Managing peaks in logistics is important to the success of a logistics operation. How to handle peaks during high demand seasons in logistics is a delicate art form. It is imperative to know the right time to get something done if it is needed the most or even if it would be nice to just wait for demand to die down. This is where a lot of companies go wrong. They try to get too many goods in and too few are available at a good price.
If a company tries to meet both supply and demand during a peak season they usually do not meet very well. If they try to get all of the goods that they need in and keep up with the price then they will not make any profit. Some goods may still be unsold because customers bought them at a higher price than they should have. These problems occur because customers change their minds. The supply may exceed the demand. The company is stuck when this happens.
How to manage peaks during high demand seasons in logistics starts with planning. The logistics operations manager should create a list of peak seasons and when they are likely to occur. They should also determine how much inventory should be on hand so that when demand exceeds supply there will be enough inventory to cover both needs. At this point it should be noted that the peak season may only occur once a year.
Managing demand during a peak season requires a different approach than dealing with steady supply. Demand sometimes outstrips supply making it necessary to order more products than can be stored. It could be possible that some customers are not as committed to buying products now as they might be. When demand exceeds supply then it becomes necessary to add to inventory.
There are three ways that companies can overcome these problems. They can increase order size to accommodate the increase in demand. They can increase shipment frequency to match the increased demand. Or, they can re-source some or all of their orders. In any case, the company needs to consider each scenario carefully and then decide which one will produce the best results in the current peak season.
How to manage peaks during high demand seasons in logistics is not a simple matter. It is important to remember that demand tends to fluctuate seasonally. What worked last summer may not work this year or maybe the previous year’s peak season was more extreme than this year’s. Companies need to closely monitor seasonal changes in consumer spending habits and industry dynamics. If they do not do this, they risk incurring significant losses.
The most common methods of meeting peak season demand involve increasing order size. Some companies have used warehousing to meet increased demand because increased demand sometimes results in lower availability of goods in the warehouse. The logic behind this is that if the company’s order size is high enough to meet the peak season, it will take less time to fill that order than it would to fill a smaller order during a normal period. For example, if a company has a ten percent increase in orders over the previous year, they can expect to fill that order at a faster rate. However, warehouses must plan for peak season demand by considering weather, infrastructure constraints, and employee counts.
The third method of how to manage peaks during high demand seasons in logistics is to re-use some of the product in order to reduce waste. For example, rather than purchasing one hundred rolls of paper due to excessive packaging during a peak season, it might be advantageous to purchase only seventy-five rolls. This would lower the total cost of production by nearly six percent. Although some companies might balk at the idea of accepting a lower return on their investment, considering how much waste can be eliminated with re-use, it is a reasonable solution for those whose budget allows it.