Imagine consumers flocking to stores, shopping carts overflowing, and orders pouring in like snowflakes. Can your supply chain operate like a precision machine, ensuring every item reaches customers on time and intact? Black Friday represents both an opportunity and a challenge for retailers. While the spotlight often shines on sales figures, the strain on supply chains frequently goes unnoticed.
This year, retailers are deploying new strategies to attract customers both online and offline, with tighter collaborations aimed at optimizing delivery, fulfillment, and in-store experiences. Meanwhile, store managers are on the front lines, balancing inventory demands with customer satisfaction. In such a dynamic environment, supply chain leaders must stay vigilant, tracking critical metrics to ensure operations truly drive sales growth.
As Rod Daugherty, Vice President of Product Strategy at Blue Ridge, aptly asks: "Have we over-optimized e-commerce fulfillment at the expense of in-store customer experience?" This question warrants serious reflection post-Black Friday. So, what key metrics should supply chain managers prioritize this holiday season?
Omnichannel Supply Chains: The Holiday Season's Winning Formula
Agile, omnichannel supply chains will undoubtedly dominate this year's holiday season. To meet rising consumer expectations, digital and physical operations must integrate seamlessly and collaborate flexibly. Today’s shoppers demand faster deliveries, greater transparency (e.g., through tracking and notifications), and broader product selections with personalized options. Black Friday and Cyber Monday will amplify these challenges.
To navigate this complexity, supply chain professionals must focus on enhancing customer experiences while optimizing efficiency through standardized processes and automation. Once a single-day event with shoppers queuing for hours, Black Friday has evolved into a multi-day shopping extravaganza stretching from Thanksgiving through Cyber Monday.
For many retailers, this holiday season is critical. Successful supply chain managers began preparing for 2017 immediately after the 2016 season ended. Key steps include:
- Reviewing lessons from 2016 and making adjustments.
- Auditing contracts with logistics providers (e.g., parcel carriers, freight transporters).
- Conducting inventory planning, reservations, and transportation.
Key Metric 1: Inventory Availability to Prevent Stockouts
First and foremost, supply chain managers must ensure sufficient inventory availability to avoid stockouts. Historically, retailers have struggled to balance inventory between stores and online channels. Last year, Walmart increased its online inventory by over 50% ahead of Black Friday to boost e-commerce sales and prevent shortages. Target, which faced stockout issues years ago, has since refined its inventory management.
Key Metric 2: Technology Health Checks for Seamless Operations
A comprehensive technology audit is essential. Verify that all applications, tracking tools, visibility systems, and even the "Buy Now" buttons function flawlessly. Retailers cannot afford website crashes or slowdowns, as experienced by Macy’s, Banana Republic, and Old Navy during last year’s Black Friday and Cyber Monday. Mobile platforms are equally critical—comScore estimates mobile sales accounted for 21% of Q4 2016 e-commerce revenue, a figure expected to rise this year. Beyond functionality and bandwidth, ensure security patches are up to date.
Key Metric 3: Transportation Contract Compliance
For transportation contracts, confirm adherence to agreed service levels, rates, and surcharges. Shipping costs represent a significant portion of supply chain expenses, making it imperative to optimize spending and have contingency plans for weather delays or carrier disruptions—like those seen during the 2013 holiday season with UPS and FedEx.
The Black Friday Evolution: Omnichannel Inventory Challenges
Supply chain managers face heightened challenges this year. The National Retail Federation forecasts a 3.6%–4.0% sales increase over 2016. Traditionally a one-day event, Black Friday now spans from Thanksgiving night through Cyber Monday, adding complexity to inventory distribution across physical and digital channels.
Supporting both channels requires meticulous planning from production to retail delivery. For instance, securing minimum quantities of trending items for a single-day promotion now involves larger shipments to ensure timely arrivals. Allocating inventory across channels also strains air freight capacity during peak months, driving up rates and favoring retailers with mature e-commerce infrastructures.
Data Insights: Shifting Consumer Behavior
Black Friday remains a bellwether for holiday shopping success, but consumer preferences are shifting. A National Retail Federation survey found online channels surpassed physical stores as the top holiday shopping destination for the first time this year. Meanwhile, a PwC poll revealed only 35% of shoppers plan to shop on Black Friday, down from 59% in 2015.
These trends force retailers to rethink inventory positioning. Many still rely on outdated systems like manual spreadsheets for omnichannel planning—tools prone to errors that introduce business risks. This season, executives should track:
- Transfer volumes and costs to meet demand.
- Lost sales due to poor inventory positioning.
- Expenses tied to under- or over-allocation.
The Winning Strategy: Integrated Omnichannel Planning
Retailers leveraging integrated omnichannel platforms gain superior visibility, enabling demand sensing and optimal inventory placement to reduce transfers and cross-shipping. Those unable to plan, allocate, and reforecast across channels will struggle to meet customer expectations, while leaders refining these processes will boost sales, margins, and inventory efficiency.