Deck the Hauls: Getting the Holiday Rush
Planning, technology help Santa's helpers make it a jolly holiday season
The holiday season is a real "rush" for operational folks who thrive on the excitement of making it through the peak time successfully.
"Everybody views the holiday season as a tough period—but we also really like this part of the job," notes Richard Pollock, senior vice president of logistics for FAO Inc., King of Prussia, Pa. "It's a logistics challenge, but we feel that we've accomplished a lot when we get it done."
FAO, one of Santa's super helpers, is the holding company for three premier retailers of toys and children's products: The Right Start, Zany Brainy, and FAO Schwarz. During the holiday season, "customers look to receive product as fast as they can," Pollock says. "They want maximum availability and immediate gratification."
The holiday challenge may be more intense this year because consumers seem to be shopping later, Pollock notes, compressing the peak season into fewer days than usual.
Ramping Up Replenishment
To handle the increased demand during the holiday season, FAO's two distribution centers, in California and New Jersey, ramp up from replenishing stores weekly to several times a week. This year, FAO is using a new flow-through process, with product pre-allocated to the stores.
"Getting merchandise from our vendors into the supply loop on a timely basis" is one of the retailer's biggest challenges, according to Pollock. "We're always looking for ways to cut down transit time." FAO uses a third-party freight management firm, Stonepath Logistics, to consolidate orders and move product rapidly to the stores.
In addition to its stand-alone stores, FAO is installing boutiques in stores operated by Borders and the Saks Department Store Group, which includes Saks Fifth Avenue and Carson Pirie Scott. Delivering to the new boutiques is trickier than supplying the stores because the boutiques are embedded in a partner's store operation.
"The size is smaller, so we try to move products via direct LTL shipments as opposed to consolidated shipments," Pollock explains.
About three years ago, the company began noticing that higher-demographic customers were increasingly buying from stores over the phone, then sending a taxi or driver to pick up the merchandise. "We felt there was an opportunity to provide added service through local deliveries," Pollock recalls.
As part of its continuing drive to optimize operations, FAO then implemented a uniform store-level, end-user delivery solution from Ensenda Inc., San Francisco, which has a national courier service base. Instead of lugging large purchases through the mall, consumers can arrange to have merchandise delivered to them at home or wherever they specify.
This year, FAO offers the delivery service in a 10-mile geographic area at $9.95 for shipments weighing up to 60 pounds.
In addition to making it easier for customers to get large gifts home, this delivery solution enables FAO to use a single point of access for delivery information, which increases supply chain visibility, reduces costs, and results in a consistent delivery process and standardized delivery costs.
Santa's Helpers at ShopNBC
Howard Fox is a veteran of holiday seasons. The senior vice president of operations and customer service for ValueVision Media loves the adrenaline rush of the spiky retail market. And there's plenty of it at ValueVision.
Headquartered in Eden Prairie, Minn., the publicly traded company owns and operates ShopNBC, the third-largest home shopping network in the United States. ValueVision also provides fulfillment and customer care services for Polo.com and operates ShopNBC.com. Its wholly owned subsidiary, FanBuzz, provides e-commerce solutions to sports, entertainment, and media brands such as The National Hockey League, the Weather Channel, and Peanuts.
Volume can be 33 to 50 percent higher during the holiday season, which starts Nov. 1 and lasts into January. Because of the instant spike in orders that occurs when a product is featured on a home shopping show, ShopNBC's orders can be particularly dynamic.
For example, when a bestselling watch was featured for $99 recently, "we sold more than 1,000 in two hours," Fox says. ShopNBC operates around the clock, so the demand never stops.
Filling customers' orders on time is a passion for ValueVision. "Our operational team is psyched up for results—that's what they live for," Fox notes. A direct-to-consumer company, ShopNBC has to cut off its holiday shipments at some point to be sure that orders are delivered on time.
"We'll go right to the wire, shipping Christmas orders on Dec. 23, using next-day shipping," Fox says.
Preparing for a successful holiday season begins the year before. "I'm a big plan-communicate-execute person," Fox says. "We do Christmas critiques of all our logistics functions so that we understand what we did well the previous Christmas, where we had problems, and what we can make even better next year."
ShopNBC operates two fulfillment centers. A 25,000-square-foot center in Eden Prairie primarily handles jewelry and watches, which account for approximately two-thirds of the company's orders. The other fulfillment center, a 275,000-square-foot facility in Bowling Green, Ky., handles hardlines and softlines for ShopNBC, plus fulfillment for Polo.com, the NBC Experience Store, and other customers.
ShopNBC also has vendors drop-ship large or hard-to-handle items such as computers, perishable foods, and Tiffany-inspired lamps.
Staffing Up Early
In addition to receiving holiday merchandise during the late summer, "we start staffing up for the holiday season in late August, early September," Fox says.
Staffing at the fulfillment centers jumps 30 to 40 percent as hundreds of seasonal hires come on board. All associates go through a customer awareness program called Red Carpet Care, presented by a company executive who spearheads the heightened customer satisfaction initiative.
"Customer-facing issues and presentation to the customer are very important to us," Fox says. This year, for example, ShopNBC added a gift box program, offering customers the option of a black gift box with gold bow and the ability to include personalized gift messaging cards.
Implementing these new services in the fulfillment centers required careful planning. "We had to invest in some new equipment, redo the packing stations to accommodate multiple gift box sizes, buy new printers, have IT code written to accept the gift messaging, develop new processes, and train the packers," Fox says.
Keeping its staff motivated during the busy holiday season is not a problem for ValueVision. Multiple meetings throughout the day keep associates informed and enthusiastic. Associates "get their thrills" from rising to the challenge of swiftly getting merchandise in and out of the fulfillment center, Fox says. "They can see what sold this hour, and how many orders are in the hopper. That jazzes them up."
ValueVision's senior management schedules one of its regular Associate Appreciation Days right before Thanksgiving. "The management team puts on aprons, serves lunch, and shares information with associates," Fox says.
Warehouse associates and senior executives work together to serve the customer. "Our goal is to ship as much as we can the same day we get the order," Fox says. "Customers love it. We want them to love it, because a satisfied customer is not just a repeat customer, but someone who will rave to their friends about their experience shopping with us."
Serving Up Satisfied Customers
Cooking.com, a leading online retailer of cooking-related products and specialty foods, is another believer in delivering a super customer experience during the peak holiday season. The company, headquartered in Santa Monica, Calif., is obviously pleasing customers—referred to as "guests"—who last year, on BizRate, rated the e-tailer nine out of a perfect 10 points in most fulfillment areas.
Cooking.com maintains high customer service standards and provides proactive and responsive "guest assistance" despite a heavy workload.
"One day in December is like one week outside the holiday season," notes Bryan Handlen, vice president of logistics for Cooking.com. Inbound volume picks up at the company's distribution center in Ontario, Calif., in October. Outbound shipments start to even out with inbound shipments the week before Thanksgiving. "Then it escalates from there," Handlen says.
Planning for the holiday rush begins as soon as the previous year's season is completed. "We do a recap in January and February, look at what we did well, what we missed, what we could do better," Handlen says.
For instance, the post-2002 season evaluation indicated that a formal demand planning tool would enhance the company's performance. Such a tool, selected earlier this year, will be implemented following the 2003 peak period.
The distribution center also gets attention during the off-season. This year, for example, it underwent some rack retrofitting.
Warehouse operations worked closely with the company's merchant group this fall to review sales forecasts for the season in order to develop a sound slotting plan for merchandise. "We'll get 80 to 90 percent of SKUs slotted properly," Handlen says. "If we see changes in demand, we move product around to a better location."
The DC moves to a double shift for the peak season, operating five days a week until Thanksgiving, then adds Saturday and Sunday shifts through Christmas, if necessary.
Warehouse staffing grows five- or six-fold for the holiday season. "We hire seasonal employees rather than temporaries," Handlen says. This year, Cooking.com expects to continue to hire seasonal employees into early December, to fill in for other seasonal help who leave.
Seasonal associates begin working in small groups with a trainer, generally a member of the permanent warehouse staff who moves into a trainer position during the peak season.
"We take some of the best employees in our core group and boost their responsibility during the holiday period," Handlen says. This helps ease the strain on warehouse supervisors and ensures that seasonal associates get the training they need to deliver exceptional customer service.
It's all part of delivering a great customer experience. "Treat your customers with respect, and do the same thing for your employees," Handlen advises. "We try to provide a good work environment that's comfortable for associates and for us." This includes providing the tools they need to do the job and demonstrating appreciation for associates' efforts.
Cooking.com's advanced warehouse management system from Catalyst directs receiving, putaway, order picking, and cycle counting, and supports value-added services such as gift tags, wrapping, and engraving. In addition, the WMS is interfaced directly with the web site, updated in microbatches every few minutes, which means customers know up to the minute what products are available.
Cooking.com uses three carriers to deliver orders. A postal consolidator, which inducts packages further down the mail stream—to bulk mail centers, for example—provides "super saver" shipping (Cooking.com offers free shipping for orders over $49). UPS handles standard ground, two-day, three-day, and next-day service. The U.S. Postal Service moves priority mail, shipments to Alaska, Hawaii, U.S. territories, and priority shipments to customers with P.O. boxes.
Handlen, who spent nine years in the toy industry, enjoys the challenges of a highly seasonal business. "Every year brings something different," he says. "It's fun, because it's always changing. You work all year to get to this spot. When you get through it, it feels fantastic."
That's a true holiday rush!