Consumers may be browsing fall’s latest trends or preparing their children to go back to school, but warehouses are gearing up for the most important time of the year—the holiday shopping season.
Although last year’s holiday season broke records for online sales volume, it was also plagued by negative sentiment from consumers who didn’t receive packages on time for Christmas morning. With another historically short holiday shopping season this year between Black Friday and Christmas, warehouses need to ensure their operations are ready to scale and accommodate increased demand.
Are you ready for the holidays?
There are several other key questions logistics professionals need to address to answer that one. The answers to the following should be found now, well before the busy holiday shopping months in November and December.
1. Are you forecasting accurately?
For warehouses, building accurate forecasting models is a critical first step to becoming holiday-ready. Consider anticipated order volume by day, week and month leading up to the holidays, as well as average units per order, inventory arrival dates and product class.
Inaccurate or incomplete forecasting can be disastrous, especially during the holidays. UPS, which handled a large portion of e-commerce deliveries for major retailers last year, came under fire from consumers when it failed to deliver gifts in time for Christmas as promised.
Although the problem was due in part to a massive winter storm that caused transportation delays and icy roads, the root cause was inaccurate forecasting and too few aircraft to handle the unexpected surge in last-minute orders.
Industry reports note that UPS originally forecasted an 8 percent average rise in daily shipping volumes in 2013 versus 2012. As a result of last minute marketing pushes leading up to Christmas, e-commerce sales the weekend before Christmas increased 37 percent year over year, according to IBM Digital Analytics. Merchant Corp. data also found that on December 23, growth in online orders increased 63 percent.
This perfect storm of last minute web deals from retailers and an unexpected spike in e-commerce orders was simply too much for carriers to handle.
2. Do you have your best warehouse layout?
By reassessing and reorganizing the layout of your warehouse ahead of the holidays, you can significantly streamline operations and increase efficiency. An optimal warehouse layout will enable your warehouse to keep up with an increase in orders and complex processes associated with packaging gifts.
Organize pick and pack lines to improve the capacity of each station. Since premium packaging, gift wrap and personalized greeting messages are in high demand during the holidays, sort packing stations based on the type of packaging and premium services required.
Dedicate one station to boxing, another to wrapping and one for personalized messages. Also, consider developing alternative processes to package orders, such as creating mini-assembly lines or setting aside certain pick and pack stations to only support orders of best-selling merchandise.
In addition to identifying efficiency improvements in the pick and pack processes, you should also use your forecasting and historical order volume data to determine whether you need to order more supplies ahead of the holidays. If you were overwhelmed last year and needed extra space or resources, you most likely will need them again this year.
Secure additional warehouse storage space ahead of time, check that all of your equipment is working properly and handle any equipment servicing requirements before November and December roll around. Be sure to order enough basic pick and pack station materials, such as tape, scanners, carts and totes. This may seem obvious, but a lack of supplies can slow down pick and pack station progress and warehouse efficiency.
3. Do you have a hiring plan?
Hiring and training skilled seasonal warehouse staff can be two of the biggest challenges during the holiday rush. It’s best to promote your open positions and actively recruit new staff members well before November and December. You will need to ensure you have plenty of time to onboard and train new employees so they can handle their workload independently by the time you receive an influx of holiday orders.
Warehouses can tap into a pool of highly-qualified candidates by leveraging referrals from existing employees. It can also help to offer employees a monetary incentive or other benefit for any referral candidates who are hired.
When training new seasonal employees, match them up with more experienced crew members to show them the ropes until they are comfortable working on their own. This helps new team members learn best practices and build rapport with other staff.
4. Are you communicating with carriers?
By fostering an open dialogue with your carrier partners in advance of and throughout the holiday season, you can ensure they are adequately prepared to handle your anticipated order deliveries. Ask carriers probing questions to determine whether they will be able to accommodate an increase in orders during the holidays and negotiate pricing early to give yourself a competitive advantage.
5. Do you have a back-up plan?
As we saw last year with UPS, forecasts and actual order volume can vary dramatically. For this reason, a solid back-up plan that deals with an unexpected surge in orders is imperative. This should incorporate flexible staffing arrangements, adequate physical infrastructure and resources, as well as an approach for dealing with technical glitches and damaging weather patterns.
If your warehouse is located near the Snow Belt, be sure to coordinate snow removal service before winter weather strikes. Demand for these services will be at an all-time high once the winter weather comes around, so it’s smart to secure a snow removal or salt vendor in advance.
For warehouses, the holiday season starts well before November. Retailer and customer experiences during the holidays can significantly influence sales and profitability for warehouses year-round. This makes it critical to plan ahead and ensure your warehouse is equipped to handle an increase in e-commerce orders and meet customer expectations throughout the holidays.