Avoiding the black swan: how to stay resilient in the face of the unpredictable

Nassim Nicholas Taleb describes a “black swan” as an unpredictable and unexpected occurrence which has far-reaching butterfly effect-esque consequences which ripple across our increasingly interconnected world. Like waves caused by a splashing animal compounding until they crash against the shore, these events have a tendency to amplify themselves until they travel much further than anyone expected, leaving massive impacts in their wake. World War I and the attacks on the World Trade Center in 2001, although a bit dark to think about, are among the best examples. Although there remains a public debate over whether the Covid-19 pandemic should be considered such a black swan as a pandemic of some sort had been predicted by experts for a number of years, the fact remains that this disease and its effect on the entirety of the global populace has had a similarly impactful ripple effect.

These past years have been incredibly difficult on everyone in the e-commerce retailing and fulfillment industry, from the floor workers at the warehouses to the sellers wondering whether their customers will remain loyal during a time where fulfillment speed can be so unpredictable. Supply chain distribution interruptions seem like they’re becoming a simple fact of life. How can you as a seller stay resilient when so much is out of your active control? Read on for some tips to weather this storm until the waters become a bit calmer once again.

What is physical distribution?

Physical distribution or supply chain management refers to how products are spread across fulfillment centers to ensure the maximum range of delivery in the shortest possible time. Logistics and distribution management is a field that’s full of complexity, so we’ll try not to get bogged down with technicalities here. But as an overview, warehouses are strategically placed to maximize their one- and two-day delivery range. After all, we live in a post-Amazon world where customers expect their packages almost yesterday, and if you can’t deliver that, they’ll go looking for someone who will. In these strict conditions, it’s a priority to make sure that your fulfillment center is as well-placed as possible. Mature fulfillment companies often operate whole networks of warehouses, optimizing their distribution supply chain by making sure they’re able to service even more remote, rural areas of the country. Smart supply chain and distribution decisions can help ameliorate shortages and delays. If one warehouse is completely out of a product, another fulfillment center a little bit away might have a few units left.

So how can I keep costs down?

Supply chain management distribution and transportation costs don’t have to break the bank. Here are a few key tips to help optimize the chain of distribution and prevent any unnecessary losses.

First, keep an eye out for any inefficiencies. Which payment processor do you currently use? Are their fees competitive, or are there perhaps better options? Even a percentage point or two adds up a lot over time. Check in with your warehousing partner and make sure that newly-arrived merchandise is being checked into inventory within a timely manner, as opposed to sitting around in intake for days on end.

Another tip is to streamline order processing. You should have one main piece of software handling the bulk of operations, which should have a robust capability to accept seamless integrations. This eliminates the need for you to go back and forth and manually input or approve transfers of information, saving you both time and money.

Third, make sure to monitor your progress! At the very least, take a few notes from month to month, to make sure that any changes you make are actually having a positive effect on your business and your bottom line. The utilization of demand forecasting can make or break your short to medium term supply distribution progress, and the best way to predict the future is to have solid data about the past.

How can I keep a backlog of inventory?

What you need is a minimum level of safety stock to have on hand no matter what. In a nutshell, you can understand the definition of safety stock as the minimum level of inventory required to last you through the arrival of your next shipment of merchandise. Different merchants and 3rd party logistics providers will have differing ideas and opinions on what constitutes an acceptable minimum level of supply, and there’s a number of calculator sites out there that can help you make the best decisions possible for your business. Having a robust understanding of what constitutes an acceptable level of stock to keep on hand is an instrumental part of demand planning and helps avoid distribution and supply chain woes.

In conclusion

The Covid-19 pandemic is no joke. It’s caused untold pain, suffering, and reduction in economic strength for nations and businesses the world over. Even though it may seem like struggle is inevitable, there are certain things you can do to maximize the possibility of smooth sailing. Demand forecasting is a highly beneficial tool that reduces up-front and running costs while maximizing revenue. No matter the size or age of your business, it’s a valuable technique that will without a doubt provide valuable insights. With the advent of AI and machine learning, these numbers are quicker and easier than ever to have close at hand. If you think demand management software is a good choice for you, P2Pseller is proud to offer demand and inventory planning tools with real-time updates, 24/7, for all our e-commerce selling partners. Sell more, scale infrastructure, and grow your business to unprecedented levels. We’re excited to help you smash sales records quarter after quarter, with zero stress and zero phone calls.