Insights to Create a Competitive Advantage

With the volatility businesses have faced in the past few years related to Covid-19, experts are predicting 2023 will continue to present supply chain challenges. With the uncertain economic climate, continued supply chain shortages and an increased focus on both sustainability and technology, 2023 is set to be another transformative year.

From finding ways to take costs out of the value chain, to implementing new automation, companies will have to adapt to stay competitive in an ever-changing North American, and global, market.

In this article we will take a closer look at the top supply chain trends that are expected to shape the industry in 2023. We’ve included insights from some of our supply chain experts who work closely with brands every day to strategize and bring more value to their business.

Dwayne Johnson: Senior Director, Retail, eCommerce and Section 321 Advisor

Ellen McLeod: Director, Strategic Retail Accounts

Amy Lawrie: Director, Strategic Healthcare Accounts

Suhi Nadarajah: Director, Business Development, Technology 

1. What supply chain challenges can brands expect to face in 2023?

Inflation and Recession Effecting Supply Chains

Many economists predict that inflation will increase in the coming year. For supply chains, this increases the cost of labour, energy, and transportation. In the US, consumer prices were up 9.1% over the year ended June 2022. This was the largest increase in 40 years according to the U.S. Bureau of Labor Statistics. According to Statistics Canada, the Consumer Price Index (CPI) rose 6.8% year over year in November 2022.

Dwayne Johnson: “As we head into a potential recession, brands will care more about their supply chain costs and where they spend their money. Their spending choices will be heavily based on shortening time to ROI and quantifiable savings.”

Amy Lawrie: “Consumer spending habits are changing as people become more cost conscious and have less disposable income after buying necessities. The high cost of raw materials and supplies is also reducing overall margins for retailers.”

Suhi Nadarajah: “Many retail and technology companies are not hitting their targets. With excess inventory we’re seeing a lot of sales and promotions in Q1 as brands try to clear out stock. In 2023 we’ll see some companies reduce the number of SKUs offered, therefore lowering the number of products and product variation to save on costs, and focus efforts on targeted products.”

The overall sentiment across the retail and supply chain industries is that a recession will cause consumers to cut back spending. Pairing this with the high cost of materials and transportation, brands will be looking for ways they can get more value from their supply chains and overall operating model.

At SCI our long-term forecasts and flexible contingency plans help your business navigate supply chain fluctuations. We help you get a greater return out of your supply chain that creates a competitive advantage by ensuring you can offset the impacts of recessions, labour shortages, etc.

2. What capabilities and services are brands looking for from a 3PL partner in 2023?

Reducing operating costs such as saving on duties and tariffs:

Dwayne Johnson: “Section 321 is the hot topic heading into 2023. As companies look to save on supply chain costs, Section 321 offers a real, tangible way for companies to put money back in their pockets by saving on duty and tariff costs.”

Section 321 is an exemption in the Canada-U.S.-Mexico Agreement that allows small shipments to enter the U.S. duty-free. This offers direct-to-consumer ecommerce retailers an opportunity to reduce their cost per unit through waived or refunded import duties on items that enter Canada bound for U.S. recipients, without affecting the customer’s experience.

By relocating distribution to Canada, retailers can maximize orders by servicing both the U.S. and Canadian markets from a single location. It also enables retailers to reduce their inventory carrying costs and turn products faster, while driving down supply chain costs.

Flexibility and Speed:

Amy Lawrie: “Brands are looking for flexibility from their 3PL partner. Many brands’ marketing teams are changing up their strategies and tactics rapidly and trying various approaches to appeal to their customers.  Because of this 3PLs also need to have the ability to adapt quickly and be flexible to their needs.”

Volume increases, new packaging and kitting methods, or new set-up and staging requirements, are easily handled and scaled quickly by SCI’s flexible operations. With our extensive experience and resources, we’re able to use a combination of highly trained personnel, as well as the latest automation and technology solutions to manage and store inventory, pick and pack products, and provide last mile delivery, quickly and efficiently. Our data visibility also allows us to keep a close eye on orders and inventory and adapt as our clients’ businesses evolve.

Strategy and Planning:

Dwayne Johnson: “Collaboration between brands and 3PLs will be important in 2023. Brands look to SCI for help to see where they can get a greater return out of their supply chain. We work with clients to develop a strategic North American fulfillment model that significantly reduces duties and tariffs, consolidates inventory and saves on holding costs.”

Our team supports you from start to finish with strategic planning and consultation to help your brand reduce or eliminate your import duty and tariff costs and find efficiencies throughout your supply chain lifecycle. We eliminate costs and complexities, risks, and complexity through continuous improvement, business intelligence, and leveraging our 3PL best practices.

Business intelligence tools and visibility:

Ellen McLeod: “Brands are looking for better reporting and analytics, easy to access portals, and real-time status updates. This includes visibility to transportation delivery statuses.  In addition, customers expect to be able to see exactly when their order will be delivered.”

Suhi Nadarajah: “Brands want more business intelligence tools with good, real-time data, to help them make quicker decisions. They’re also looking to their 3PL to help them understand what the data means, and how it can be used to influence their strategy.”

At SCI we use the latest technology to manage volume fluctuations and offer up-to-date end-to-end visibility of your supply chain data that can be accessed at any time to make decisions more quickly and accurately.

Our progressive business intelligence tools allow brands to better track their supply chain performance and give historical inventory and order data. This allows brands to measure, monitor, and optimize their operations, to make better, more informed data-driven decisions. This visibility will also be passed on to the consumer level, where customers now have high expectations around being able to track their orders.

3. What sort of technology and automation supply chain industry trends will we see in 2023?

Automation

Amy Lawrie: “To reduce the pressure coming from the labour shortage, supply chains will need to continue to adapt with more automation, and goods-to-person technology.”

To reduce dependency on manual process and labor, especially during peak periods of demand, and increase production capacity, supply chains continue to incorporate scalable automation solutions. Robotic technology is getting more advanced, safer, and more affordable, making it more accessible to incorporate into operations to assist workers with warehousing and transportation tasks.

SCI can help manage your high-volume e-commerce logistics with our goods-to-person automation strategies which include box-on-demand, vertical lift modules (VLMs), automated parts storage machines, and collaborative robots. Coupled with our business intelligence and analytics tools, our automation technology helps optimize production capacity, improve order accuracy, and increase operational efficiency, saving on your bottom line.

AI and IoT

Artificial intelligence and machine learning will become a driving force for maximizing efficiency of systems and operations in supply chains. This will involve a collaborative approach of humans working with AI to improve operational environments.

Suhi Nadarajah: “The rise of AI will make its way further into supply chain technology. AI can help create better models for route optimization, picking and packing optimization, etc. The Internet of Things (IoT) will also continue to be important used in supply chains in a variety of ways to improve efficiency and visibility.”

The Internet of Things (IoT) refers to the network of physical objects, such as devices, vehicles, buildings, and other items embedded with sensors, software, and connectivity which enables these objects to collect and exchange data. IoT provides up-to-date transparency and information about product location, speed of movement, estimated arrival, etc. This helps uncover delays, bottlenecks, and disruptions in the supply chain, which organizations can improve to save costs, raise service levels, and optimize systems.

4. How will a focus on sustainability effect supply chain industry trends?

Amy Lawrie: “Companies whose branding is closely tied to sustainability and green initiatives will look to work with 3PLs that share these same values and have sustainable practices.  As a 3PL its important for us to demonstrate and highlight our sustainable practices and in turn, help strategize how we can better help these companies achieve their sustainability goals.”

Dwayne Johnson: “For more and more brands, the proven sustainability and social responsibility efforts of their 3PL partners has become a key decision factor on who they will trust with their supply chain support.”

The demand for partners that are environmentally and socially responsible has grown as more consumers make purchase choices based on brand and retailer sustainability efforts. According to Canada Post’s 2022 holiday report:

• 61% of shoppers value brands that use sustainable packaging
• 56% choose brands that have environmentally sustainable practices & values
• 31% value brands that are committed to ethical working practices

At SCI your sustainability goals are also ours. Through our meticulous focus on continuous improvement and relentlessly optimizing our operations; we are committed to minimizing our carbon footprint and reducing our impact on the environment for a greener future.

5. How is eCommerce changing, and how will these changes effect supply chain industry trends in 2023?

Balancing cost savings with high consumer expectations around delivery

Consumers expectations for a smooth and quick delivery experience are at an all-time high going into 2023, with many customers penalizing B2C and B2B companies for poor delivery performance. To improve and enhance the customer experience, brands will need to manage expectations with real-time shipment tracking and proof-of-delivery information sent directly to the customer.

Suhi Nadarajah: “In the supply chain, deliveries are more expensive than in-store purchases. Instead of increasing the cost of goods, many brands are increasing the cost of delivery instead.”

Dwayne Johnson: “Free shipping won’t be as wide-spread as it used to be, or brands will add fees for returns by mail to tighten up cost margins.”

Ellen McLeod: “Customers continue to have high expectations around online orders. Customers still want products delivered fast, and to have clear visibility to delivery dates and times. However, we will also see retailers trying to entice customers back to brick-and-mortar stores to save costs.”

Retailers will have to consider how they can satisfy all these needs while keeping costs low. SCI adds value to your business by finding ways to reduce your transportation costs. We work with you to understand your business and identify where the most effective improvements can be made to optimize transportation operations. Fulfilling orders from warehouses closer to your customers, zone skipping, and in-house value-added services are just a few efficiencies that can help save on fuel costs. SCI also has the flexibility to switch between our multi-carrier networks to avoid delays and get your delivery to its destination as efficiently as possible.

Partnering with an Experienced 3PL

Technology, efficiency, and managing costs are all major trends our experts expect to see in 2023. SCI has managed wholesale and direct to consumer e-commerce supply chains for decades, navigating yearly trends and market changes. Our value lies in the ability to understand your business and identify where the most effective improvements can be made and how to optimize operations to stay ahead of your competitors.

From inventory management and ecommerce fulfillment through to the final mile, our team of experts will provide you with the efficiency, scalability and resiliency you need to ensure your orders are fulfilled efficiently and delivered seamlessly to your end consumer.

Our unique combination of national coverage, forward-thinking expertise, progressive technology, and data-driven insights means we can design solutions to fit your current logistics needs and continue to adapt as your business evolves.

Contact one of our 3pl experts today to realize the untapped potential of your supply chain with SCI’s end-to-end logistics solutions, optimized for your business.

Electrification of commercial vehicles has recently grown as EV technology becomes more accessible, governments provide incentives, and companies look to become more environmentally conscious while saving on transportation and diesel costs. As more manufacturers enter the market, demand for not only the vehicles, but an infrastructure to support such vehicles has also risen. However, many companies interested in adopting this technology for their commercial fleets still have a lot to consider about when and how to invest and make this transition.

In this insightful interview SCI’s VP of Transportation, Guy Toksoy, talks with Frans Tjallingii, the CEO and Co-founder of 7Gen to get an insiders view on charging infrastructure deployment and fleet electrification. They discuss the challenges and opportunities in electrifying medium and heavy-duty fleets, including:

• Who should transition their commercial fleet to EV?
• What’s the typical investment horizon for transitioning a fleet to EV?
• What are the pros and cons of a purchase model vs lease model?
• How will the charging infrastructure grow to help support the transition to EV fleets?

Leverage SCI’s end-to-end supply chain solutions for your next fleet transformation and EV charger installation roll-out.  We provide warehousing, project management, transportation management service, white glove delivery, and spare parts management through our extensive national FSL network for EV chargers and related parts. Contact us today to learn more.

Read the transcript of the video below:

Introductions:

Guy Toksoy:

Hello everyone, my name is Guy Toksoy and I’m the Vice President of Operations for our transportation, parts, and services, and repair services division of SCI. I’m very excited today to be sitting down for a virtual fireside chat with Frans Tjallingii who is the CEO and co-founder of 7gen and we’re going to chat a little bit about the electrification of the commercial fleet space in Canada. So Frans, welcome and thank you for joining me today in our virtual fireside chat. Could you just introduce yourself and tell us a little bit about who you are and what your company does.

Frans Tjallingii:

It’s great to be here and I’m excited to be with you in this fireside chat.  My own background has been in the transportation space but more on the maritime-side so I’ve been in the oil and gas and maritime space for a long time until I decided to become an entrepreneur. Then I built and sold a software company over 2017 and 2018 and decided then to focus on clean technologies. This led me to come together with a few co-founders to start 7gen.

Our focus is commercial medium and heavy duty fleets so everything from last mile logistics to heavy transportation and regional transportation. What we do is we help fleet operators basically from A to Z try to figure out what fleet planning they should do, what vehicles to start with, what to start with, and then what vehicles would work for them, what charging infrastructure would work for them, etc. And then we do turn-key execution of those projects and also the financing so ultimately the end product is that they basically lease from us a vehicle that includes charging and includes everything that they need to start their operations and also starts basically saving money from day one because in many of the applications that we work with it is cheaper today already to use EV.

Guy Toksoy:

We’ll discuss some of those things and get into it a little bit in detail later on hopefully in our chat. Just to start off you know that vehicles are a very passionate subject for me and I’m really excited to chat with you about them today; specifically about the electric vehicles or electrification of the commercial fleets in Canada. But you know this is like the new gold rush; everybody’s talking about electrification and EVs both on the personal vehicle side as well as on the commercial fleet side.

In your opinion what are some of the main reasons why companies are wanting to convert either part or all of their fleets into electric vehicles?

Frans Tjallingii:

I think it’s mainly driven by climate change right now; climate change is the overarching framework by which the fleet transitions are being done. Generally they drive government policy and then government policy drives incentives and those incentives now make it cost effective for operators in many areas of Canada and elsewhere to move to EV.

So EV is a technology that’s been around for many decades, generally hampered by the battery density – the weight of battery you need to haul around to do a certain amount of range which means especially in commercial applications that you’re losing payload. So there’s stuff that you need to do on the battery side. On the other hand once you have an electric vehicle it is super efficient in terms of converting energy to transportation to ultimately movement. So if we’re able to tap into that efficiency, that also drives a lot of advantages for someone moving into EV. So given that the purchase price is manageable, the advantages for an operator on an operation side are that you have very little maintenance and your energy cost goes down because generally the cost of electricity is a lot less than the cost of fuel and you have this very efficient way of converting energy to movement.

How do I know my fleet is a good candidate to go electric?

Guy Toksoy:

I want to talk a little bit about the transition plan. How would I know if my business and the fleet I’m running is a good candidate to go electric? What are some of the items that I would need to look at or my team needs to look at as part of my operations?

Frans Tjallingii:

I’d say you know the best summary is if you’re doing less than about 250 kilometers in a day, and you have the ability to charge overnight, you should seriously look at electrification today. Generally in most vehicle classes there are solutions that are available today with a good reliability that you could start integrating into your sleet.

So I think that’s a rule of thumb, and why am I saying that is for two components. One is the vehicles – the bulk of the commercial vehicles available today have a range of up to about that 250 kilometer mark. And then it’s about your investment that you need to do in charging infrastructure. So if you have only half an hour to charge it’s going to be very hard for you to make that work economically – it’s going to be expensive. If you have 10 hours to charge the charger that you need to install is much smaller and you’re investment in charging infrastructure is going to be a lot smaller.

The joint business case is vehicle and the charging infrastructure required to make that vehicle work you have to sort of see them as one because they jointly determine the capital expenditure that you’re going to have to ultimately get one unit on the road. And then look at your fleet renewal plans. If you’re doing fleet renewal, consider not buying another diesel vehicle. Can you do that vehicle in a EV version? And what adaptations might you need to do to shuffle your fleet around or do route optimizations to allow you to take some EV in.

What is the typical investment horizon?

Guy Toksoy:

What kind of a typical investment horizon should a company look at? And in addition to the investment horizon is it better to take an incremental approach to the fleet electrification or is it better to do a complete fleet replacement?

Frans Tjallingii:

I’d say the actual payback period will vary a lot dependent on your sites, depending on the charging infrastructure, depending on the vehicle, depending on the route,  depending on how many kilometers you do, depending on the cost of energy and the utilities of the service area that you’re in, etc. So that’s the sort of the complicated answer, but in actual fact generally after incentives we’re generally looking at a three to seven year payback period. So it’s not clear-cut, but if you’re spending your own capital you’re generally looking within that three to seven year range dependent on where you are.

How does an incremental transition approach work?

Frans Tjallingii:

In terms of an incremental approach, generally what we advise customers is increments, especially if you have a larger fleet. Start with 10 vehicles, which is the maximum for many incentive programs. Try stuff out, get used to it get your drivers used to it, understand where you can create some more commercial opportunities so you can scale up bit by bit.

The other analogy is we’re sort of on iPhone 1 or iPhone 2 in many of these vehicles, but iPhone 3 will come out. The next version will be better, will have better range, will be tested out more, etc. I’d say there’s a number of different reasons to go incremental. On the other side, if you want to create commercial opportunities with going electric now’s the time to do it. We see that governments will clamp down. Prices are coming down bit by bit, but incentives will also come down. So as the stick approach goes up, the carrot approach goes down. That’s sort of how we often see it happening.

So we see the phasing out of internal combustion engines on the light vehicle side by 2035. We believe we will see incremental pressure on commercial operators and anyone to go to zero emission. So at this moment in time when it’s not yet mainstream when not everyone just has it already there is much more opportunity to be had to go to your clients and say hey listen how about we do this together, you give me a better contract, I go electric, we’re both happy. I think now is the time to have those discussions and do that. In two years, three years, I think it will be much more mainstream.

How many vehicles should I convert at once?

Guy Toksoy:

In terms of going with the incremental approach is there a minimum number of vehicles per site that you would recommend? In other words, let’s say a site has 10 vehicles and all of them operate within a 250 kilometer radius on a daily basis and service the customers, is one a good number, is two a better number? Is there a minimum number that people might want to try out and learn from before expanding to the entire fleet?

Frans Tjallingii:

I think here my answer is going to depend on two things. One is your commercial opportunities and what would you like to achieve. If all those 10 vehicles serve one client and that client’s very green, the discussion that we’re going to have is probably a bit different, so that’s one part of it.  But there’s nothing wrong with getting one EV in. On the other hand on the charging infrastructure side it might be a bit different. Let’s say if that EV is a class A tractor – like a heavy duty vehicle, you’ll probably install one DC fast charger. The economies of scale of adding 10 DC fast charges versus one DC fast charger are different than from a level 2 charger. On a level 2 charger perspective and a deployment cost you will save by installing 10 level 2 charges at one go or 15 or whatever number on the back end infrastructure. The work required for cabling a whole bunch of stuff that you’re going to save money on by doing 10 rather than one.

And again it depends on the site, it depends on a bunch of things. But ultimately there is more efficiency to be gained in some of the infrastructure work to not do that individually for each charger rather than for a larger group of chargers. So I’d say you can look at them separately almost but at some point if you have 10 charges there then you know the question is would you use them and when are you going to use them. So it’s a chicken and egg discussion that unfortunately leads to the outcome – it depends.

Pros and Cons of purchase model vs lease model:

Guy Toksoy:

We talked a little bit about lease versus buy, knowing that there is a separate investment in charging infrastructure as well as obviously the vehicle itself what are some of the pros and cons of a purchase model versus a lease model?

Ultimately the decision really depends on your philosophy about how you deploy your own capital and what you’re going to use that for. If you’re using it for your own growth or for your own operations or for a whole bunch of things then you may want to have someone else provide the capital for the assets. So that’s where we come in. In general if you’re going to have to go out for financing, often a leasing provider like us can be competitive because there’s no underlying assets that can be financed and have some security.

For example if you’re a company that needs a loan to buy the vehicle then you should also look at an asset finance solution like ourselves. Because that’s probably going to be competitive to going out and getting a loan on your own balance sheet. Not always, but often it is. So having said that there is a difference between a charging infrastructure and the vehicle. The vehicle is much easier to reposition in case of default or in case of anything happening. Charging infrastructure is much harder. So our proposition is we do both together, and we’re very competitive at that, providing ultimately a better solution to our clients.

How will the services industry help support the growth of EV and EV Infrastructure?

Guy Toksoy:

We know that there’s a lot of investment that’s pouring into the EV space and in particular around the charging infrastructure. When the investment starts to pour in and we start seeing more and more charging stations popping up around the country, how does industry or services industry help support that growth?

Frans Tjallingii:

I’d say at this moment everything happens through local contractors. We have a network across the country of vetted contractors but they’re generally local. So it’s hard to find someone that we work with in Ontario that will also do work in BC, and generally they also support us on the maintenance side in terms of having people on a call-up basis to come and intervene. I think that market will evolve. We’ll see players maybe such as yourself ultimately scaling up to become that larger scale service provider that may be required in the space to really get to the next level. Because that’s the evolution that will need to take place moving from a more piecemeal solution to something that’s more holistic.

Guy Toksoy:

What you’re talking about is more local partners that you’re utilizing or that you’re seeing being utilized for the delivery installation and servicing of charging networks but if you were to scale those up at a level that’s going to be needed over the next five, ten years you’re you should be tapping into more global players or bigger players that help clients scale up quickly and build that infrastructure.

Frans Tjallingii:

I think we’re definitely open to that. We’re looking to scale fast. We’re a recipient of some of that money flowing into the space and ultimately we’re looking to build this at scale so we’re constantly looking for partners to scale with.

SCI’s EV Infrastructure Services Solution

Frans Tjallingii:

So Guy, we spoke a bit about where this charging infrastructure is going to go and ultimately I foresee that we’ll have a lot of distributed charging infrastructure in a number of different
locations. I know SCI has some knowledge and skills that you’re thinking about bringing to this EV space. Can you talk a bit more about what that looks like?

Guy Toksoy:

Yes. What SCI does is help our client base with delivery and installation of different types of commercial solutions whether they are you know automatic bank machines, or parcel lockers,
or kiosks in various locations, and our white glove fleet is heavily into providing this type of a service of both delivering those products into the locations that they’re used in, but also installation and further maintaining them; repair maintenance services and critical parts services, etc. So it’s a natural progression for SCI to look into the electric vehicle space and particularly on the infrastructure related to the charging networks and offer some services that we see a very strong parallel to what we’re doing currently and so we hope to get more and more engaged with our client base in terms of helping them deliver, install, and maintain the charging networks across the country.

Well Frans I’ve learned a lot from our conversation today. Is there anything that we didn’t cover that might be useful information to fleet owners that are considering electrification that you want to maybe touch upon?

Frans Tjallingii:

Yes, I’d say many people are seeing this as – oh we’ll worry about it next year or the year after or the year after when someone forces us. I think if you’re in a segment where you fall within an operating range of 250 kilometers per day and overnight charging as a possibility you should. But even if you’re doing more and you have less time, you have to start looking at it now. I think now is the time when you can create some commercial opportunity around it. Now’s the time to already learn, because ultimately the battery electric vehicle is more efficient than the diesel version.

Guy Toksoy:

Well thanks again, I learned a lot. Thanks for sharing your thoughts and expertise in this area of electrification of commercial fleets, and hopefully for people who are viewing this it will help them make a decision in terms of which direction they’re going on how fast they’re going. I think the direction is pretty much set; everybody’s going to be going in the EV space at some point over the next five years, ten years, 15 years max so it’s happening. It’s just a question of how do we get there and what help companies like your company and companies like my company
SCI can help players get there, so thanks again.

Frans Tjallingii:

Yeah my pleasure.

Holiday and seasonal shopping are the busiest and most stressful times for retailers. With higher demand for products in stores and increased orders online, retailers are challenged to prepare for peak season fulfillment and supply enormous volumes of products in just a short peak shipping season. The 2022 peak season, however, will bring its own set of challenges to face and overcome, from predicted lower purchase volumes, rising transportation costs, labour shortages, and more.

The Importance of Peak Season

The holiday peak season is the most important time for direct-to-consumer brands, and many make approximately 19% of their yearly sales during this time alone.

Customers expect more and more from their retailers to make their online experience the most enjoyable and memorable. This includes expectations around free and fast shipping, as well as a seamless returns process. Additionally, with the dominance of Instagram and Tik Tok, brands and consumers are looking to create ‘share-worthy’ unboxing moments, which are made possible with specialized kitting and packaging. Retailers who manage to ‘pull-off’ the perfect end-to-end shopping experience can win over loyal customers and grow their likes and shares.

In this article you’ll learn about consumer shopping trends, the specific challenges wholesale and direct-to-consumer brands will face in the 2022 holiday peak season, and how partnering with SCI can help set you up for success for future peak seasons.

Canadian Consumer Peak Season Fulfillment Trends You Should Know

According to Canada Post’s recent 2022 holiday report, consumers are shopping earlier, spending more online, and prioritizing sustainability during the holiday season. According to their surveys in 2021:

• 47% of Canadians completed their holiday shopping early because they were worried about item availability and low inventory
• 20% of Canadians started shopping in September & October and 23% shopped in early November
• 50% of shoppers planned to buy more items online during the holiday season
• 1 in 4 plan to avoid going to malls and stores
• 87% of shoppers want free shipping
• 60% of holiday shoppers say easy returns is an important factor that influences their choice of retailer and 82% look for free returns
• 61% of shoppers value brands that use sustainable packaging

Partnering with a Trusted 3PL

Missing out on peak season revenue due to supply chain deficiencies can lead to large setbacks for companies of any size. This is why it’s so important to find the right 3PL supply chain partner that can be adaptable to your changing demands. It can make the difference between having a successful, lucrative peak period, versus causing larger problems, stretching beyond the supply chain itself.

To alleviate this risk and avoid the “growing pains” of peak season fulfillment, the best strategy is to rely on an experienced supply chain partners (3PL) like SCI that can take away the stress of distributing your products on time.

Peak Season Fulfillment Challenges and Solutions

 1) Peak Season Fulfillment Volume Increases & Inventory overflow

One of the biggest challenges for companies is managing the significant increase in orders during a short period in the year. With the higher volume there is a huge risk for delayed orders and disappointed customers if orders aren’t fulfilled on time. This is an issue for brands with fulfillment operations that can’t scale quickly and effectively.

To ensure they have enough product to meet demand, and to avoid potential shipping container delays and empty shelves at stores, many retailers have increased their on-hand inventory, which requires a place to be stored. It also requires someone to manage the increase in order volume and potential customer demands. SCI has a wide warehouse and fulfillment network coast-to-coast across Canada that includes 32 distribution centres.

Leveraging the latest technology

At SCI we also use the latest technology to manage volume fluctuations and offer up-to-date end-to-end visibility of your supply chain data that can be accessed at any time to make decisions more quickly and accurately.

Our progressive business intelligence tools allow you to better track your supply chain performance during peak season with insights such as historical trends and comparisons to SLAs.  These tools enable us to measure, monitor, and optimize your operations, so together we can make better, more informed decisions year after year. By monitoring your network, we can understand health trends, which we use to balance service levels and costs and improve your bottom line.

2) Supply Chain Labour Challenges

Volume increases during peak season also require a flexible labour force to manage and store the inventory, pick and pack products, provide last mile delivery, etc. With ongoing labour challenges its important to work with a 3PL that is finding innovative ways to offset any issues created by a shortage in labour.

A poll taken during our North American e-commerce webinar in 2021 found that the majority of attendants had concerns about labour shortages related to peak season.

This continues to be an issue entering the 2022 holiday season. During the pandemic many truck drivers retired, or changed careers, leaving an 9% vacancy rate for jobs in the trucking industry.  In general, many people’s work priorities changed, with some opting for more flexible work-from-home jobs, creating a challenge for warehouses and supply chains.

Overcoming peak season labour shortages

It’s important to arrange for extra personnel well in advance of peak season and provide sufficient training so employees can feel confident in their positions. Working with a 3PL like SCI connects you to highly trained personnel, and a flexible workforce made available through a robust recruitment network, and relationships with staffing agencies.

Offsetting labour shortages with technology and automation

SCI has implemented goods-to-person automation strategies such as vertical lift modules, and automated parts storage machines to offset labour shortages. SCI has also invested in technology such as collaborative robots that assist with picking to enhance the productivity of existing workers. Scalable automation solutions can increase your production capacity and utilize warehouse space more efficiently, while reducing the dependency on manual processes and labour, especially during periods of peak demand.

3) Increased Transportation Costs

High gas and diesel prices are making fulfillment, transportation, and last-mile delivery more expensive. Retailers will have to consider how they can offset these costs through more efficient shipping methods, consolidating inventory, and other effective operation and shipping solutions. With our end-to-end supply chain capabilities, including asset-based transportation solutions, SCI can you streamline and scale your supply chain operations from inbound to final mile.

How to reduce peak season fulfillment transportation costs

SCI adds value to your business by finding ways to reduce your transportation costs. We work with you to understand your business and identify where the most effective improvements can be made to optimize transportation operations. Fulfilling orders from warehouses closer to your customers, zone skipping, and in-house value-added services are just a few efficiencies that can help save on fuel costs. SCI also has the flexibility to switch between our multi-carrier networks to avoid delays and get your delivery to its destination as efficiently as possible.

We plan which carriers to use, negotiate pricing for given service levels, and manage contracts. We also conduct real-time outbound order rate shopping between partner carriers to choose the best price for a given level of service. Our unique combination of national coverage, forward-thinking expertise, progressive technology, and asset-based capabilities means we can design transportation solutions that fit your current supply chain needs and adapt as your business grows.

4) Holiday Shoppers Spending Less

One of the many consequences of the pandemic was a sharp rise in supply chain costs, which has put a strain on the global economy, and raised the cost of living. This unfortunately means that many people are cutting back on their spending during the holidays as people tighten their purse strings and only buy necessities. As a result, some retailers are predicting a decrease in order volume for 2022, resulting in excess inventory and slimmer margins. A way to offset these challenges is to widen your consumer base and find innovative ways to save costs within your value chain.

Broaden You Consumer Base Across North America

Many American direct-to-consumer brands have the opportunity to reach more customers in a similar market by expanding into Canada year-round, but especially during peak season. Black Friday and Cyber Monday continue to be two of the busiest shopping days of the year for Canadians, both in-store and online.

American retailers can also target Canadian consumers looking for Boxing Day/Boxing Week sales. Boxing Day occurs the day after Christmas when retailers slash prices on un-sold inventory, and shoppers rush to get post-holiday deals. By localizing inventory in SCI’s Canadian warehouses retailers can reach Canadian consumers faster, with lower supply chain costs.

Save with Section 321 Shipping

Setting up inventory in Canadian warehouses also opens the opportunity to save up to 20% in duty and tariff costs using Section 321 fulfillment shipping. Section 321 is an exemption in the Canada-U.S.-Mexico Agreement that allows small shipments to enter the U.S. duty-free. This offers direct-to-consumer ecommerce retailers an opportunity to reduce their cost per unit through waived or refunded import duties on items that enter Canada bound for U.S. recipients, without affecting the customer’s experience.

When experiencing lower volumes during peak season Section 321 shipping is a way to save money and maximize revenue. By consolidating distribution in strategic centers in Canada, retailers can maximize orders by servicing both the U.S. and Canadian markets from a single location. It also enables retailers to reduce their inventory carrying costs and turn products faster, while driving down supply chain costs.

SCI has in-depth knowledge of the U.S. and Canadian supply chain industry, and relationships with top US carriers to help you develop a streamlined cross-border strategy. Our team supports you from start to finish with strategic planning and consultation to help your brand reduce or eliminate your import duty and tariff costs and comply with non-resident trade regulations.

With Section 321 we’ll ship your products from our Canadian facilities to your consumers in the U.S., but the delivery experience will be no different if it was fulfilled domestically. SCI’s last mile-delivery partner network can reach 80% of U.S. consumers in under 3 days.  We are also able to manage all returns from strategic locations in the United States, so your products don’t need to be sent back over the border.

5) Returns and Reverse Logistics

A peak in sales inevitably results in a peak in returns. You’ll first want to ensure your return policy is clear and easy to understand, and that your customer service team is trained to ensure a smooth return experience. Poorly handled returns can harm both reputation and revenue. When returns are handled quickly and easily, you’ll see better customer satisfaction and loyalty while reducing costs and capturing valuable data about processes and quality.

Finding Cost Savings in Your Reverse Logistics Strategy

Retailers should have a process in place to handle returns that avoids any disruptions to your operations. SCI offers end-to-end reverse logistics capabilities that can take the stress out of this additional piece of the peak season fulfillment puzzle. We work with you to create a reverse logistics program that is seamlessly integrated with your current supply chain and logistics process.  Find cost savings and operational efficiencies with a thorough inspection to determine whether your products should be reshelved, repaired, or salvaged for parts before resorting to recycling and disposal. If parts need to be recycled, we do so responsibly.

6) High Expectations for Kitting and Packaging

The importance of having aesthetically pleasing boxes and packaging for your products has grown in recent years with the rise of influencer marketing on social media platforms such as Youtube, Tik Tok, Instagram, etc. Unboxing moments get recorded or photographed and uploaded for followers to view and comment. Even beyond influencers, the general public often uploads images to their social media to share what they received as a gift during the holidays.

In some ways the appearance of the box and presentation of the product has become as important as the appearance of the product itself. Brands looking to convey a cohesive brand identity, an aspirational lifestyle, or a particular message need to design their packages with the un-boxing experience in mind. Working with an experienced 3PL with in-house value-added services such as packaging and kitting can ensure you exceed customer expectations during peak season.

No matter how unique your packaging and kitting needs are, SCI’s team can skillfully fulfill your orders to satisfy you and your customers. Whether you ship stock or offer custom subscription kits, we’ll execute a fast and accurate kitting process. We can also add a personalized touch to orders for special occasions, such as the holidays, with special inserts, tissue paper, or gift-wrapping.

Your Trusted Peak Season Fulfillment Partner

SCI has managed wholesale and direct to consumer e-commerce supply chains for decades for many well-established retailers, as well as high-growth new entrants. We pride ourselves on adding value to clients’ businesses with our commitment to reducing costs, risks and complexity through continuous improvement, business intelligence, analytics, and transparency. We give our clients the competitive advantage they need to grow their business.

As a trusted strategic partner, our team is dedicated to understanding the unique intricacies of our clients’ supply chain, providing end-to-end management of the entire customer experience. We have the North American expertise and 30+ years experience to deliver on this commitment and keep our clients steps ahead of their customers’ expectations.

Contact one of our experts today for more information on how SCI can help improve the scalability of your end-to-end supply chain during peak season, and all year round with our inventory management, strategic planning, warehousing and distribution services, transportation solutions, and post-sales logistics. SCI’s supply chain solutions guarantee that retailers meet their seasonal requirements and delight customers.

Every year SCI holds awards to recognize our employees for their contributions to SCI’s continuous improvement program. This program encourages employees to implement initiatives that benefit the company and our clients such as reducing waste, improving safety, fostering a better work environment, or enhancing customer experience. From finding new ways to improving performance, sharing expertise, and developing talent, we had over 1,600 ideas, submissions, and projects in 2021. We’re proud of our employees for their engagement and dedication to operational excellence.

Congratulations to the winners of this year’s SCI Awards:

Casey (left) receiving award

1st Place: Casey

Casey led a project that redesigned the pick and pack process for one of SCI’s clients. The project improved picking accuracy, productivity, efficiency, and streamlined the shipping process. The project has now been implemented at multiple locations across Canada. This is a great example of how a focus on continuous improvement and operational excellence initiatives can make a huge difference for our organization and our clients.

2nd Place: Heritage Road Facility

This location’s project provided a solution that enables the facility to induct oddly sized items into their conveyor line. The project increased process efficiency and productivity and is a great illustration of embracing our culture values of ‘operational excellence’ and ‘achieving together’.

3rd Place: Longueuil Quebec Facility

This location’s project improved their waving and picking process. As a result of their work, picking density was improved, and travel time was reduced. Improvement’s such as this are a great example of how SCI is constantly striving to make us, and our clients, even better.

Congratulations to all our winners!

You can see last years winners HERE 

TORONTO (ONTARIO), September 14, 2022 – SCI Group, a leading Canadian 3PL specializing in e-commerce fulfillment and transportation management, has partnered with Bench, an athleisure clothing brand, to create a cross-border ecommerce fulfilment solution for the U.S. market leveraging duty savings made available through Section 321. This direct-to-consumer strategy enables Bench to deliver to e-commerce customers in the U.S. directly from Canada, creating cost efficiencies without any impact to delivery times.

Beginning in early 2021, SCI and Bench have built their relationship based on trust, strategic planning and proven results through the expansion of Bench’s Canadian, coast-to-coast wholesale business. This led to a new opportunity to expand Bench’s business into the USA with the SCI team building out a cross-border solution through their expertise in southbound ecommerce fulfillment and Section 321.

“We’ve had a great experience partnering with SCI to develop a new coast-to-coast distribution strategy for our Bench brand that services both the Canadian and U.S. direct to consumer market,” says Victor Levis, CFO/COO at Freemark Apparel Brands International. “SCI’s team worked closely with us to help us understand the benefits of Section 321 and guided us through the process from start to finish. Thanks to their expertise we’ve been able to expand our business and conveniently reach U.S. consumers.”

Section 321 is an exemption in the Canada-US-Mexico free trade agreement that allows shipments of products valued at $800US or less to enter the U.S., from Canada, duty free. For direct-to-consumer (DTC) ecommerce retailers, this offers an opportunity to reduce their cost per unit through waived or refunded import duties on items that enter Canada bound for U.S. recipients, without effecting the customer experience.

“We’re thrilled to be able to drive this North American e-commerce strategy for Bench from Canada,” says Dave Mack, Vice President, Omni-channel Retail at SCI.  “By consolidating distribution in strategic centers in Canada, Bench is able to reduce their inventory carrying costs and turn products faster, while driving out duty and tariff costs”

To learn more about Section 321 and how SCI can help reduce your cross-border costs, please visit:  https://www.sci.ca/section-321

About Bench:

Inspired by an active 24-hour lifestyle, Bench is a brand that designs, sources, and markets clothing and accessories for men, women, and children. Born in the heart of Manchester, England, it originated in the late ‘80s as a niche t-shirt brand, taking influence from the music and the skate scenes. Bench is dedicated to design clothing that embraces individuality and supports all lifestyles. From heritage hoodies to iconic track suits, Bench’s wardrobe staples focus on multipurpose components that meet the modern needs of city dwellers. Learn more at Bench.ca.

About SCI:

SCI makes North American businesses even better by offering our clients a suite of innovative supply chain solutions in the omni-channel retail, technology, health, beauty and wellness sectors.

Across Canada’s most extensive national distribution and transport network, SCI manages complex logistics for both Canadian and North American clients. We pride ourselves on adding value to clients’ business with our commitment to reducing costs, risks and complexity through continuous improvement, business intelligence, analytics, and transparency. We give our clients the competitive advantage they need to grow their business.

SCI’s tagline “We’ll make you even better” is a commitment today from a business that’s leading clients into tomorrow. As a trusted strategic partner, our team is dedicated to understanding the unique intricacies of our clients’ businesses, providing end-to-end management of the entire customer experience. We have the North American expertise and 30+ years experience to deliver on this commitment and keep our clients steps ahead of their customers’ expectations.

For further information, please contact:

SCI | https://www.sci.ca| Natasha Wookey | natasha.wookey@sci.ca

Bench | https://www.bench.ca| Michael Routtenberg | mrouttenberg@fabinc.ca