Editor’s Note: This is the second post in a series of focus on planning and also getting ready for any peak season you may experience due to the holidays or otherwise. Today we will focus on more of the internal practice by focusing on what you can do in the distribution center. In the first post, we wrote more about external when we focus on how you can better work with Carriers and also your customers to communicate effectively and manage expectations and operations so no peak season has you unprepared. When you are prepared, typically, you have contingency which also means you can absorb any issues that could possibly drive up costs in your logistics department.
2015 is coming to a close and as we herald in the New Year, shippers (manufacturers, retailers, and distribution centers) around the country are busy gearing up for the holiday season and have holiday logistics best practices on the brain. However, the diversity of the supply chain, and the importance of timely shipping and customer service, presents a unique challenge at best through several festive celebrations all year long. Be it Christmas, the New Year and New Orders, a new budget, Thanksgiving returns, etc., shippers need an efficient and effective Distribution Center (DC) to support this consumer spending peak that takes place typically at this time of the year. Additionally, freight in general and the crunch in capacity have stayed flat or decreased in 2015, as economic growth has created mild to little growth in durable goods orders as well, except consumer spending is scheduled to increase slightly. This, combined with the festive peak periods adds omnichannel pressures on shippers and drives the need for a strong fulfillment infrastructure to effectively manage customer orders, no matter when and where they originate.
Companies must respond to these new demands in order to deliver a great customer experience while simultaneously fulfilling orders profitably. According to Bain’s Insights, one of the rules for winning is to adopt an early omni-channel strategy that will help companies to reinforce their overall competitiveness. As such, preparing the distribution center to handle the strain of the holiday orders and permit the supply chain to be flexible and agile is central to holiday season success. Here are 5 tips to prepare any shipper to master the art of holiday logistics.
Benchmark DC Systems to Handle the Volume
In the e-commerce area of your business during the holidays or if you are a seasonal business who takes inbound shipments and orders at a different time of the year, or if you are putting a focus on the sales force to close end of year deals, peak volumes in a busy time, like the holidays, often spike dramatically, sometimes reaching 10 to 20 times their normal size. Some facilities see orders soar ninefold — but taking nine times as long to meet demand isn’t an option. If your system isn’t ready for the increase, you’ll face productivity problems. As they said in their insights report for the trends manufacturers and shippers will face in 2014, it’s vital that your logistics process and also your investment in the proper logistics technology such as a transportation management system that integrates into your warehouse management system or enterprise resource planning (ERP) software.
Make your Inventory OmniChannel
For a handful of huge shippers and retailers, it makes sense to divide inventory into one stream for traditional replenishment and another for e-commerce fulfillment. But for most other companies, it would be wise to tear down the walls separating types of inventory. You’re placing undue stress on the DC when the same product is divided into different segments.
Get out From Behind the Desk
In our post, “A Walk in the Warehouse to See these 4 Things: MBWA and Trade Compliance” we talk about the 4 things you can see when you actually get out from behind your desk. It’s amazing the perspective you can get by stepping out, looking out on the floor, and seeing with your own eyes a broken process. Awareness is a VITAL state of mind during the busy holiday peak in the DC or in your own warehouse. In fact, research finds many managers and supervisors spend 60 percent or more of their time behind their desks. Solutions such as mobile labor management systems let companies track production from a tablet—allowing managers to spend more time away from the desk to check in on performance issues or production lags.
Plan for Increased Staffing Needs
How many shifts do you plan to run during peak holiday logistics season? How many temporary workers will you hire, and what sort of tasks will you allow them to handle? It’s best to answer staffing questions early. If you aim to keep your workers happy, you should also think about some sort of incentive plan that pays bonuses for workers who thrive during a very active time.
Set Order Deadlines Earlier
The holiday logistics dance can become chaotic in part because shippers might promise items ordered right before Christmas would arrive in time. Moving your order deadlines a day or two earlier is likely to reduce much of your last-minute stress and set more realistic fulfillment expectations with consumers. Again, like we said in the Thanksgiving planning post, successful logistics execution requires a lot of planning. Give yourself contingency time built into expectations you’ve give the customer for delivery.
Make sure you have tools in your TMS that allows for tracking and gives notifications of the delivery process along the way. No matter how much you prepare, the busy holiday logistics season can put strain on any shipper. The business landscape is competitive, and consumers have proven willing to share their displeasure with late or incorrect orders on social media and by other means of word of mouth. Those that are prepared and execute well will have a competitive advantage.
Planning for the surge with a focus on best practices for holiday logistics execution will also keep the CFO and accounting folks happy, as there will be less customer headaches, returns, or unexpected increases in costs associated with logistics such as labor, shipping costs, and more. Distribution center mistakes can be mitigated by following the simple steps above, which will help create a more cheerful—and profitable—holiday logistics season for all.