Part 1: Operational assessment
It is mid-February and there is one thing our consultants know happens every year: companies around the world are finishing up their analysis regarding how they performed during peak season 2018, because we all know a peak season can be 30-50% of your annual sales.
Are you ready for peak season 2019?
Maybe you’re not ready, per se, but you are ready to look at where and how your organisation can improve. Black Friday is just 10 months away after all, which means you have around eight months to get any improvements in place and have your best peak season yet. An organisation that is unprepared can easily miss orders or lose money during a peak season, and every retail and eCommerce company knows that this is the worst time for lower sales and profits. Now is the time to figure out what went right, and more importantly, the areas that need improvement.
Data analytics holds the answers.
We know the right questions to ask to get the solutions that are needed by working with a company’s digital operational data (typically from a WMS or OMS), from their 2018 peak season. Along with the data, we perform a thorough review of the physical operations, and use of existing automation to give us a full representation of what is happening at every juncture. From there, our analytics team uses our proven analytics tools along with our consultants’ experience to help identify gaps, or areas that require a deeper view into the operations.
Common areas for peak season improvement and long-term include; SKU slotting, merchandise flow, production scheduling, right-sized labour by department and effective and timely exceptions resolution. Whilst we agree much focus needs to be placed on managing future peak seasons, part of our job is to help companies in retail and eCommerce navigate to their desirable cost-per-unit. In parallel, we also work with them to maintain core human capability during non-peak times, at volumes 30% to 50% of peak. Our experience and persistence in achieving this essential goal leading up to peak season is why companies soar during this important time, because after all, you can never get 2019 Peak Season back.
Part 2: So, your 2019 peak operational capabilities assessment is done. Now what?
The answer is a list of operational, technology, lean or training needs that offer improvement. The list may seem daunting; however, it becomes manageable by working together with our team and prioritising the potential initiatives, based on operational impact and time-to-implement. Then it’s time to move onto the design phase.
Many times, gains can be achieved in the short term, while others may require internal project resources and capital. Work begins right away on the low hanging fruit, while other longer-term must-haves move into the design phase. Material handling equipment delivery and systems modifications almost always drive the critical path in the time-line.
An assessment could include the following:
Flexibly adding capacity to fulfilment and packing by creating new high-volume pick lines, establishing pop-up capacity for standalone products (ship-alones) or building capacity shunts to offline pack stations
Reducing lost capacity through improved end-to-end flow execution and measurement, watching the clock, and optimising the scheduling of people and equipment based on shift volume projections
Gaining throughput with better process design, institutionalising best practices, formalising labour management (metrics, labour standards/LMS), coaching and improving training approaches (building “muscle memory”)
Avoiding failures by reinforcing and expanding equipment preventive maintenance; replacing critical failure risks, ensuring spare parts stocking levels; and ensuring equipment or software service agreements are current
Effectively acquiring talent – staffing and labour-shortage strategies via expanded recruiting to retirees, people with disabilities, college students, teachers, etc.; maximising cross-training opportunities; and fine-tuning HR peak retention and incentive plans, (i.e. flex time)
Organising product placement – inbound, reserve storage, and slotting planning; ensuring no “new product” surprises for Operations through connecting and improving communications between operations and merchandisers
Upgrading leadership with floor-level supervisory personnel that are trained to make a difference managing people, process, exceptions and building performance
Leveraging and maximising brick-and-mortar – with omnichannel strategies via “pick up at store” and “ship from store” capabilities
Part 3: Timeframe
Whether your warehouse and fulfilment design plans amount to a tweak or a complete overhaul, time is a critical factor. Substantial changes in space allocation, equipment acquisition, or personnel reassignments can’t be left to the last minute. And you can’t afford the expense and hassle that can occur when design issues impede ongoing fulfilment operations.
It is important to “keep the lights on” while preparing for the upcoming peak season. During this phase, it’s important to plan for a smooth implementation and operational transition while the design process is underway. If there are efforts requiring external acquisition of material handling equipment (MHE), controls, systems or labour, the team needs to work quickly get to a short list of potential providers, highlighting the most time-conscious and cost-effective options.
Sometimes the providers are a ‘given’; that is, they are incumbent “partners” with resident technology. In such cases the team guides the design discussions so that they can quickly develop a working budget and metrics for progress and completion. Perhaps most importantly, a PMO process begins and helps turn objectives into effective program execution. The team works with Senior Management to assess options on the basis of cost, benefits, and degree of difficulty to implement, to help select the options that work best for your situation.
Being cognizant of a fixed and usually aggressive timeline, the design for next peak has to be effective and focused. In today’s environment when MHE is included in the enabling goals, manufacturing lead times can drive (or limit) the ultimate deliverable solution. The team sometimes makes “do we make it or buy it” decisions, and then works with the purchasing team to ensure that acquisitions of equipment or software are made judiciously and with the input of key stakeholders.
There are tools available to help control the impact of purchasing choices by clearly defining budget parameters, modelling and estimating supplier capabilities and costs, as well as highlighting opportunities for both increased efficiency and cost-savings. The team should look at your supply chain as an end-to-end entity—from sourcing, manufacturing, and warehousing to distribution and fulfilment to customers—so the solutions proposed do not favour one element of your overall operations at the expense of another.
Part 4: Metrics, execution, results and an honest real-time assessment of status
The team is driving towards commissioning and acceptance of your solutions, including equipment, controls, systems, and planning tools in a real-world context. Your program leader organises the implementation activities into a specific logistics program management office (PMO) methodology. A governance structure is established with relevant Senior Management and possible outside expertise. Key stakeholders are kept informed of each phase of the implementation process to assure clear communication and to allow for adjustments to be made in-process—without jeopardising deadlines or budgets.
To achieve the expected results, internal ownership is established early and with clear accountability. In parallel to the delivery of any external solutions, internal resources are preparing for the internal transformation to the future state, or what we call the ‘client side.’ Significant activities include: training preparation; test planning and resource education; a formal change communications program.
Testing is critical, as it highlights both a system’s strengths and those areas in need of adjustment or improvement. Even under the pressure of strict deadlines and budgetary limitations, this is not the time to rush or skip over key details. A well tested solution helps ensure a smooth transition and optimal functioning of all elements of your operations. This also helps ensure that your most valuable assets—your people—are trained and confident in all operational areas.
Once any vendor has demonstrated completion of system commissioning, internal operations begin the efforts of acceptance, then move to a “crawl–walk–run” phase for operational ramp-up.
Don’t let another peak season pass without making the upgrades your operations need to stay in step with the business’ projected growth or evolving service commitments.
-Robert Ouellette, Partner, Crimson & Co North America