While the rest of the world is transitioning into the final months of the year, the retail industry has been preparing for the holiday season since before the first signs of summer. Though the time to purchase gifts, decorations and party supplies may still be a few weeks off, retailers are well into the final stages of their end-of-year strategy. The holiday surge requires extensive planning for retail manufacturers, in particular, as they make the goods that grace both the physical and virtual shelves.
As any retail manufacturer will tell you, the key to successful holiday execution is an effective and efficient enterprise resource planning (ERP) system. An ERP system allow manufacturers to collect, store, manage and interpret data from various business activities, and keep track of resources and project statuses. To best leverage opportunities and ramp up for the end of the year, retail manufacturers can use a combination of calculated forecasts and detailed business intelligence analytics compiled at the end of the second quarter.
Through use of an automated ERP system, manufacturers can focus on three key areas that will help set their companies up for a productive and profitable holiday season:
- Materials: An intricate portion of a retailer’s ERP system is its MRP, or materials resource planning. In fact, a survey conducted by the National Retail Federation (NRF) revealed that 25 percent of retailers noted poor inventory control as the top issue hindering holiday sales in 2015. MRP is the initial step of the holiday preparation process, as manufacturers refer to the nuts and bolts of historical production data to make inferences about how much of and which types of materials they're going to need. Through advanced forecasting methodologies, manufacturers can calculate year-over-year differences in the use of resources to measure the requirements of this year’s production. Data on the previous year’s materials ordered, used and distributed all contribute to these forecasts, which help prepare the shop floor and back-office for mass production.
- Employees: Once manufacturers have an understanding of the amount of required materials, they must then plan for the employee resources that are necessary to maintain these high production orders. According to the NRF, U.S. retailers are expected to hire between 640,000 and 690,000 workers this holiday season. In order to be fully prepared for the expanded workforce, retailers should look to streamline onboarding processes and shift planning and paper tracking to keep the back-office as organized as possible. Making use of an automated system that not only manages these processes but also keeps the shop floor informed of machine times, availability and production efficiency is crucial. That way, retailers have an in-depth view of how their holiday hires are performing and what areas of the process need improvement.
- Process: Now that they’ve ordered the materials and hired/trained the necessary people, manufacturers can begin the full production process. This not only entails pulling together all the resources needed for the product — whether it be an action figure, sweater, case of popcorn — but also preparing for getting the finished product to the consumer. In doing so, manufacturers require a system that can efficiently handle their maximum order capacity, capturing customer data to create the ticket and pack the product once it's ready for shipment. The system needs to be able to differentiate between bulk orders being sent to distributors and individual orders sent directly to the buyer. Setting up such a complex organizational tool early on is essential, as once the manufacturing of the product begins and the orders come in, the holiday season has officially begun.
Retailers are beginning to bombard consumers with holiday-themed ads. For retail manufacturers, holiday preparedness is a continual strategy, and having a strong ERP system in place that can manage all aspects of the process — from materials to hiring, to shipping and customer satisfaction — is the true key to success.
Dan Griffin is the director of product management at Macola, a supplier of business software that provides a more natural ERP experience.