The Ten-Week Retail War: A Survivor’s Checklist
Every year, expectations for the retail holiday season rise. Retail companies feel the squeeze of the economic recession and continue to look for cost-cutting outlets.
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- Company Quicklook
Here are several factors to consider and address before the upcoming holiday season:
Line up your vendors: Having a great relationship with your corrugate suppliers, pallet suppliers, packaging suppliers, lift truck and material handling equipment (MHE) maintenance providers, LTL and TL carriers, etc., will pay dividends during the holiday season when facing a crunch. Update your contact sheets and meet with your vendors to address some of the details you may face for the holiday push.
Staffing/temporary labor: Probably the most important item to address is staffing. You need to ensure you have a labor staff that is capable of processing the holiday volume without breaking the bank. Evaluate multiple temporary agencies to see what services are available, especially screening of employees for appropriate skills and references to avoid the daily revolving door of temporary employees. It may be advantageous to use more than one agency to promote a competitive environment for your business. Make sure temporary-labor agencies understand your priorities and business objectives. It will be important to evaluate individual performance to provide feedback to the agencies.
Production expectations/daily metrics: Having impressive holiday sales projections is great, but not meeting those expectations is a disaster. One way to keep up with the demand is to have actionable distribution metrics. It is essential to have a solid grasp on your supply chain’s capacity. What is the maximum volume received per day? Picked per day? Shipped per day? Do you have enough receiving space, dock doors, pickers, lift trucks, etc.? Make certain that you perform a capacity analysis for your distribution network before the holiday season.
Space planning: Do you have enough space to meet the demand of the holidays? Do you need additional square footage temporarily or permanently? Validate that there is enough receiving, shipping and/or pack-and-hold space. Often it is necessary to pick, pack and store items well in advance due to the large demand. Determine the required number of storage locations and pick locations, and confirm that there is extra space for unforeseen volume. In addition, perform a slotting analysis to ensure pick locations are the correct size and high velocity items are slotted to easily accessible pick locations. If more storage is needed, consultants can be used to expedite the process.
MHE ramp-up: In addition to the facility capacity analysis, verify whether you have enough MHE for the holiday retail season. Do you have enough scanners, printers, work stations, mobile carts, box cutters, etc., for the retail holiday season? Contact your suppliers/vendors to get an understanding of equipment lead-time. It is often a lack of sufficient quantities of the simple equipment that limits capacity during the peak season.
Operations management training: The most overlooked aspect in being prepared for the holiday rush is having sufficiently trained management and staff. Is your staff prepared for peak volumes in short time frames? Supervisors and managers must understand their operations and have a solid understanding of the operations that come before and after an order is processed. Thriving distribution centers have cross-trained management, which is essential for reducing overtime and headcount throughout the DC during peak season. Moreover, the level of training directly impacts quality. Remember, a goal of the holiday season is to make sure you have repeat holiday business next year.
Rapidly Increasing Overall Throughput
It is easy to understand that a major shift in order profile requires DC management teams to adapt with new methods and technology. Less obvious, however, is the need to invest and change as overall throughput increases, regardless of order type. Let’s assume that a retailer with no e-commerce business is now enjoying double-digit growth year after year. As the overall throughput climbs, the following pressures are applied on the operation:
Constraints on dock doors, staging areas and yard space
Overall traffic congestion throughout the DC
Insufficient staff and equipment to keep pace with the reserve-to-pick location replenishment requirements
Pick aisle congestion, resulting in decreased picker productivity
- Pack workstation capacity constraints
Considering the challenges associated with continued retail fulfillment growth, it is clear that an operational overhaul is warranted for many retailers. With that understanding, we can further examine opportunities to replace outdated operational processes and technology with highly efficient solutions.
Order fulfillment strategy: In order to meet the picking demands of the holiday season, you may need to change the order fulfillment strategy. Adding cross-dock capability can be a life-saver. Cross-docking eliminates the need for goods to be stored, replenished, picked and repackaged. Likewise, you may need to change from discrete picking to batch picking to improve productivity. Locating a few high-velocity SKUs to a put system rather than a pick system is another strategy to potentially increase productivity. A change in pick technology (e.g., going to pick-to-light) may be the difference in meeting or not meeting the demands of your customer. Although the time for implementing a pick-to-light system or voice-pick system takes a few months, it can increase picking capacity by as much as 300 percent and simplifies the picking process for temporary staff. Analyze the impact that both short-term and long-term picking strategies have on your business. Make sure you optimize your MHE and layout in order to maximize your facility’s potential.
Systems enhancement: Most companies that succeed during the holiday season are companies with good systems, but more importantly, companies that know how to use their systems get the most out of them. Does your warehouse management system or warehouse control system provide enough flexibility with order fulfillment, waving and routing? Would it help operations if you enhanced your wireless system? Having visibility to orders is important during the holiday retail season. Check that your systems are designed around your operation and not vice versa. Some companies allow their IT department to dictate operations; this is a recipe for disaster. It can be a challenge to get sales, operations and IT on the same page, but it is essential for a successful retail holiday season.