Starting in October, national media is focused on the parcel carriers and their efforts towards preparing for the busy holiday-shipping-season. However, we hear very little about the e-commerce fulfillment service providers (3PLs) and how they prepare for their busiest time of the year.
The consumer tends to assume that the e-commerce merchants fulfill their own online orders and have little understanding of how merchants, both large and small, work closely with 3rd party e-commerce order fulfilment service providers. The e-commerce specific 3PL plays a major role in warehousing, processing orders for shipment, and handing off those orders to the parcel carriers.
Let’s look at how 3PLs prepare for the holiday shipping season to ensure that we all receive our gifts on time.
New Year planning phase
During January, both the 3PLs and carriers independently review how their operations performed during November/December and make plans for operational related upgrades and investments that improve their performance and service. Early in the new year, the best 3PLs are inviting their parcel carrier partners to review their working relationship during the recent peak shipping season and begin making plans for improving their cooperation for the upcoming peak shipping season.
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Springtime marketing projections
During the spring months, 3PLs are evaluating projected e-commerce purchasing trends for the upcoming holiday shipping-season and start refining their operational models for managing the increased volume. They are also meeting with their carrier partners to better understand potential carrier-imposed capacity limitations for both individual customers and their facility.
At this time, the fulfillment service providers are communicating with their individual clients to review carrier volume constraints and how limitations will impact how many shipments they are permitted to ship during November and December.
When summer rolls around, the fulfillment centers are also finalizing their customer lineup for peak and finalizing carrier arrangements for their clients. Some customers will have moved on and new merchants will take their place.
Fall inventory harvest
Starting late in August and into early September, holiday season inventory starts arriving at the 3PL fulfillment centers with most inventory scheduled for delivery by early November. This can be a tenuous time for the 3PL if they have miscalculated their capacity or merchants send more inventory than planned for.
This can also be a difficult time if supply chain chaos drives late product delivery, as with this holiday season. Fulfillment center management gets nervous if they are staring at empty storage bays in late November and into December. As for the parcel carriers, delivering October and November inbound parcel volume is a challenge and inbound volume to the 3PL can mirror peak season outbound volume in some cases.
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Peak season will hit with a vengeance starting in mid-November and last into late December if unanticipated high parcel volume and bad weather conditions come into play. This year, supply chain chaos could very well result in the peak shipping season running into January. This is also the time when the joint planning efforts between the carriers and fulfillment service providers pays off with an orderly hand-off of merchandise from the fulfillment center to the carriers, which results in on-time delivery during the holiday-shipping-season.