Logistics News

By Cliff Holste

September 14, 2011

Logistics News: Will Underperforming DCs Survive Another Peak Shipping Season?

Training is Key to Having a Successful Peak Season

Every year as the summer season ends and fall begins, retailers begin to gear up for the big end-of-year peak season. For many consumer goods retailers fourth quarter sales represents 50% or more of their total annual sales volume. If it doesn’t go well, and they don’t hit their numbers, it could spell doom for the business. This of course, puts a great deal of stress on supply chain logistics systems to respond. At the center of all this activity are the DCs. The question is – are they ready?

Holste Says: With an eye to the future, perhaps now is the time to consider doing advanced planning in the form of an operations audit for identifying and solving the more pervasive and reoccurring problems. What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

This is an appropriate question given the on-going weak economy and resulting focus on “lean” over the past few years. For some DCs, which have been forced to reduce their workforce and make do with the equipment and systems they have, the upcoming peak period may be more challenging than it normally would be. Many of them are “making do” with material handling systems and order fulfillment processing methods that predate the Internet ordering explosion.

As a result, many such companies are concerned as to how they can get through this year’s peak shipping season without disappointing customers or exhausting their already over stretched workforce.

Typically, companies hire additional temporary help to cover peak periods. Passed experience combined with the current sales forecast provides the basis for determining how many temps will be needed. However, other factors can enter into the equation, such as; worker experience and job skills, and on whether or not they are acclimated to the DC environment. Some will leave after receiving their first paycheck, while others will hang-on for a few weeks before withering away. Initially, the turnover can be as high as 60% to 70%. So, if you wait until the peak begins to bring them in you risk being under staffed well into the peak period.

Training is Key to Having a Successful Peak Season

Given the high turnover rate for temps, the training investment may seem costly. Still, the better trained they are, the fewer you will need.

The following are a few practical suggestions for hiring and training temps we have collected from interviews with DC managers:

• People referred by current full-time employees generally make the best workers.
  
  
• Having a policy that offers opportunity for full-time employment for the best performers is a strong incentive. This is especially true given the current high unemployment rate.
  
  
• Start the hiring process well ahead of the peak period. Since DC volume is relative low at that time (the quite before the storm), there can be some flexibility as to how labor is applied. Take some of those surplus hours to maximize training time.
  
  
• Start by training the trainers. The ones who catch-on fast are your best resources for training others.
  
  
• Quality checks on the temps are essential for identifying any additional training needs.
  
  
• Train on the simplest tasks first, but allow time to cross-train on tougher tasks. When things get crazy, you will need all-hands-on-deck, and you'll be glad you did!
  
  
• Consider offering performance and attendance cash incentives for meeting and/or exceeding pre-established goals.
  

Additionally, you might try some of these functional ideas:

• For the more complex tasks - staff with a team consisting of an experienced full-timer paired with a temp. The temp will get accustomed to doing the job quickly and safely.
  
  
• Some processes, like gift-wrapping and personalizing, are in much heavier demand during the Holiday Season. Consider an assembly line approach with short, well-defined work processes. Be careful to keep the line balanced and smooth running. And, make sure that there are experienced full-timers in place for quality control.
  
  
• Take advantage of the increase in single-line orders of very popular items. Wherever possible Pick & Pack these directly into shipping containers.

Final Thoughts

Processes that perform below standard during normal volume periods are a nuisance. However, during peak periods they can drag down the performance of the entire operation, idling workers, delaying shipments, and causing excessive overtime to complete the day’s work.

With this year’s peak season rapidly approaching, unless you have access to a magic wand, you may once again have to make do with what you have. But, with an eye to the future, perhaps now is the time to consider doing advanced planning in the form of an operations audit for identifying and solving the more pervasive and reoccurring problems, see (Are Audits, Assessments, & Evaluations Just an Intellectual Exercise?).