Nearly every industry will experience seasonal peaks – that especially stressful time every year where demand spikes and operations are pushed to their limits. The retail industry is no exception, and while the time of year may be predictable, the demand being faced is anything but. According to the National Retail Federation, the Winter Holiday season represents 20-30% of total retail industry sales, with holiday sales growing an average of 2.5% every year for the last 10 years. This severe seasonal peak will make or break your retail supply chain, and put your workforce to the test.
Peak Season Pressure Points
Peak Season will push the capabilities of any operation, as you are significantly increasing product demand and shipping volume during the peak window. For most companies, this causes multiple new pain points to arise, including the need for temporary workers, additional equipment, and dealing with customer expectations.
Temporary workers present a unique challenge, as you need to get a large number of employees up to speed in a very short amount of time. This means you have to incur the initial cost of training time, and are typically relying on seasoned veterans from your operation to do the training. Since your seasoned veterans are often your most productive workers, productivity tends to fall behind. Many operations will add an additional shift to compensate for time spent training workers, which leads to increased labor costs to cover that shift. That cost not only covers the pickers on the floor, but also must address the cost of having a manager or supervisor available. Additional labor is necessary to address the excess demand, but hiring too many new employees or adding additional shifts can be costly and will eat at your margins.
Increased Technology Cost
When adding a large amount of new employees to the workforce, there is often a large technology cost to equip them. While this is a necessary purchase, it can be painful if you only need the equipment for a few months, but have to purchase it outright. Although these costs can often be justified as an investment for future peak seasons, the bulk of this technology will sit on a shelf for 9-10 months out of the year, waiting for the next peak.
Decreased Order Quality
Between the increased number of inexperienced workers and the increased volume coming in and out of the warehouse, quality tends to suffer. This can be offset with increased audits, but that leads to increased labor hours, and the addition of packing and auditing stations, which can become a bottleneck for your operations. If additional audits are not added, you risk shipping the incorrect product, and then have to deal with return and replacement shipping costs.
Increased Customer Expectations
Over the past 10 years, customers have developed a desire to have what they want, when they want it – even when the distribution center holding that item is across the country. What used to be considered last-minute shopping has now become the norm, with many holiday shoppers waiting until the last minute to place orders. These last-minute orders can put high stress on warehouses, as shipping windows and cutoff times become increasingly important. Although these purchases are made last minute, the customer puts an extremely high value on the order arriving when they want it, and will become highly dissatisfied if that is not the case. Failing to deliver the right product within the window they desire will result in lost business, and potentially drive your customers to the competition for later purchases.
Lack of Visibility
During peak season, our fulfillment centers are asked to react to and plan for the unknown, but they may not be equipped with the tools they need to do so. Companies that aren’t using a real-time inventory or fulfillment system can struggle to keep track of what is on the shelf, leading to the loss of a sale or a frustrated customer. Being able to forecast, or at least keep track of what is on the floor, is essential. As cut-offs approach, being able to re-distribute labor or pinpoint an order in real time can help avoid late shipments (and the costs that come with them) and double shifts.
How Voice Can Help
To find out how voice can alleviate the pain points that were outlined above, you can download our full eBook, Alleviating Peak Season Stress with Voice, here.
Questions? Head over to our contact page and we’ll get back to you with answers!