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6 Peak Season Fulfillment Challenges and Solutions

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

Peak Season Fulfillment Shopping Bags

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.

Peak Season Fulfillment Challenges

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.

transportation management services

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.

section 321 fulfillment

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.

Peak Season Fulfillment Kitting and Packaging

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.

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How Surgically Clean Air Outsourced Their Fulfillment to SCI to Meet Growing Demand – Case Study

About Surgically Clean Air

Surgically Clean Air is a leading provider of premium air purification solutions for medical professionals, businesses, and educational institutions. They design, manufacture, and distribute their commercial grade air purification equipment across North America and Europe with plans to expand.

Responding to Rapid Growth

When the pandemic hit, businesses looked for solutions to keep employees and patrons safe indoors with clean, purified air. Demand for air purification products grew very quickly in a short amount of time, resulting in an increased volume of orders that they could not fulfill themselves in-house.  As a result, Surgically Clean Air began the search for a reliable 3PL partner that could fulfill their orders with a integrated warehousing and transportation strategy while also being cost efficient for their business operations.

“After researching several 3PL partners, we chose to move forward with SCI because of their very high reputation for being reliable within the 3PL industry,” says Jamil Frig, VP Operations and Supply Chain “After our first meeting we knew that the staff would be easy to work with and I was confident they understood our business. Most importantly, they were willing to work and grow with us during these very dynamic times”

SCI has several warehouse facilities within Mississauga and the Greater Toronto. By partnering with SCI, Surgically Clean Air had access to SCI’s extensive national distribution and transport network, strategic planning capabilities and business intelligence to stay competitive and grow their business.

Surgically Clean Air Office

Scaling for Success

SCI’s operations and IT teams worked quickly to get all Surgically Clean Air SKU’s set up physically in the warehouse and on their warehouse management system so the EDI connections could be made for efficient order fulfillment. Surgically Clean Air had a very unpredictable demand profile due to the extraordinary Covid related conditions. They also had specific distribution requirements that covered both deliveries and part replenishment for a completely new infrastructure across Canada. This included special handling and care for the equipment during the pick and pack process. Once orders are packed, they were shipped out to clients through SCI’s transportation network.

“SCI worked with Surgically Clean Air’s supply chain team to understand their distribution requirements and production constraints which led to a unique logistics and transportation solution answering for both efficiency and adaptability,” explains William El Khouri, Group General Manager, Transportation and Services for SCI.  “We scaled up the main critical operation within weeks and kept on adapting our capacity and capabilities as we learned about their evolving needs.”

Within the first 6 months of 2022, SCI fulfilled 1,895 orders for Surgically Clean Air with a 95% on time average for their SLA. Once the company’s fulfillment operations were set up with SCI, Surgically Clean Air could focus their efforts back on sales, customer care, and growing their business.

“We knew SCI would take care of our orders across Canada,” says Jamil Frig. “Even when last minute requests have arisen, their staff and senior management have been very responsive.”

“SCI is a mature 3PL provider with experienced staff offering reliable, efficient, and cost-effective fulfillment solutions across Canada. They have been an excellent and patient partner as we continue to grow our business in this extremely dynamic environment.”

Jamil Frig, VP Operations and Supply Chain, Surgically Clean Air
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How SCI Helped Launch Cepheid’s Direct-to-Consumer Healthcare Operations in Canada – Case Study

About Cepheid

Cepheid Canada is a division of the global health sciences company, Danaher. As a world leader in diagnostic tests and test systems, Cepheid helps hospitals, clinics and long-term care facilities save lives with fast, accurate tests to diagnose COVID-19, influenza, tuberculosis, and other life-threatening infections.

Scaling fast in a new market

As part of the company’s strategy to shift sales from a distributor model to a direct-to-customer healthcare approach, Cepheid planned to launch its Canadian operations in Fall of 2021 with localized healthcare logistics. To get into the market quickly with its COVID-19 test, Cepheid needed a healthcare logistics partner to localize their Canadian inventory in country, support their coast-to-coast distribution requirements, and meet complex Health Canada compliance regulations.

direct to consumer diagnostics test covid-19

In the Spring of 2021, the team began its search for a 3PL partner with a North American footprint and extensive supply chain compliance experience in the direct-to-consumer healthcare sector. “Our top priority is always serving our patients. We knew we needed a logistics partner who shared that commitment and had the experience and expertise to execute,” recalls Tom Healy, Global Director of Strategy, Technology and Asset Management at Cepheid.

Direct-to-Consumer Healthcare Logistics Ready in Record Time

The company was impressed with SCI’s end-to-end healthcare specific 3PL services, including GMP-compliant warehouses, pick, pack and ship services and sophisticated inventory control. In addition, SCI’s experience carefully handling direct-to-consumer healthcare related products was a big plus.

Cepheid also needed a 3PL partner that could support the repackaging and labelling of products as well as shifting customer requirements during critical infection outbreaks. SCI’s experience with managing medical devices and their adherence to supply chain compliance requirements demonstrated they were up to the task. SCI also had recent experience managing critical personal protective equipment and diagnostic devices supply chain compliance for both the Canadian government and a large social services organization during the COVID-19 pandemic.

SCI offered an experienced project team and proven processes to support the complex EDI implementation and back-end integration with Cepheid’s ERP system. “SCI not only understood our business but helped us navigate local requirements and had the warehouse solution and IT capable systems ready to go two weeks ahead of schedule,” recalls Prasanna Havinal Global ERP Manager for Cepheid.

Supporting Cepheid’s explosive growth

In late 2021, demand for Cepheid’s diagnostic kits exploded, and SCI’s operations were immediately mobilized to scale quickly and meet the unforeseen order volumes.

As a new business in Canada, Cepheid staff depended on SCI to help it confront start-up challenges with flexible support. For example, global supply chain conditions meant a shifting mix of inbound parcel and pallet shipments, while outbound shipping windows were changing by the hour and a large pending Canadian Government contract was being booked for COVID – 19 test kits.

“Cepheid and SCI worked together to deliver a direct-to-patient supply chain solution and executed a flawless implementation in a very short development cycle.”

- Tom Healy, Global Director of Strategy, Technology and Asset Management, Cepheid

In addition to managing the fluid logistics situation, the SCI operations team built and integrated a custom performance management solution that let Cepheid’s supply chain and executive teams manage critical performance metrics in real time.

“Cepheid was very clear about their needs and worked side by side with our team to find new ways to continuously improve processes”, remembers Peter Tostevin, Vice President of SCI’s healthcare division. “They constantly challenged our team to align with their mission of finding ‘a better way’ to get these important products to end users.”

Teaming up for success

Thanks to a smooth implementation, Cepheid was able to meet the growing demand for its COVID-19 tests and other diagnostic products.

Direct to consumer healthcare Cepheid

Another key success factor was the strong relationships between SCI’s IT, account management, operations and executive teams and their counterparts at Cepheid. These relationships were crucial for helping the company navigate Health Canada compliance requirements and to continuously streamline processes while keeping the project on track.

“We were racing against time to get our solutions into the hands of healthcare workers so they could keep Canadian patients safe.” Recalls Tom Healy Global Director of Strategy, Technology and Asset Management at Cepheid.  “The SCI healthcare logistics team was responsive and flexible and supported us throughout this incredibly successful operational launch.”

“We also can confirm in many cases that SCI’s ability to execute warehouse services for the
shipment of COVID-19 test kits provided the critical diagnosis required to save patients. SCI
should be very proud that the solution they have put in place has made a real difference within the Canadian market.”

- Tom Healy, Global Director of Strategy, Technology and Asset Management, Cepheid
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Supporting Saysh’s D2C Fulfillment with the Section 321 Exemption

E-commerce sales continue to soar globally as online shopping becomes faster, more accessible, and more convenient. Alongside this growth, smart direct to consumer retailers are looking for ways to take additional costs out of the supply chain without sacrificing customer experience. One strategy where brands are seeing strong results is cross-border shipping using the Section 321 exemption in the Canada-US-Mexico free trade agreement. This agreement allows small consumer orders to enter the US from Canada duty free.

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One Million Masks Coalition – Case Study

As the COVID-19 pandemic tightened its grip on British Columbia in early 2021, the BC government implemented a mandatory face-covering policy to access both travel systems and all public spaces throughout the province. Many low-income people were faced with a dilemma: They relied on public transit to get to work, school and access essential services, but found it difficult to afford or obtain the face masks needed to travel safely.

United Way, Deloitte, TransLink, OEC, YVR, BC Ferries, BCAA, SCI and BC Transit recognized that they all had a part to play in using the resources available to them to come together to help those in need.

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Ontario Association of Children’s Aid Societies – case study

For more than 100 years, the Ontario Association of Children’s Aid Societies (OACAS) has been enhancing and promoting the welfare and wellbeing of children, youth, and families in Ontario.

When the Government of Ontario declared a pandemic emergency on March 17, 2020, Lyndon Smith, the Director of OACAS Shared Services knew things were going to change very quickly.