Top 3 Bottlenecks in the Warehouse During the Holidays
The holiday shopping season is an annual sweet spot for both online and brick-and-mortar retailers. Unfortunately, the holidays aren't all fun and games, especially for online retailers that can't scale to the sudden influx of orders that this time of year brings.
Like it or not, the customer experience doesn't end when the buyer completes a transaction online; it extends to the delivery of the item to the customer's doorstep. That means customers will evaluate your brand based on its ability to pick, pack, ship and deliver products on time during the holidays.
Holiday Warehouse Challenges for Online Retailers
At Dotcom Distribution, it's our job to successfully guide e-retailers through the logistics and fulfillment requirements of the holiday shopping season. Over the years, we've seen three critical warehouse bottlenecks that can jeopardize your brand's ability to take advantage of holiday retail opportunities.
1. Gift packaging: Gift packaging is an important service for holiday gift buyers. Although gift boxing or wrapping can be a valuable option year-round, holiday shoppers expect the ability to purchase gifts online, have them packaged as beautiful "presents," often including being wrapped in their choice of holiday-themed wrapping paper and including personalized messages when they're shipped directly to recipients.
Normal gift packaging volumes are blown out of the water during the fourth quarter, particularly between Thanksgiving and Christmas. The bottleneck happens when the warehouse isn't able to keep up with the processes that are associated with various wrapping options.
Consider separating orders based on the type of gift packaging they require. For example, gift boxes may go to one set of pack stations, while gift-wrapped products go to others. By developing an optimized workflow, you're able to take advantage of process efficiencies and effectively manage a high volume of gift packaging and messaging requests.
2. Pick and pack lines: Warehouse pack stations have limits. For example, if your maximum capacity is to handle 100 orders per day at a pack station, you can't automatically increase the capacity of that station when orders spike in November and December. As a result, having a clear understanding of expected daily volume along with opportunities to pack orders through an alternative process will be key to eliminating any shipping backlogs that result from gaps in pack station infrastructure and demand.
To prepare for the holidays, you need accurate information about pick and pack activities on a per station basis. And if you are relying on scanners, carts, totes or other options, you must ensure enough resources are on hand to support peak days. Your maximum daily capacity, when compared to peak selling days, will determine when the backlogs could occur. If the gap is too large on key days like your ground shipping cutoff day, you may never be able to recover without incurring huge expenses in upgraded shipping costs.
In some cases, it might make sense to reorganize your pack stations, create mini assembly lines or other strategies such as "quick pick" lines that support orders for only best-selling items. Any opportunity to batch and pack orders more efficiently will help reduce the pressure and reliance on your traditional pack stations.
3. People power: Across the board, the biggest challenge during the holidays is finding qualified people to work in your warehouse. If you have forecasted properly, you should know how many people you need to pick and pack orders each day. Now you need to recruit, train, schedule and manage those workers as cost effectively as possible.
I've found that the best way to staff warehouses for holiday peaks is a simplified and effective onboarding process. New hires are trained, attached to experienced pickers or packers for half a day, and then cut loose to work on their own. Warehouse monitoring and performance incentives ensure the achievement of performance benchmarks and keep the warehouse running smoothly throughout the season.
Again, it's critical for forecasting models to identify expected order volumes on a day-to-day basis. This enables you to schedule staff based on daily forecasts and create a master schedule that takes into account order volumes, employees’ needs and other variables.
For many customers, the holiday season is their first exposure to your brand. By forecasting warehouse requirements and accurately scaling infrastructure, processes and personnel to anticipated order volumes, you can ensure that holiday shoppers receive the same customer experience your brand delivers the rest of the year. At Christmas, it's often a customer's first time buying from your site — you only get to make a first impression once. Good service during the holidays is critical to having return customers throughout the year.
Maria is CEO and co-founder of Dotcom Distribution, where she has played an integral role in developing and defining all aspects of the operation, including sales and marketing, operations, finance and IT. Her strategic leadership helps the Board and senior management to establish long-range goals, strategies, plans, and policies. Maria has developed the systemic and procedural infrastructure necessary to provide timely and accurate analysis of budgets, financial reports and financial trends in order to assist the Board, senior executives and clients in performing their responsibilities. Maria holds a CPA. Prior to founding Dotcom, she began her career as an Auditor at Arthur Andersen and was the CFO of GoodTimes Home Video.