With COVID-19, Holiday Season 2020 was unlike any other. While the overall supply chain faced pressure due to unprecedented volume, operators had to make several mid-course corrections to handle this surge as most shoppers did so from the comfort of their couches. This article considers lessons learned over the last holiday season against the backdrop of the current pandemic and provides warehouse managers and operators with a checklist.
Historically, Q4 retail and e-commerce sales have accounted for more revenue than any other quarter of the year. In past 5 years, retail and e-commerce sales have grown by 3.8% and 15.2% year over year respectively in the fourth quarter. Overall, holiday sales in November and December have averaged about 19% of annual retail sales over the last five years, but the figure can be higher for some retailers. The National Retail Federation expects 2020 holiday sales to have risen between 3.6% and 5.2% year over year, amounting to between $755.3 billion and $766.7 billion. While final numbers are yet to be published, the NRF President and CEO Matt Shay said he expects the industry could have a “strong finish” to 2020, in spite of the challenges from the coronavirus pandemic.
Source: Department of Commerce
Warehouse Safety: With the new normal came new standards. Social distancing, local and national regulations, government mandates, and company enforced precautionary measures led to a recalibration and focus on safety. Warehouse operators and managers need to ensure that appropriate protocols are in place to comply with these and other policies to keep the warehouse safe.
Manpower: While it is ideal to hire well ahead of time, it is never too late either. Whether the need is demand planners, data analysts or inventory managers at the corporate level, or truck drivers or warehouse associates at the floor level, the common refrain from supply chain managers has been that if recruiting talent with the necessary skills is hard, retaining them is even harder. While most sectors are witnessing all time high levels of unemployment during the pandemic, the warehousing and storage industry has seen little to no impact. Hence, reskilling is the way forward, and involves training this new talent pool to work efficiently in the warehousing and storage industry. It is worthwhile to not only focus on hiring, but also on training and retaining.
Capacity: Starting point should be to determine whether the warehouse has the necessary capacity for the upcoming demand. Ultimately, apart from the mechanical rated capacity for the material handling equipment, there are three ways to increase capacity: increase manpower, increase the duration of operation, and increase productivity. It is best to set yourself stretched yet realistic goals. Large conveyor belts or small handheld devices all play a role in adding to capacity. Preventive maintenance is key to maintaining capacity. Downtime results in reduced capacity.
Software: Automation is synonymous with hardware, software, and data. Hardware for the most part is witnessing some progress, but the real innovation, at least as of now, lies in software. The points above are part of the hardware checklist, but one needs to ensure that software is ready too. Real questions to consider are if required software is ready to handle more, and are the operators comfortable to work with the required software while managing competing priorities.
Identify Bottlenecks: While material handling capacity is one thing, yard capacity is another. It is very plausible that a warehouse can handle the volume, but the yard cannot. Warehouse operators need to ascertain the real bottleneck in their supply chain by breaking it down at the sub-process level. Several warehouse operators were forced to stress test their operations on overall capacity last year because of the pandemic and unprecedented demand, so it may be a good idea to stress test each process path, software, and hardware in advance to ensure preparedness for the future.
The most noteworthy part is to look back at last few years for lessons learned. Every facility is unique and hence a cookie cutter approach may not work. Managers and operators should refer to challenges they faced during the last few holiday seasons to come up with their personalized to do list. One should ideally hope for the best but probably plan for the worst. While it is impossible to plan for every single risk, it is better to plan for all controllable, measurable, and foreseeable risks.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any other agency, organization, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author(s). These views are always subject to change, revision, and rethinking at any time. Please do not hold them in perpetuity.