Peak Seasoning at Omaha Steaks

Dec. 12, 2006
7 Supply Chains to Look Out For in 2007 Omaha Steaks runs a premium order-fulfillment process that befits it's premium steaks, red meats and other gourmet
7 Supply Chains to Look Out For in 2007

Omaha Steaks runs a premium order-fulfillment process that befits it's premium steaks, red meats and other gourmet foods. In 2005 the private, fifth generation family company ( located in Omaha, Neb., recorded sales in excess of $410 million.

During its peak season in the four weeks of December, Omaha Steaks' shipments jump from an average 18,000 shipments per day to 100,000 shipments per day. During this period the company sends out about 30% of its four million total annual shipments.

To fulfill these orders successfully, Omaha Steaks will hire about 2,100 temporary employees, including 700 seasonal warehouse workers, to help out its 1,800 permanent employees. They will handle orders coming in through a variety of channels, including telephone sales, catalogs and its internet website.

"Consumers on the Internet order later and later every year," says Ron Eike, director of operations. "It's a great challenge to have but from a production standpoint, having the inventory ready, and shipping and logistics standpoint, it's created some challenges, because I've literally lost 2 weeks out of my peak shipping calendar because customers simply don't order early."

To ship out orders during this compressed peak season in September the company opened a new 110,000 sq.-ft. refrigerated distribution facility. The automated facility will process about 65,000 shipments over a 24-hour period, which leave the facility in white Styrofoam coolers packed with dry ice. The company's former distribution facility will handle about 35,000 shipments per day.

"Everything that I ship the clock is always ticking because it is frozen," says Eike. Both facilities have pick-and-pack conveyor lines that carry the coolers from the freezers to the shipping docks. Orders flow through the new facility in a much straighter line and are automatically routed to trailers destined for specific UPS ( shipment hubs. UPS takes ownership when the trailer leaves the shipping docks, and it insures every package. Every load has a scheduled arrival time at the hub, which drives the package delivery time.

A perennial challenge during peak season is the company's inbound flow of dry ice, which it sources from 10 different manufacturers around the United States. The company recently took over the logistics of all of these inbound loads. Working with UPS Supply Chain Solutions they've tied in the carriers' back-hauls from the shipping hubs so the returning trailers are never empty.

"Dry ice cannot be pre-manufactured. Everything is cut to our spec every day based on our forecasted shipments. There's a lot of precision in getting those loads in," says Eike. "During peak we're doing so many loads per day, they have contracted with carriers a dedicated amount of loads per day, and we can fill them both ways, so the carriers love us."

In an area with low unemployment, the company has had to get creative in order to more than double its workforce during the peak season. These 2,100 "holiday hires" work in a variety of areas from its call centers to its distribution operations. In addition to maintaining a reputation as a good place to work, temporary hires from previous years receive a cash incentive that increases every year that they return to work over the holidays. They also receive the standard employee product discount throughout the coming year. This year, before the company had even begun to actively recruit workers for the peak season, it had already managed to hire 600 people.

"We're about the holidays. We're about food. We're about fun. We spend a lot of money for our employees," says Eike.

Omaha Steaks Vital Statistics
Annual sales: around $410 million (private company)
Employees: 1,800 (plus 2,100 holiday hires)
New facility: 110,000 sq.-ft.
Orders processed per year: 4 million (30% in December)

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