Having survived many a Peak Season, Black Friday and Cyber Monday in the past, I have learned a great deal from those experiences; enough to be able to advise shippers on how to survive the holiday rush.
The Holiday shopping season, also known as peak season, is upon us. We know this can be the make or break for many retailers in the country. Those that are into Omni channel marketing are especially counting on the online sales to burst during this short window of retail shopping time. The pressure for their freight forwarders, logistical service providers and Third Party Fulfillment (3PF) providers becomes a crucial element in their success.
According to a report from the DC Velocity Journal: “ Peak Season Botched execution can put a huge dent a company’s profit margin as well as its reputation. UPS Inc. saw that happen in 2013 when the carrier drew sharp criticism for significant delivery delays after underestimating the last-minute surge in e-commerce orders. The company has spent heavily to avoid that scenario in following years, but watched its profit margins shrink in the 2016 peak as it struggled to handle a record 712 million packages.”
Of course this year they will attempt to get that profit back by instituting peak season surcharges in order to be sure they can execute during the final days of peak season. The charges, ranging from 27 cents to 97 cents per package, with a large package surcharge of $24.00, these charges will start in November and run through December 23.
So how will one in the industry stay prepared for the surge and what should you be looking for in your providers and partners?
Retail Forecasts
It’s a must to get the forecasts in order to keep a close eye on weekly swings. This requires an account management team having constant communication on a daily basis from your retailers and clients. Forecasts are a critical part of service agreements, which often include service level agreements (SLAs), such as an ability to ship all orders by 2 p.m. on the same day received. By collaborating with the retailers, fulfillment centers can react to changes and make sure products reach consumers on time. The shipping patterns in the retail market are changing quickly in the era of Omni channel fulfillment, especially with the increase of online ordering. This is one time that you cannot predict what’s going to happen, but staying close the your client’s forecasts makes all the difference for a successful season.
Labor & Workforce
Ken Wiseman, CEO of AMS Fulfillment, offered some of his strategy: “It’s become more of a challenge to hire warehouse associates in a time when a 3PF companies, such as AMS have to plan for the volume bursts during Peak. We’ve had to seek out additional labor sources to locate the best we can at a time when wages are on the rise and good candidates are scarce. Some of the ways we seek the right people is to offer incentives, advanced training offering college credits. We also include lean engineering process improvements that are coupled with advanced warehouse management software, thus simplifying material handling, packing and shipping tasks.”
Logistics
The carriers and logistical service providers used must be well informed in advance of your production and daily output forecasts. Most good carriers will have to manage the equipment and resource requirements in order to meet the burst volume requirements. This is the most crucial part to a successful on-time delivery of products. Without this back end process working like clockwork all else would be trivial to completing the fulfillment cycle. There’s nothing worse than to have over produced and your carriers leaving additional volume on your docks. This can be avoided by working closely and providing forecasted information to the carriers in advance of Peak.
Peak season fulfillment and delivery success comes down to planning, fine tuning your forecasts and communicating with your partners. Engaging all parties involved from supply chain to order cycle and final delivery to the consumer. It’s never too late to start planning with your fulfillment and logistical partners. Timing is everything and success comes from planning early and staying ahead of the tail.
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About the Freight Freak:
John Bevacqua is the VP of Logistics at AMS Fulfillment. His area of excellence is in creating distribution and fulfillment operations that function as a capable interface between suppliers, retailers, and wholesale distributors. His experience includes developing and leading FedEx/ Kinko’s Distribution Services into the FedEx post acquisition, USA Wireless Technologies, and a top Logistics Management company. He has also worked with third party fulfillment companies, preparing him for his current position with AMS Fulfillment.