Inventory Planning: Learning to Love Your Inventory Plan
Undoubtedly, you've already established an efficient work flow for pick and pack in your warehouse. However, there could be cluttered and disorganized areas that are tolerable day-to-day, but become a serious detriment during times of high activity.
Optimized warehouse organization and layout is one of the few ways you can improve your labor productivity/cost equation without souring your workforce. Products must be easily accessible and arranged throughout the warehouse in a logical manner for order picking flow. Aisles must allow adequate room for your staff to navigate around one another, and they must be clear of overflow merchandise. This means designating secondary overflow pick locations for excess inventory in stock.
If your warehouse is disorganized, don't be afraid to seek advice from an operations planning expert. Engineering the proper warehouse layout and work flow is critical to maintaining efficiency during your peak season.
Order packing is often more complex and time consuming during peak volume periods, especially if you offer gift wrapping as an option to your customers. You'll need an efficient way to integrate this additional step in the packing process without slowing down the flow of nonwrapped orders. What direct and indirect costs are associated with providing these types of services? Do they drive incremental revenue? Should they continue next year? Think about the impact of these services now, and make changes while business is moving at a slower pace.
Managing back orders and evaluating stock levels are also critical to customer satisfaction and, in the end, overall revenue during your peak season. Set up a cross-docking method for such products, matching incoming inventory from your vendors with unfilled pick tickets at the shipping station. Effectively juggling inventory levels to ensure proper stock rotation and capital requirements will be critical to the success of your next peak season.
Shipping later into a holiday or peak season can be a huge competitive advantage for retailers. Understanding carrier requirements and costs can dramatically affect bottom lines and overall customer satisfaction. Communicate regularly with your carrier(s) to learn what's working for other retailers. Leverage alternate shipping methods to decrease costs or increase revenues by getting orders to customers before Christmas. Lastly, manage marketing efforts around free shipping offers. Identify which offers make the most sense as they relate to freight costs during high-volume shipping peaks.
Managing your vendor relationships starts with communication. Planning for peak-season volume well in advance gives your vendors plenty of notice before you place orders for large quantities of inventory. By reaching out early, your vendors will be able to better ensure the product availability you need. Treat your vendors like the business partners they are, working together for peak season growth.
When preparing for your busy season, remember that many retailers have gone before you and have valuable lessons to share. Ask other retailers of similar size and resources how they overcome peak volume demands. There are many sources to consider, including retail associations, trade publications or even outsourced business service providers, to help grow your business. Networking to learn from others is something every good retailer does to maximize time and effort.
Retailers shouldn't hate the most exciting and productive time of year for their business. With some insightful evaluation, careful planning and strategic decision making, you can look forward to the results of an efficient and profitable peak season in 2011. What's not to love?