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Introduction
The peak season for many retailers might be the most profitable time of the year; however, it can also be stressful as it brings extensive supply chain disruptions to keep up with the demand.
From an inventory management perspective, the holiday season anticipates the height of challenges like extreme high demand, longer vendor lead times, shortage of space, delayed product delivery, and many more.
Retailers are constantly striving to forecast demands accurately to optimize their warehouse operations and workforces efficiently. As per McKinsey research, 1 out of every 5 consumers in the US are willing to pay a marginal increase in shipping costs for faster order delivery.
This change of shift in customer expectations caused e-commerce retailers to ramp up their peak season warehousing to deliver a smoother order fulfillment experience.
Peak Season Challenges
The buzz of the holiday season brings a whirlwind of challenges and complications for the warehouse, distribution, and fulfillment centers. While each situation is distinctive, below are some conventional Warehouse challenges that warehouse associates face during the peak season.
1. Not Using Right Technology
Lack of using legacy software in the warehouse during the peak season might cause issues in meeting unexpected demands in orders and inventory management. Not investing in the right technology hampers the slowing down of picking, packing, and sorting processes that lead to delays in peak season fulfillment.
If the current systems are not capable enough to handle the surge in order, it will lead to unexpected costly mistakes. Off-the-chart inventory counts are a situation that arises when a warehouse is not using the right technology.
Not having the exact inventory details can cause unnecessary delays to the trained warehouse associates in locating buried inventory, comparing product numbers and SKU codes, and picking the right product, thus, leading to poor end-customer satisfaction.
2. Inefficient Workforce Management
To cope with the significant rise in order fulfillment and inventory management, warehouse managers cannot afford to bear labor shortages and unavailability during the peak season.
According to the Institute of Supply Management, 50% of the companies find difficulty in hiring new workers, impacting labor shortages that inhibit warehouse operations. Lack of flexibility in work schedule makes warehouse employment as low as six months.
Sometimes warehouse managers do not focus on effective training programs and communication methods that bring negative repercussions like inevitable glitches in order fulfillment, inventory management, and increased turnover.
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3. Inaccurate Demand Forecasting
Peak season often brings an immense influx of orders for e-commerce retailers across all digital channels throughout its stretch. Predicting accurate order volumes and inventory is crucial for managing high demand and smoother operations.
Inaccurate forecasting will magnify multiple complications like incorrect inventory, paying extra for equipment and training for the associates, and delay in product delivery. Inaccurate demand forecasting can lead to improper stock keeping that turns into obsolete inventory during the holiday season.
Retailers and manufacturers end up sticking unwanted products that are marked down and even sold at a lower price which turns into a loss. Hence, workers will spend plenty of time finding the right product for fulfillment.
4. Improper Planning
Lack of proper warehouse management planning ahead of the peak season can lead to unexpected mistakes. It can hamper the productivity of the workers as well as delay order delivery to the end customers.
Insufficient regular checkups of the above-mentioned aspects can cause interrupted workflow during the peak hours of the month. If the machinery, software, equipment, and electricity supply of a warehouse are not enough during the peak/holiday season, then there will be a high chance that the warehouse will not be able to handle the demand surge of the peak season.
5. Inefficient Space Utilization
During the peak season, a warehouse manager cannot afford to face challenges in inventory management. The lack of efficient space utilization in warehouses has decreased capacity utilization by up to 68%.
Mistakes in warehouse setups lead to the slower movement of fast-selling items while hampering the order fulfillment process. Not only will the picker spend more time finding the product, but also, the profitability will be affected due to the lesser number of order fulfillment.
Ways to Prepare Warehouses for Peak Holiday Season
Peak season is synonymous with elevated demand for warehouse operators, which also comes with multiple challenges. Without prior efficient planning for the holiday season, retailers might experience massive warehouse limitations, difficulty in inventory management, labor shortages, and delayed fulfillment, all of which could result in degraded customer experiences and diminished brand reputation.
Let's have a detailed discussion of proven ways that might help prepare warehouses for the peak season.
1. Optimal Warehouse Staffing
During peak season, warehouse associates face excessive burnout, and proper scheduling needs to be prepared ahead of time to reduce labor-management issues. Predictive scheduling is the best practice that companies follow (as some states in the US mandate it) to manage the holiday season rush.
Events like planning employment, onboarding, organizing training programs, and assigning professionals based on expertise might lead to efficient warehouse management. The Zenefits survey concluded that almost 78% of the workers were more productive when they had flexible work schedules planned before the peak season.
The holiday season is synonymous with unpredictable worker schedules, as warehouse managers are unable to forecast the demand and staffing needs accurately. Almost 8 out of 10 companies claimed to hire seasonal staff in their distribution centers and warehouses to keep up with the rush.
Amazon has raised the minimum wage of its warehouse associates to $15, which is double the federal minimum wage. To compete with this, companies like JC Penney offered giveaways to its seasonal workers on an hourly basis, Macy’s commenced performance-based bonuses to its part-time and full-time employees, and Target organized $500 gift cards for their seasonal hires.
2. Right Warehouse Layouting
Streamlining the warehouse layout in peak season is directly proportional to reducing turnaround time for order fulfillment. An efficient warehouse layout will drastically reduce product handling time and unnecessary associate movements.
Warehouse automation software analyzes the SKUs to identify the seasonal and fast-moving items and determine the storage area. Putting fast-selling products at the end of the aisles will reduce the walking time of the pickers while enhancing smoother fulfillment operations.
Hopstack’s warehouse management system conducts algorithmic ABC analysis for optimal employee movement. It helps in warehouse mapping by pointing out the bottlenecks and traffic areas, while the warehouse officers can plan the employee movement and inventory stocking efficiently.
WMS is also used for maximum utilization of warehouse spaces so that stocks come faster while leading to hassle-free picking and packing processes.
3. Forecasting Demand Volumes
According to Salesforce research, more than 42% of consumers globally plan to buy their holiday gifts much earlier due to the fear of price hikes during the holiday season. Hence, demand forecasting becomes the inevitable aspect that must be accurate to avoid the rush in the peak season.
Warehouse automation software will help to pull the historical data of the last peak season. These systems also provide demand forecasting, labor planning, omnichannel order management, outbound fulfillment optimization, and predictive analytics that handle spikes in order volumes. Having data handy will help warehouse managers keep their partners in the loop in a way they can allocate based on the forecasts and needs.
4. Optimal Inventory
Often brands struggle in scaling up their inventory management capabilities when they experience frequent stockouts, high volumes of unsold stocks taking up the warehouse space, heavy reliance on manual or paper-based inventory practices, discrepancies in demand and supply of goods, etc.
Adopting a robust inventory management system during the peak season can yield enhanced visibility across supply chains and improved inventory management like optimizing warheouse fulfillment operations, reducing costs, maintaining stocks, product spoilage, forecast market demand, theft prevention, and many more.
With an advanced inventory management system, warehouse managers can get real-time granular SKU visibility that will provide information about dead stocks and slow-moving items. Dynamic inventory optimization offers detailed insight into the stock level that helps to prevent understocking or overstocking while utilizing the warehouse space effectively.
It also enables a comprehensive SKU audit trail from receipt to dispatch with minimal human intervention making it ideal for the peak holiday rush.
5. Eye on Efficiency Metrics
While optimizing warehouses for the peak season, modern (third-party logistics) 3PL companies need to focus on important metrics such as order fulfillment rate, same-day orders, order lead times, picking efficiency, picking error rate, etc.
The key metrics are used by the warehouse managers to evaluate the performance and activity of their network during the peak season. It also helps in identifying any course corrections during rush hours thus helping in smoothening the order fulfillment process.
Modern warehouse management systems enable real-time tracking and visibility of all the key metrics at every step for all the stakeholders including warehouse managers, CXOs, 3PL’s tenants, etc.
6. Implementation of Automation
Automation software can help in efficient warehouse planning during peak seasons by providing real-time data, 24*7 visibility of warehouse operations, reduction in missed picks, automatic replenishment, lesser returns, improved responsiveness, and maximum productivity of the warehouse associates.
Automation capabilities help retailers to create value, reduce risks, and improve reliability across the complex network of fulfillment nodes. Warehouse managers must use a digital fulfillment system that focuses on hardware and software automation capabilities so that they can work seamlessly with each other.
With hardware automation, repetitive tasks like picking, warehouse packaging, and sorting can be automated through a wide range of devices like printers, barcode scanners, conveyor belts, hand terminals, picking arm robots, etc., thus mitigating the challenges of warehouse operations.
On the contrary, software automation must control the hardware and make seamless 2-way data flow to the systems like ERP systems, sales channels, and accounting systems in real-time. It replaces the manual and spreadsheet-based processes while making the whole process faster and smoother.
7. Working with Right Carrier Mix
With enhanced online sales remaining stagnant since the advent of COVID-19, e-commerce companies are striving to meet the supply chain demand with the help of preferred carriers.
While 2021 has demonstrated the customer expectations of single-day delivery, working with a single shipping service was not the ideal solution for retailers. Working with the right carrier mix will provide flexibility in fulfillment and logistics to the shippers during the peak season.
A diverse carrier mix can assist the retailers in managing the unexpected spike in order volumes while helping in expanding capacity for faster order delivery to the end customers at minimum cost.
By using automated warehouse management systems like Hopstack, retailers can easily integrate with their preferred carriers like FedEx, DHL, etc. to cope with capacity issues.
Key Takeaways
The magnificent spike in order volumes during the peak season can cripple an unprepared warehouse or a fulfillment center.
- It can leave a lingering negative WOM amongst customers, as the waiting period is too long for the products to get delivered.
- By eliminating manual warehouse operations, WMS can improve the agility, speed, and accuracy of the whole fulfillment process whenever needed.
- Evaluate the state of the warehouse and implement automation mix wherever possible to maintain optimal inventory while fulfilling customer demands.
- Utilizing historical and real-time data is proven to be of great use as the former helps in calculating the risks based on past activities; however, the latter provides accurate visibility of warehouse operations like shipment, returns, tracking orders, and inventory levels.
How does Hopstack Digital Fulfillment Platform Help in Managing Peak Season Challenges?
Managing inventory, orders, and fulfillment operations during the peak season is a major challenge for brands and the 3PLs that cater to them. Efficiency and visibility are the names of the game when it comes to surviving and thriving during the peak/holiday season.
Hopstack provides all the necessary tools that a fulfillment function needs to manage a high volume of orders in this period and solve all the bottlenecks associated with fulfilling the orders. Hopstack’s efficiency-first approach ensures that a brand’s or 3PL’s inventory, inbound, and outbound fulfillment activities can attain maximum possible productivity and provide visibility to every key stakeholder involved.
Schedule a demo to learn more about how Hopstack can help your brand solve the biggest challenges faced during the holiday season and provide the best possible post-purchase experience.
