As you process those final returns from the holiday rush, now is the time to evaluate your operations. When order volumes skyrocketed – especially on Black Friday and Cyber Monday – it probably unearthed weaknesses in your supply chain.
There’s only one problem: your budget is already set for 2018, making it difficult to push through any additional expenses to correct those weaknesses. On top of that, it may be difficult to execute any major changes before business picks up again next fall.
You need a short-term plan that will help you deal with the 2018 busy season while also supporting your long-term strategy. The 2018 peak season will arrive faster than you think. In this blog post, I’ll cover several issues I frequently see omnichannel and eCommerce retailers run into and quick fixes for them.
Lack of Communication
One common problem I find among clients is best described as poor communication between the business and the supply chain operations team. Often, the merchandising and marketing departments at retailers will decide what products they want to deeply discount or push on Cyber Monday, but will not notify the warehouse.
The quantity of these products that usually lasts a week or more in a pick face disappears in minutes and hours. Replenishment requests are triggered and fulfilled, but can’t keep up with the demand. Meanwhile, pickers wait for the area to be replenished, creating congestion in the affected pick faces. Order fulfillment slows to a crawl, missing shipping cut-offs. Alas, supervisors are unprepared when they discover thousands of orders all needing the same handful of products. This is what I call “death by replenishment.”
However, if the supply chain operations team knows the products that are being pushed and has time to prepare, it makes a world of difference. You can create strategies to mitigate the rush. One common one is to create a temporary picking hive of floor location pick faces with pallet quantities in an easily accessible location. Many clients do this in the receiving area since most DCs shut down receiving on the busiest days of the year.
Ensuring everyone is on the same page can go a long way toward avoiding chaos and, most importantly, keeping customers happy.
Choosing the Wrong Products for eCommerce
Retailers must be smart about what products they sell online or discount during the peak season. I’ve had clients lose hundreds of dollars on every order because there was no collaboration with distribution on what products are cost-effective to pack and ship at a high volume. Your strategy cannot simply be “sell more of every product,” as appealing as that might sound.
One common problem is when clients offer free shipping during peak season without limiting it to products that have an effective margin to cover the shipping. You should consider the size and weight of the products to make sure if you do offer free shipping, you are not losing money. For example, free shipping on inexpensive large wicker lawn furniture is not going to work favorably in terms of your bottom line.
If merchandising and marketing work with the supply chain operations team, they can determine more profitable alternatives for items with size and weight characteristics that are not conducive to free shipping. If you have to sell products that are expensive to ship, you can pass on these costs to the customer, offer in-store pick-up or only sell it in-store (if you have a brick-and-mortar presence).
Another common problem is when clients try to sell fragile or products that are not easy to pack – such as lamps, large mirrors or picture frames – in high quantities during peak. Because these products must be carefully wrapped and often do not fit in standard packaging, they consume large amounts of time at pack stations, slowing down fulfillment of all orders. Additionally, a high number of the products will break during shipment, frustrating the customer and creating a future return to process.
Communication with the business to determine which products to push when your warehouse is running at full capacity is key. Working together, you can select products that have a sustainable cost of fulfillment and won’t cause bottlenecks at your pack stations.
Short on Labor
Many retailers realize that their order volume will exceed their manpower capabilities before peak. At first, it may seem like hiring more temporary workers is the answer when you cannot comfortably handle the amount of product moving through your warehouse. However, you may just need to rethink your approach to fulfillment during peak. For many clients, modifying their picking and slotting methodology strategies solves the labor shortage.
One common tactic is to switch from discrete order picking, where orders are picked one at a time, to batch picking. Picking a large quantity of the same product at once, instead of visiting the same shelf location multiple times, improves efficiency and reduces labor.
Another option for clients using cart picking is to reduce the number of waveless orders automatically being released for fulfillment and cart build. Instead, pool orders to create waves of the same or similar products near each other in the warehouse to build smart carts with denser picks, reduced number of locations visited and faster order fulfillment to reduce labor.
It’s often effective to use different strategies in separate areas of the same warehouse. Get creative. The key is to minimize travel time and create denser picks for each pass through the warehouse. Select a strategy that fits your order profiles. Re-engineering your processes may require little-to-no additional money.
Now is the time to start planning for the 2018 holiday season, even though you’re just finishing off the 2017 rush. As you can see, there are a number of cost-effective solutions for the most common problems retailers face during peak times.
The next step is to look two years (or more) ahead and find long-term fixes for these challenges. Carefully inspecting projected growth and market trends will help you predict your biggest challenges down the road. That’s when you can make big-picture decisions like constructing a new or additional DC, purchasing material handling equipment, or overhauling your software technology suite. These solutions require a larger investment, and a longer runway.
Develop a better strategy for 2018 while the issues you ran into are still fresh in your mind. If you start addressing these challenges now, you set up your supply chain for the smoothest, most profitable peak season yet with a head start on the competition.