traditional material management system to predict spikes driven by social media mass reactions on a product has created the need for a “second-tier” material management that can flexibly respond to sudden demand surges driven by social media- logistically and cost effectively. This second-tier material management by 3PLs, emerged against the backdrop of the fact that businesses need partners who can diversify their supply chain risk rather than a system that can handle spikes when they happen. This second-tier material management is in place to ensure production and distribution is scaled up quickly without costs spiralling out of control, which is a difficult feat to achieve in some consumer segments that require instant gratification, where customers want products to be delivered quickly.
To take advantage of this second-tier material management, the third-party logistics (3PL) partners should have adequate experience in high-volume channels to keep up with these spikes created by the social media buzz. The goal is to ride the wave and maximize the opportunity by filling all orders generated during the period hence making customer happy and creating brand reputation for the company. To achieve this, this business partner should have the capacity to react quickly in those moments and get the volume out the door accurately to your customers and continue to capture all those sales that will only be there for as long as the spikes last.
Obviously, it means choosing a 3PL fulfilment partner(s) with the right capacity and warehouses strategically located close to the customers. This will optimize storage cost and delivery speed, because the closer the products are to the end customers or retail partners the faster and the more cost-effective fulfilment operations will be. Furthermore, as the supply chain operators are catching up with this new fulfilment trend, the most important capabilities to look for in a new fulfilment partner are the abilities to scale, experience in handling high and fast-moving inventory volumes as well as a technology that enables simple and flexible solutions. Probably the power of AI will be leveraged in predicting the activities of major influencers in respective industries to warn planners of potential products that will go viral in the near future. When this happens, the quality of AI generated Exception messages will help adjust forecast in meeting viral trends.
Here are some challenges you might face building a supply chain that can flex and scale to meet sudden spikes and trough in demand with or without a social media viral trend. Parcel carriers use zone-based shipping models, which work well with distributed warehouse system as against centralized warehousing. Cost of shipments to faraway destinations from a centralized warehouse is usually unsustainable, which makes decentralized warehouse the best option for meeting cost and customers need. In supply chain, it could be a very difficult to justify an investment in storage, especially when demand is erratic. However, with the social media influence on material planning you could quickly run out of capacity or get stuck with a technology that is incapable of handling moderate to high order volumes at peak periods. Finally, it’s important we keep track of cost as we prioritize the urgent need for speed that is associated with the viral nature the orders as consumers are less patient than ever on social media and want their purchases to arrive instantly.
These days consumers and businesses shop online which includes on the social media as such working with the right fulfilment partners ensures you’ll be ready to take advantage of any surge in demand for your product(s) to create a good customer experience and boost your brand or company image. Therefore, it advisable to partner with a 3PL that has a multi-node fulfilment network that locates your inventories close to large customer markets, with a simple system that could quickly adapt to surges in demand.