Many in our supply chain, B2B and B2C community have no doubt been reflecting on what occurred during the 2013 holiday buying surge. Many lessons and potential improvements can be gained to prepare for future surges in customer fulfillment.
One of the most noteworthy incidents was the blame game surrounding 2013 last-minute holiday shipments that could not be delivered in time for the Christmas holiday. Retailers and all forms of media were quick to primarily cite UPS, and to some extent FedEx, for failure to overcome last-minute network bottlenecks with the consequence for not meeting service delivery requirements. In our Supply Chain Matters commentary in late December of 2013, we opted to provide some caution in citing culprits pending more facts as to what really happened. However, we did state: “…if there is a need to caste blame or point fingers, let them be pointed directly at the online retailers and fulfillment firms that created the marketing expectations that shoppers could wait to the very last minute and get guaranteed delivery by the holiday.”
Yesterday, FedEx reported fiscal third-quarter financials which included the December period. FedEx CEO Fred Smith was quick to point out that online retailers need to shape-up on their sloppy shopping practices or risk losing customers.
Our Supply Chain Matters response- Bravo!
The Wall Street Journal reported (paid subscription or free metered view) that Smith indicated that online retailers claimed that they had tendered shipments to FedEx and UPS for delivery when they, in reality, had not.
B2C focused shippers exactly know that game- it is called gaming the system. Some teams are quite good at these practices. During crunch times when all the pressure is on regarding fulfilling and shipping orders, teams find creative ways to move the surge down to the next tier while gaining revenue recognition for shipment.
FedEx CEO Smith further pointed out that shipping labels were often affixed incorrectly or items were not packaged correctly, prompting the need for FedEx and UPS to tend extra steps to correct non-conforming packages.
That by our view is the added sign that in crunch time, standards were considerably relaxed by online shippers since getting shipments to carriers was a far more weighted metric.
The WSJ attempted its reach out to major online retailers such as Amazon, Overstock, Wal-Mart and others but received a no-comment response. We now know that Amazon had signed up an additional one million members to its Prime Program, which features free shipping, in the week prior to Christmas. Credit to Kohl’s whose executives fess-up to operational challenges at its fulfillment centers during the last-minute holiday surge.
According to the WSJ, Smith further noted that online retailer shortcomings “is a big part of the e-commerce business that really didn’t get enough publicity last year because they were an integral part of the problem even more than the weather and the carrier performance.”
Well Fred, Supply Chain Matters provided that publicity and so did certain other supply chain focused social media outlets. We are pleased to sign up both you and Scott Davis of UPS on our Subscriber listing.
Parody aside, a look back at the facts concerning the 2013 holiday surge is indeed helpful and constructive. UPS delivered a record 31 million packages on December 23 despite having to overcome its network surge bottlenecks that untimely caused the wrath of “the Scrooge that stole Christmas” FedEx experienced at least a 22 million packages surge on at least three days in December, despite extraordinary winter weather disruptions. The WSJ cites Mercent Corp. data indicating that online orders on December 23 among 550 retailers were up 63 percent from the year earlier.
UPS has already signaled that it will charge a premium surcharge for shippers of last minute holiday packages. Perhaps FedEx might opt to do the same. It is time for all of the involved parties to collaborate on adherence to consistent practices and in setting proper expectations for online shoppers.