As an ecommerce business, the last thing you want is for your products to be out of stock when your customers are clamoring for them. Rather, you want the right amount of inventory on hand to meet customer demand and increase your profits.
But if you’ve been maintaining your inventory levels based on out-of-date data, an unpredictable spike in demand can leave your supply chain scrambling to keep up, putting your company at risk of losing the revenue you should be pocketing — and leaving your customers frustrated. There’s gotta be a better way, right?
That’s where partnering with a third-party logistics provider, or 3PL, can really help. A 3PL logistics company can utilize its expertise and resources to help you take control of your supply chain. So when demand volatility comes, you’ll not only be prepared. You’ll thrive.
What is Demand Volatility?
When we’re mentioning demand volatility, we’re talking about unexpected or rapid changes in a product’s demand. So if a particular product found little demand last month and then suddenly was the item customers wanted for the season, this would be an example of demand volatility.
As consumer behavior shifts in today’s ecommerce world, changing consumer demand for products can often cause demand volatility. As customers modify their tastes and expectations, it can be difficult for companies to keep up, especially as customers want items arriving at their doors right away.
Yet this volatility can also come from other outside forces. World events such as overseas conflicts or the recent COVID-19 pandemic can lead to specific product shortages from surging demand as customers rush to buy certain items associated with the news. Volatility can also come from unexpected changes in lead time, leaving companies in a bind as they await product supply to meet their customer’s demands.
It’s only a matter of time when volatility reaches your supply chain. That’s why working with a 3PL logistics provider or warehousing company is so vital for businesses like yours to succeed. So how can your 3PL help you plan well for volatility?
How a 3PL Warehousing Company Helps You Meet Changing Demand
Demand Forecasting and Analytics
With a 3PL logistics provider’s vast supply chain management experience, they can excel at tracking key supply chain analytics, such as historical data, market trends, customer behavior, and seasonal factors, to accurately predict future demand. With your 3PL logistics partner’s demand forecasting, together you can make informed, confident demand planning decisions to ensure you have the right amount of inventory, manpower, and other resources available to meet the various demand changes that come your way.
Scalability and Flexibility
Instead of committing time and money to owning and managing your own established (yet limited) supply chain operations, partnering with a 3PL warehousing company gives you ideal flexibility and scalability (and peace of mind!) for demand volatility. As demand increases, your 3PL warehousing partner can easily scale up operations so your products reach your customers on time. At the same time, when demand slows down, your warehousing company can scale back so you’re not stuck with costly excess inventory.
Accurate Inventory Management
It’s vital to have optimized inventory levels in periods of changing demand. And this all starts with maintaining accurate stock. Experts in inventory management, your 3PL warehousing partner can deploy advanced technology to provide real-time inventory data, especially as you start utilizing multiple warehouses nationwide. With your 3PL warehousing company’s accurate data, as well as other warehousing company-led strategies like incorporating buffer stock as needed and maintaining consistent cycle counting, you can maintain the right amount of inventory for any demand season.
Diverse Supply Chain Relationships
When demand volatility occurs, having good connections helps. Your 3PL logistics provider will have diverse relationships with a vast array of supply chain service providers, including a national network of carriers in trucking, air freight, and drayage. This can especially be helpful if you encounter any lead time delays or other logistical challenges. When supply delays or demand spikes happen, your 3PL logistics provider can quickly adapt by utilizing other connections, enabling your logistics to continue as normal without a hitch.
Smart Warehousing: Your 3PL Logistics Experts at Demand Planning
If your company wants to be confident and steady in the face of volatility, working with a 3PL logistics or warehousing company for demand planning can make all the difference. That’s why ecommerce companies nationwide are choosing to partner with Smart Warehousing for their 3PL logistics needs. With our expertise in ecommerce fulfillment, warehousing, transportation, and replenishment, we can help you reliably meet customer demand no matter what operational challenges come your way. Contact us today to learn more.