Retailers certainly know we’ve entered ‘Peak Season’ as they stockpile TVs for Black Friday. According to some articles, peak begins in August with preparation for Halloween. That date does appear to be true from a consumer standpoint.
Experts predict growth, which simply means that more commerce will take place this year than last, and with more commerce there will be more fulfillment. Fulfillment companies are like the engines that make it all happen. How do the fulfillment experts prepare for a season of high volume and how do they handle times when the pressure is really ON?
Daniel Butera, Chief Operations Officer at AMS Fulfillment, has agreed to help us understand how fulfillment companies operate during peak season.
Thank you, Daniel, for accepting the interview. I’m sure AMS is up there with the top performers, and as a top performing company you may have some recommendations, based on years of experience. For example, when do you begin preparing for peak season and how do you prepare?
Thank you for taking the time to speak with me, as it is my pleasure. It may seem odd to many outside of the industry but preparations for the following year, technically, begin as we are going through peak season. Having a plan of action that is built on past experience, client forecasts, and data analysis, we move into peak season with our road map in hand and confidence. We are monitoring our productivity and throughput rates in most areas on an hourly basis to ensure we are hitting our projected rates, while noting where we are falling below expectations. What are the bottlenecks? Where are our team members experiencing fatigue? What quick solutions did we put in place to get us through, and can we implement a technological fix to correct the issue moving forward? These discussions continue through Q1 as the preparations become more formal with a kickoff post-holiday brainstorming session. These kickoff sessions are always a lot of fun, as team members are given the floor to discuss what worked, what didn’t, and how they think it can be better.
The greatest innovations come from the end user, so we take what they say very seriously. The next planning session revolves around client directed projected growth, and what their foreseeable needs will be. Order volume, units per order, line items per order, and overall sku growth are considered primary review factors in relation to both labor and technology, while projected stock levels and turns provide insight into the footprint. Many clients are data and forecast driven, and in these cases the process is straight forward, but there are also many clients that do not have that ability. This is when we partner with them, and present both historical analytics in relation to their shipping data, as well as industry insight into trends to build the model.
These conversations are happening throughout the year, and through all seasons. We adjust as the client’s business contracts and expands, and monitor these changes against historical data to ensure we are on track. Then we look down at our phones and realize that it is September 1st, and the ride begins all over again with our plan in hand!
AMS fulfills for large chain stores and retail businesses as well as for e-commerce, shipping directly to the customer. Can you talk about how you approach the broad spectrum of clients you serve?
Absolutely. In the past the peaks and valleys of business to business and e-commerce were quite different, so we had greater ability to shift both staff and resources to and from each business segment as needed. Given that all of the activity still fell within late Q2, and all through Q4, there was a definitive split. We became accustomed to shipping both large retail chains and boutiques on a seasonal calendar, with the final big push happening toward early to mid-September. We could then shift a good portion of those same resources over to e-commerce as we got closer to Black Friday. Those were the good old days! Over the last two to three years we have seen these worlds completely overlap.
Retailers are now requesting later and later delivery dates, so that they can keep their own stock levels as low as possible while they trend sales for greater periods of time heading into the holiday season. This trend has pushed launches that would occur in early to mid-September into October and early November, with multiple weekly replenishment orders dropping against popular styles well into December in certain cases. This has pushed us to technological and data driven solutions to reduce/eliminate throughput constraints. Where in the past we would have added additional labor to get more out the door at the same time, we no longer have that option in most cases. The volume of business has gotten too big to manage it in that way, and driving people to the point of exhaustion is fundamentally against our core values.
At AMS we are implementing technological solutions that allow us to ship large spiky volume with minimal staffing shifts. The solution is not to just work faster, the solution is to work smarter. Employ systems that will allow a team member to pick a multitude of items, orders, and lines at the same time, while working at a pace that does not burn them out. Employ processes and innovation to packing and pack stations that allow a team member to easily shift between business segments if need be. Monitor order and sku velocity to ensure your shifts line up with peak periods of the day and week. We have to be nimble and smart. Eighty five percent of our order volume is driven by e-commerce, while eighty five percent of unit volume is driven by the business to business segment. What is more important? The answer is both. Both are equally important to AMS and our clients.
So I gave you a very long answer to a simple question. I guess I could have just said; tech. We invest in tech.
We’re sure the pressures of the season require exceptional performance from your employees. Could you talk about the AMS employees and how they handle the load?
We are so fortunate at AMS. Many of our team members have been with us since the company was founded. They are family, and they are treated as such.
Fatigue and burnout are a very real part of our industry, and we take several steps to ensure we are taking care of each other properly. First I would say that this is not just a holiday or Q4 issue. As a fulfillment partner for multiple brands across multiple business segments the business spikes, unexpectedly in many cases, throughout the year. Planning for last minute spikes is key, and making sure our team members are safe and alert is part of that planning.
Are our tables and carts at the right height so team members do not have to hunch or bend more than necessary? Can the cart be lighter? Can we limit the amount of time that someone is standing? Are they using an anti-fatigue floor mats? Is it too hot or cold in the building? Do we have proper lighting so they are not straining their eyes? All of these issues are addressed on a daily basis, and ensure that associates are safe and alert.
As managers we are accountable to our team members. Is it possible to be productive when you have worked 12 hours, or more, a day for 7 days straight? The answer is No. We can pretend that we are all superheroes, and that “We have the best people, and they do what ever it takes to get it done for AMS, or they die trying,” but the truth is that we do have the best people. They will do what ever it takes to get it done for AMS and our clients, and they should not have to put themselves in harms way to accomplish that goal.
We owe them staggered and alternate shifts, so they can be with their families during the holidays. We owe them days off during the week, so that they can rest and be productive. At AMS, we employ both stagger shifts, and rotating days off to ensure everyone is well rested, motivated, and absolutely safe. We also conduct weekly safety tours, and meetings with randomly selected team members. During these meetings, Ken Wiseman, AMS’ Chief Workforce Officer, and one of our founding partners, personally conducts the class instructing team members on what they should look for and how they go about reporting both issues and ideas to their managers. It is a core principle that we are all accountable to each other for safety.
Our team members take this very seriously and if we, as managers lose sight of these core values, we are quickly reminded. I love that! We are all held to the same level of responsibility regardless of title.
Thank you Daniel for an excellent and informative interview!
Thank you so much for your time, and allowing me to run on about what we do and how we do it. I am very fortunate in that I love what I do. A big part of that love is wrapped into “Peak Season”. The challenge and test of how to get it done, better, faster, and safer, is a test that we welcome every year. How do we employ technology to solve an issue that challenged us throughout the year? Can that same issue solve a bottleneck we see coming down the road, and is it scalable across multiple facilities/clients? These are the questions that motivate us to stay ahead of the curve, and not just during peak season.
Daniel Butera