WHITE PAPER Retail Supply Chain. Managing Seasonality in the Retail Supply Chain

Transcription

1 WHITE PAPER Retail Supply Chain Managing Seasonality in the Retail Supply Chain

2 Seasonal peaks are a fact of life in retail, but with careful supply chain planning they can be more of an opportunity than a threat. The ability to respond to sudden surges in demand caused by seasonal peaks is a critical success factor for retailers. For some, the six week window before Christmas delivers as much as half of their annual profits. Although Christmas represents the biggest peak for most sectors of the retail trade, Easter also figures prominently on the calendar for many supply chain planners, whilst winter and summer sales create additional spikes. Individual sectors have their own cycles. The start of the school year is a peak period for booksellers, while the fashion trade sees sales rise after the all important fashion weeks. For online retailers, especially in the electronics and entertainment sectors, the launch of eagerly awaited products can create enormous upswings in demand. Carefully laid logistics plans can be undermined by the unexpected buying frenzy that surrounds hot products. Promotional Pitfalls Promotions are much more important these days, especially to e-retailers because they increase basket size, bringing valuable economies of scale: each incremental item per order translates into a reduction in cost per unit. However, carefully laid logistics plans can be undermined by the unexpected buying frenzy that surrounds hot products. Some retailers seek to protect their bottom line from these market swings by developing complimentary ranges of products and multi-channel strategies. But ranging does not diminish the need to deal with the peaks that affect individual lines. So what is the best way to deal with the ups and downs of customer demand? 1

3 A critical first step to managing your response to a peak trading period successfully is to set up a team under the control of a single, responsible manager. Dealing with the seasonal peaks Planning is at the heart of any effective strategy for seasonal peaks. Inaccurate forecasts and last minute changes can undo weeks of work, so it is vital to look at throughput forecasts as early as possible in order to make timely decisions about the amount of space you will require and the best way to manage orders, thereby avoiding a situation in which inbound volumes are higher than outbound ones. A critical first step to managing your response to a peak trading period successfully is to set up a team under the control of a single, responsible manager. Representatives from operations, human resources, transport, security and the retail side should convene weekly to review progress and to make decisions. Communication pathways between the retailer and the warehouse should be clear in order to minimise stress. Identifying bottlenecks Initially, the team needs to gather and analyse data on what happened in previous years, but should not be afraid to challenge figures from marketing departments who may not be looking at things from a logistics perspective. And they should be sure to look at actual figures, not just last year s forecasts. Beyond the figures it is important to consider potential bottlenecks in your operations. Do you have the necessary storage space, mechanical handling equipment and transport contracts to cope with the rush. Are there opportunities to borrow space or possibly staff from neighbouring distribution centres? With a temporary influx of staff into distribution centres it makes sense to check whether there are enough car parking spaces, toilets and canteen facilities to cater for them all. Security procedures may have to be tightened since the honesty of the newcomers is an unknown factor. In addition, changed shift patterns may call for adjustments to transport schedules. It is advisable to check whether there are restrictions in your lease about what times vehicles can move in and out of your premises. 2

4 Planning well in advance With demand increasing fivefold in some retail sectors, people issues are paramount in dealing with peak periods. Hiring and training temporary staff is a vital part of your response, so it is important make sure you have the right person inhouse with the people skills to manage temporary staff. And that manager should make the company s needs known to agencies as soon as possible. You will want to make sure you hire people with the right skills early and assign people to appropriate jobs. If you need people to work at height or drive fork lift trucks then you will need to make your needs known right away. Time spent conducting thorough interviews is well spent, if it minimises the possibility of laying people off later on. Students are often attractive temporary employees because they are likely to be literate and have numerical abilities. So far as remuneration is concerned be sure to pay the right person a bit more, bearing in mind that there may be competition for the best staff. It makes sense to assign temporary staff to the least skilled roles that require a minimum of training. However, if temporary employees do need instruction make sure they join in plenty of time to undergo training. Targets for activities such as picking, putting away and despatching are vital to maintaining a productive workforce, but despite your best endeavours, turnover among temporary staff is likely to be higher than normal. It is important to be proactive and have the strategies and protocols for identifying and removing employees who do not make the grade. The rise of e-fulfilment has greatly reduced the timescales in which logistics managers must plan and implement supply chain solutions. Seizing the opportunity Whilst some retailers fully prepare for periods of peak throughput, others fail to plan ahead for the people, processes and materials required for such seasonality. The rise of e-fulfilment has greatly reduced the timescales in which logistics managers must plan and implement supply chain solutions. Peak weeks or months have morphed into peak hours with a correspondingly greater need to align capacity with order profiles. It requires a systematic approach based around effective planning to reap the full benefits of the anticipated seasonal increase in demand from your customers. 3

5 Twelve actions for Christmas: a checklist for managing seasonality 1. Start planning in August / September 2. Give responsibility for Christmas strategy to one person 3. Appoint a core team with representatives from operations, HR, stock inventory, transport planning and security to oversee the whole planning cycle 4. Set weekly meetings with a clear agenda 5. Make forecasts based on last year s actual figures, adjusting for changed circumstances 6. Keep plans as flexible as possible: there may be an agreed timetable with set dates, but it could be out by days or even weeks 7. Estimate when increased demand is likely to begin 8. Start thinking about your inbound logistics late September or early October 9. Check that facilities are in place to cope with an influx of temporary workers 10. Talk to manpower agencies about your requirements and put appropriate training programmes in place 11. Consider testing your capability by replicating an hour s worth of peak trading two or three weeks before the anticipated increase in volumes 12. Make preparations for an increased level of returns. 4

6 UTL s e-fulfilment and multi-channel fulfilment expertise comes as a result of successful partnerships with our clients. We provide flexibility and a breadth of experience to manage their supply chain operations and ensure a continuity of excellent service for their customers. Please contact us if you want to improve the management of variability and seasonality in your supply chain, take cost out of your pick and pack operations, or improve your returns handling capability. UTL is part of the Unipart Group of Companies, one of Europe s leading providers of outsourced logistics and distribution services. For more information contact: UTL Nuneaton Unit 12 Hamilton Way, Bermuda Park, Nuneaton Warwickshire, CV10 7RL Tel: +44 (0) or visit our website: 5