We can all feel it: The holiday season is upon us, volumes are peaking and shippers are preparing for capacity to be stretched like no other time of year. While the holidays always bring some level of uncertainty, this year is sure to present shippers with a host of challenges unlike any they’ve seen before, and only time will tell how big a difference this will make for the world’s supply chains.
In the meantime, there are some very clear practices that every company, regardless of industry, can do to prepare themselves for the uncertainty this holiday season is sure to bring. The exact steps you need to take to improve your supply chain may vary, but for the most part, it all boils down to improving agility and ensuring resilience.
In a recent webinar, I had the privilege of sitting down with Jeff Covington, Supply Chain Manager at Smithfield Foods, and one of our oldest customers here at FourKites. Smithfield was an extremely early adopter of visibility technology, and it shows in the amount of progress and innovation they’ve been able to bring to their supply chain. As one of the world’s biggest producers of pork products gears up for the holiday rush, I saw a great opportunity to zero in firsthand on some of the ways that even very large companies can maintain agility within the supply chain – and ensure that they’re able to respond to anything that may come down the line.
A Moving Target
It’s hard to predict the exact effects of COVID on holiday shipping. FourKites has been closely tracking the ups and downs in global shipping volumes since the pandemic started. Especially in those early months, we witnessed a true bullwhip effect as consumer demand for essentials shifted nearly overnight. Now that shippers have more or less adjusted to the new normal, we’ve seen those numbers stabilize into something resembling normalcy.
One thing we can be fairly certain of is that ecommerce will continue to give a powerful account of itself. Just last month, Amazon Prime Day (which many are now calling the start of the holiday season) saw consumers ordering nearly 10% more goods than in previous years. This goes hand in hand with a general increase in all forms of e-commerce activity that has accelerated with the onset of the pandemic.
For more traditional retailers, however, our data shows that the picture may not be as rosy. In recent months it’s become clear that many consumers are diverting what limited spending power they have at this time on essentials, with purchases in the retail, CPG and Food & Beverage sectors logging tremendous growth.
Amid challenges like this, it’s clear that keeping costs down is a critical battleground this holiday season. Needless to say, the holidays are a big time for Smithfield Foods, as millions of people around the country enjoy a Smithfield ham for their Christmas or Thanksgiving holidays (or both). Because it’s a highly perishable good, these shipments are also operating under very tight shipping windows, both on the shipping and the receiving end. So, for any shipper like Smithfield, maintaining strong on-time delivery rates is also a key concern during the holiday months.
Both of these areas can be addressed with better real-time information.
I recently caught up with a longstanding shipper in the CPG space, and learned that they spend $35 million per year in OTIF fines alone! Even for a major operation with a heavy-duty budget, that’s still a pretty big number. And it’s also totally controllable. In fact, one of the first things that Jeff was able to achieve with FourKites was a seven-point improvement in Smithfield’s on-time performance (I learned during the webinar that it’s now up to 8%). When you think about this not only in terms of manpower, efficiency and customer satisfaction, but in real dollars saved from OTIF fines, this kind of improvement is absolutely huge.
“FourKites allows us to get down to those exceptions that we’re having trouble with, that we need to engage with. It does the same thing for our ham loads, those high-quality, critical loads that we need to keep visibility on. It lets us know which ones to focus on and put in extra effort to salvage for the customer.”
– Jeff Covington, Supply Chain Manager, Smithfield Foods
There are two words in the supply chain space that really separate out the leaders from the laggards. One of them is agility – how quickly you respond to changes in your operation and challenges as they occur. The second adjective is grit. I’m sure I don’t have to tell anyone in this industry how long even the best-laid plans survive once the rubber meets the road. Because of this, what really distinguishes the top-performing companies from the rest is how willing they are to recognize that something went wrong, and buckle down to get it fixed.
If I had to choose one person who best embodies those two ideals of supply chain management, I’d be hard-pressed to find someone better than Jeff Covington. You don’t get to be at the top of your game by being inflexible or unwilling to adjust when change comes down the line. Smithfield’s constant commitment to innovation has helped them not only make it to the top, but stay there as well. Couple this with their forward-thinking agility and sheer determination, and it’s easy to see why they continue to be a force to be reckoned with throughout the food & beverage space.
. . . . . . . . . . . . . . . . . .
Hungry for more stories from the world of real-time visibility? You can catch the full recording of my talk with Jeff here, and don’t forget to read the full case study of FourKites’ work with Smithfield Foods, as well!