Tackle order spikes and surges whenever they hit

by | Sep 14, 2016

Spikes in order volume happen for a variety of reasons. They can be expected, in the case of seasonality, flash sales and the upcoming holidays of Black Friday or Cyber Monday for example. They can also come as a complete surprise, such as a weather-related incident or after a product goes viral. When such spikes occur, retailers and suppliers alike can have a hard time keeping up with demand. Much like trying to sip water from a firehose, an outdated ERP or EDI system can foil a business’s success even as orders are coming in at an astounding pace.

When order surges happen, they could make or break a company. There are basically two ways the situation will unfold: Either the supply chain was ready and able to satisfy consumers, or there was a breakdown in the supply chain and people were disappointed. Of course everyone strives for the former, but if the latter situation occurs, it could cause serious damage to the bottom line as shoppers can easily have their needs met better elsewhere. The internet has given shoppers an endless aisle where they can find pretty much anything they want and in many cases can have it delivered to them overnight.

It’s not necessary to give away the store to make people happy. Simply being able to follow through on product, inventory and shipping promises is the key to keeping the orders and profits flowing.

Easier for consumers, harder for supply chains

It’s so much easier for consumers to buy online that more and more shoppers are forgoing the crowds on Black Friday to shop at home, on their own time, maybe in their pajamas and coffee mug in-hand. According to the retail researcher ShopperTrak, sales at brick-and-mortar stores on Black Friday fell from $11.6 billion in 2014 to $10.4 billion in 2015, while online sales jumped 14 percent to $2.72. Total online sales on Cyber Monday in 2015 rose 16 percent from 2014, to $3.07 billion, according to the Adobe’s Digital Index.

The surge in online shopping has been a boon for consumers, but a challenge for supply chains. For suppliers and retailers, internet sales are not easier; delivering very small quantities to individual locations requires more resources, shipping charges and attention to timeliness than the more cost-effective method of shipping large quantities to warehouses. Online purchases are good for sales, but can be extremely challenging for the supply chain and profitability. E-commerce has transformed consumer shopping habits and patterns, and as a result supply chain and logistics operations have to change as well.

Impacts of surges in order volume

Many companies have a well-established process for day-to-day order volume, but are simply not equipped to handle order spikes. When order surges occur, a variety of issues manifest:

  • Processing of critical documents, such as orders, can slow down
  • Increased need for manual interventions
  • EDI transaction errors, such as rejected invoices
  • Improper calculations of how much of a product is needed, in what locations
  • Incorrect inventory information leading to upset customers and missed orders

On the flip side of the coin, a supply chain network can’t be designed to operate every day based on huge spikes in sales that only occur for a few days or weeks of the year. Overstocks would abound and inventory would likely sit around for longer than retailers would like. Markdowns would be frequent, eating into profits.

The answer is maintaining a supply chain that is scalable to meet the spontaneous demands of consumers. When surges in orders and demand are successfully met, it builds trust with customers, who are then more willing to place additional orders in the future. The results can be numerous: More brand recognition, increased brand affinity, elevated customer loyalty and greater profits, just to name a few.

The supplier who needed a faster solution

Many suppliers and retailers are looking to cloud services from companies like SPS Commerce when their current EDI provider can’t scale with the peaks and valleys of order volumes. They are looking for consistent 24/7 service that they can trust for spikes in sales, particularly for the holiday season and especially when it comes to increasing numbers of drop-ship orders. Traditional EDI services – a technology developed before the internet was even invented, not to mention before e-commerce disrupted the retail scene – often fall short of supporting these goals. Today’s retailing moves too fast, with too many orders for traditional EDI to keep up.

One client of ours, which we’ll call Touchdown, had a seasonal need that illustrates the importance of having the right systems in place at the right time. The company distributes football memorabilia and merchandise – about 6,500 SKUs worth. Every year around fall, Touchdown gets a spike in orders, but they ran into serious troubles keeping up with distribution after adding several retailers that often experience huge spikes in order volume – Groupon, Walmart and Zulily.

Touchdown had reached the limitations of its existing EDI system, which was resulting in a failure to reach contractual obligations with its retailers and the possible loss of a revenue stream. Touchdown had an SLA for a four-hour turnaround time to get items out the door for Walmart, but its EDI provider couldn’t process orders quick enough, often resulting in two hour delays just to receive the order and cutting the available time to ship in half. The company’s EDI system simply wasn’t able to process the amounts of documents needed in a timely manner, limiting Touchdown’s ability to grow and scale.

SPS Commerce partnered with an ERP provider to recommend a combined ERP-EDI solution that would scale with Touchdown’s business. With the SPS EDI fulfillment solution, orders come in real time, with no two-hour delays. More of the process is automated, reducing time spent with EDI transactions. With SPS, they have a project manager dedicated to their needs. Best of all, the solution is scalable to meet spikes in order demands with no disruption to the supply chain.

Moving past traditional to Beyond EDI

Fulfillment from SPS Commerce moves our customers beyond the limitations of traditional EDI. Our Fulfilment solution unlocks the information in your orders, and makes sense of which orders are most important, at risk or have the greatest opportunity. It knows what needs extra attention, and what’s under control. SPS Commerce Fulfillment moves you into a retail world beyond EDI, and into a world where you not just keep up with your customers, you stay ahead of them.

In addition to data analytics and visibility, our network is built to scale with the surges that many seasonal businesses face. SPS Commerce is capable of processing millions of documents, and can flex to accommodate spikes of more than double the amount of transactions typically seen on an average day, such as at the peak of cyber week in 2015. Though predictions say more people will be shopping online than ever before this holiday season, our systems are already prepared for the onslaught of 2016 holiday internet sales.

When choosing a solution for your business, choose one that can manage thousands of orders per minute to give you real-time visibility. Choose a solution that is able to identify buying trends and scale to help you meet demand and down during your off-seasons. Find out how you can ramp up for your peak season with a little help from SPS Commerce.

Ready to learn more about what’s beyond traditional EDI? Contact an SPS Commerce representative to get started today.

Tony Thrasher

Tony Thrasher

Technical Product Manager at SPS Commerce
As an expert in retail fulfillment, Tony offers a unique viewpoint on using the latest retail technologies, including the SPS Commerce Retail Network, RFID and more to drive innovation and growth. At SPS, he is responsible for using graph-based architecture to drive meaningful insights and expand the value of the SPS Commerce Platform to customers and partners.
Tony Thrasher

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