For most retailers seasonality is a way of life. Of course the primary holiday season, kicked off by the “Black Friday” frenzy, is where retailers make the vast majority of their annual profits. However, there are also other important “seasonal” time periods, such as Easter, Halloween, or Back-to-School, that while shorter duration, create challenges for supply chain managers that need to ensure their supply chain is equipped to handle the up-tick.
Because seasonality is expected, processes to manage it should be incorporated into the traditional SO&P planning all year long, starting the 1st of January. Below are some strategies managers should consider incorporating into their seasonal supply chain planning to avoid experiencing out-of-stock’s and empty store shelves:
- Seasonal Support Teams: Create a team that will support the planning for seasonal demand and capacity. Seasonal planning will require input from a number of functional groups across your organization. By choosing someone to lead the team and those team members that will support these initiatives, you can drive accountability and set the right expectations for the organization.
- Increasing Direct to Store Fulfillment: Many retailers source most of their products internationally. This elongates the supply chain by increasing lead time. This is especially difficult to manage during seasonal demand periods, when response time and product availability are critical. One way to offset the long lead times, is to kit or pre-load seasonal pushes at origin to enable direct-to-store distribution at destination. This allows shippers to bypass the traditional distribution center – not only getting products to store shelves faster, but also reducing disruption to the distribution center’s operation and cost structure.
- Labor Management for Seasonals: During peak periods, labor requirements at a distribution operation can change drastically. Often times, the work force can double, if not more. This creates a challenge for operation leaders, who must balance the need of having qualified personnel on board throughout the year, without incurring additional costs for labor during non-peak seasons. Having a robust labor management program gives you early visibility to productivity trends of seasonal hires, and allows you to more accurately project your labor needs during peak periods. It is also helpful to maintain a diversified portfolio of temporary staffing agencies to draw from during times of increased demand, and communicating to them early on in the year when you expect demand to spike so they can be prepared to offer the capacity you need.
- Cross-Training: Cross training employees enables you to move personnel around the operation depending on seasonal shifts. It is also important to design job functions that cater to different skills sets, allowing less trained, temporary workers to be able to effectively perform a valuable activity within a short time. There should be less complex job functions that temporary workers can be brought in to do during seasonal spikes, while cross-trained permanent employees perform the job functions requiring more skills and experience.
- Seasonal Facility Slotting: The foundation to maintaining high levels of labor productivity and efficiency is having the right design within the distribution facility. It is usual to locate faster moving products closer to the operating areas, in order to reduce travel distance and increase productivity. However, there are products that experience a very different order velocity depending on the season, especially those only available during specific seasons throughout the year. Developing a slotting plan that takes into account seasonal products will help your workforce keep up productivity when it comes time to ramp-up fulfillment for those specific products. There are some organizations that experience multiple seasonal events throughout the year. In this case, it may be appropriate to designate a “seasonal product area” within the facility. This section of the facility can be re-slotted for each different season, thus minimizing the movement of non-seasonal products throughout the year.
- Enable Cross Docking Capabilities in Distribution Centers: It is natural for seasonal periods to drive spikes in order quantities, often increasing the amount of full pallet or full case replenishment orders when compared to non-peak periods. However, many operations continue to follow the standard of receiving, putting away, and picking to fulfill these orders as they do during non-peak periods. This can drive inefficiencies, since products are stored only to be picked in its exact configuration to fulfill an order shortly after it has been put away. By setting up distribution centers to allow for cross docking capabilities, whether systematically through a WMS or manually, through a reporting process that matches inbound product receipts to outbound orders, shippers can take advantage of the time saved by just moving product through a facility. This allows them to speed up their response to customer orders.
By planning ahead, you can take advantage of increased speed to market, reduced costs and most importantly, better customer service. Are you ready for “Black Friday”?
Written by: Mario Rivera, Director, Solutions & Business Development, Ryder Retail Operations
