5 Ways to Manage Warehousing Requirements During Peak Periods
Managing peak period shipment volume is a structural challenge in the U.S. economy. Those preoccupied with executing order fulfillment services spend much of the year thinking about and planning for it. The surge is a three- to four-month peak in first inbound, and then outbound shipments, with overlap. Shipments to retailers come first, followed by a huge spike in shipments directly to consumers. Industries such as toys can see as much as 80% or more of their sales in a very short time frame.
Warehouses can use a number of techniques to maintain service level agreements (SLAs)—the "guaranteed" turnaround time for an order to go out—during peak demand periods. These techniques include:
1. Manage laborers carefully. From Labor Day to Christmas Eve, ask employees to avoid vacation time, except in areas such as sales and finance. Make additional use of temporary labor, but rely more on additional shifts of previously trained workers. Feather in additional day shifts and night shifts as needed. Start well before peak season, in order to be ready when it comes. Shake out any issues with training or attendance before crunch time. Cross-train supervisors and other employees on different tasks, facilities, and shifts. Add flexibility and scalability wherever possible, but always at the lowest possible cost.
2. Incentivize staff. When smaller, rely on a core team. If needed, use overtime to help address the challenges of volume spikes, which routinely are between five and 10 times the norm and require additional hands on deck. Hourly workers are incented by the prospect of overtime pay, but the cost curve goes up more steeply than the productivity curve. The latter goes down as steeply, if not more so. Good service is highly correlated to happy, well-rested workers, and vice versa. Provide a career path for all workers, whatever level they start at, and offer benefits and pay for performance along that path.
3. Set expectations. Plan with clients who have significant historical volume spikes, and be realistic about the ability to maintain SLAs during peak. That may mean running an extra day shift right after Black Friday, working the weekend, whatever it takes. Work Sunday afternoon shifts to address the weekly spike and accumulated volume of the extra online shopping days over the weekend. Get ready to attack the larger seasonal volume spikes, and even the smaller ones—it's like training for the really big ones.
4. Watch out for carrier issues. Ultimately, all supply chain systems are physical, and subject to physical constraints. The idea that parcel carriers can infinitely multiply their human and hard assets for 22 days of the year is not realistic; there will be a cap to the extra drivers, equipment, and sorting capabilities. This is experienced most acutely in ground service delays during those absolute peak days. Carriers can also get hurt if they over-staff and prepare for more volume than they get. All carriers are more incented to not over-staff and over-equip for the volumes because that negatively impacts profits.
5. Technology improves throughput. There is no denying that the move toward more sophisticated IT solutions can increase productivity dramatically. But that is impossible without disciplined, expert implementation. Many software implementations fail. Hardware is fickle. Be prepared and expert at troubleshooting, duct tape, spit, and vinegar.
The opportunity to manage a highly complex problem requires expert deployment of people, places and things to lead through challenging and demanding times. That process runs a lot more smoothly when there is a clear mission statement for a peak demand improvement program and a focused plan to roll it out.
Capacity offers expert warehousing, assembly, order fulfillment services and technology solutions and provides bicoastal fulfillment from facilities in North Brunswick, NJ, and City of Industry, CA. Capacity also operates out of the UK, near Gatwick Airport, and in France near Lyon. Capacity is cGMP certified, operates FDA registered facilities, and is NJ and CA State Board of Health approved food grade. Capacity provides domestic and international distribution to companies of all sizes. More info: www.capacityllc.com.