How the Logistics Industry Prepares for the Holiday Season
For years, the winter holiday season, which stretches from Thanksgiving to the end of the year, has been the busiest time of year for retailers, warehouses and shippers. Increased demand for products means that stores and fulfillment centers need to ensure enough stock to successfully fulfill orders. Increased demand for shipping means that companies need to plan out their shipping and delivery schedules in advance to minimize the chance of packages arriving late or getting lost. So how do logistics companies prepare for the holiday season?
What Affects Holiday Season Logistics
The holiday season in 2020 was like no other due largely to the pandemic and a dramatic shift in consumer habits. During the third quarter of 2020, e-commerce sales increased by 36.7% from the year before. A change in shopping habits is just one factor that affects holiday retail sales and logistics. A few of the things logistics companies need to prepare for during the holiday season include:
- A shortage of delivery drivers: As the number of online orders increases, particularly during the holiday season, the need for delivery drivers will increase. The Bureau of Labor Statistics estimates that employment opportunities for delivery drivers will increase at a faster-than-average rate of 5% between 2019 and 2029. Not having enough drivers on the road to handle the influx of packages can crease shipping logjams, both for warehouses waiting to receive shipments and customers waiting to receive their orders.
- Limited shipping services available: Along with the number of drivers on the road, the size and capacity limits of the trucks they drive can also affect logistics during the holidays. During the 2020 holiday season, private shippers set limits for retailers and refused to pick up orders after a point. Many of those orders were then funneled to the U.S. Postal Service, which struggled to keep up with the demand and the influx of packages.
- An increase in the number of orders and shipments: The more orders there are, the more companies need to be prepared to fill those orders. That means having enough stock on hand to avoid stock-outs or delays. It also means having enough staff in a warehouse to pick and pack shipments.
How to Prepare Inventory for the Holiday Season: Action Steps to Take
Preparation ensures that your company stays ahead of the curve during the busiest time of year. Being prepared also improves customer satisfaction and can strengthen the relationships your company has with shippers and other third-party partners. Following a holiday inventory checklist can help you be as prepared as possible.
Order Inventory Well in Advance
Whether you operate a brick and mortar store, an online store or a combination, you need to have enough stock on hand to sell to customers. To get a sense of the stock levels you might need during the holidays, review sales and inventory from the prior year. You can also conduct an inventory stock audit to confirm that the numbers in your inventory management software match the numbers on your store or warehouse shelves.
Once you’ve estimated how much you’ll need to order to keep up with holiday demand, estimate how much extra time you’ll need for orders. You’ll generally want to allow at least an extra day or two for orders during the busy time. That amount of time should be sufficient to account for any delays on the manufacturer’s or shipper’s end.
Hire Seasonal Staff
An increase in orders can mean that your warehouse staff needs to work extra hard to get packages packed and shipped in a timely fashion. To keep up with demand and keep your employees safe, a better move might be bringing on new team members during peak periods. Again, you can look at last year’s numbers to get an idea of how many new employees to hire during this year’s holiday season.
When you hire seasonal team members, be clear about what their responsibilities are. Since you might not have much time to train them or for them to become familiar with your warehouse’s processes, it can be a good idea to limit their responsibilities and roles to the simplest of tasks or to tasks that don’t require a lot of knowledge of the warehouse layout and storage system. For example, seasonal team members can be responsible for packing boxes rather than picking products off the shelf.
Talk to Your Team
What works and what doesn’t when it comes to your warehouse management and inventory management? Your current team can provide a wealth of insight. Ask them to share, either anonymously or not, their opinions or ideas about what you can do differently to streamline processes, make the workplace safer or generally improve the situation during the busier times of the year.
Another option is for you to get on the warehouse floor yourself to see how things operate. When you spend time on the floor, you can spot inefficiencies or issues that arise. You can also get a clearer sense of what improvements might be effective for the holiday season.
Automate and Streamline Your Inventory Management
Updating your inventory management method before the holiday shopping season begins can help reduce your stress levels and keep things running smoothly even when orders are at their peak. A cloud-based inventory management software program streamlines your process in several ways. First, you can access the platform from any device that has an internet connection. Second, the platform lets you keep track of inventory levels at multiple locations and across multiple platforms. You don’t have to worry about overselling products.
An inventory management software platform can also take the guesswork out of reordering products, meaning that you are less likely to run out of the most in-demand products in the midst of the busiest season of the year.
Consider Alternative Fulfillment Options
If you are concerned about forces beyond your control, such as driver shortages or limited shipping capacity, affecting the timeliness of your deliveries or orders, it can be worthwhile to explore other fulfillment options as the holidays approach. One option that has become popular with retailers and consumers recently is buying online and picking up orders in stores.
The in-store pickup option benefits companies by reducing shipping costs and lightening the load in the warehouse. If the store already has the items ordered on its shelves, an employee can pick them, package them up and prepare them for pick-up at the customer service desk. If the items need to ship to the store, they can travel with the rest of the store’s shipment, cutting down on the number of packages the warehouse needs to assemble and prepare for shipping.
Communicate With Customers
Clear communication with customers is vital for your company’s health at all times of the year, and it becomes more critical during peak seasons. Just as you might allow yourself extra time to place orders during the holiday rush, it’s a good idea to let customers know their deadlines for shipping and to move those deadlines ouut by a day or two if you anticipate higher than average order volume.
Another way to communicate with customers is to be proactive about reaching out to them if there is a delay or another issue with their order. For example, if the item ends up being out-of-stock, communicate the information to the customer right away, letting them know when you expect it to arrive and giving them a list of options, such as waiting or canceling the order.
When Is the Busiest Time of Year for the Logistics Industry?
The winter holiday season includes events that occur in November and December. Some days during the season are busier than others. Certain holidays that fall outside of the traditional winter holiday season also lead to an increase in demand for the logistics industry. Some of the busiest times of year include:
- Halloween: In 2020, shoppers spent an estimated $8.05 billion on Halloween costumes, candy and decorations, or just over $92 per person. Shoppers getting an early start on their winter holiday shopping also makes the time around Halloween particularly busy.
- Thanksgiving weekend: In the past, the big shopping day around Thanksgiving was Black Friday, but today, the single-day sales event has grown to become a weekend-long sales event. In 2020, 186.4 million people shopped during the Thanksgiving weekend — that is, Thanksgiving Day through Cyber Monday. The average shopper spent $311.75 over the holiday weekend.
- Super Saturday: Although plenty of people get their holiday shopping done early, there are also those who put things off until practically the last minute. Many of those shoppers head out on “Super Saturday,” the last Saturday before Christmas, to place their orders or shop in-person. In 2020, the number of people shopping on Super Saturday reached 150 million, the second-highest number since the National Retail Federation started keeping track in 2016.
- Valentine’s Day: Outside of the winter holiday season, there are some other busy times of the year for the retail and logistics industry. In 2021, Valentine’s Day spending is expected to top $21.8 billion, with the average consumer spending $164.76 on gifts for their loved ones.
- Mother’s and Father’s Days: Two other holidays are also busy times for the logistics industry due to an uptick in consumer spending. Around 86% of consumers celebrate Mother’s Day, spending an average of $205 each. Similarly, 76% of consumers celebrate Father’s Day.
Logistics Checklist for the Holidays: Best Practices
As the holiday season approaches, committing to a few best practices can help you weather the influx in orders, keep shipping on schedule and keep your team happy and safe on the job.
- Know carrier and manufacturer’s schedules: Most shipping companies have a holiday schedule that determines when they will pick up orders or deliver shipments. To avoid having a pile of packages waiting at the warehouse right before a big holiday, make sure you familiarize yourself with the shipping schedule and set your own delivery and order schedule based on it.
- Adjust your orders as needed: Demand for some products increases during the holidays, so it’s important that you adjust your company’s orders to account for that increase in demand. You might also need to rearrange your warehouses to account for a temporary influx of a particular product. You may also need to adjust where your stock lives. If online sales are booming, but in-person sales are slow, allocate more products to your online channels than to your brick-and-mortar stores.
- Be flexible: Multiple factors affect people’s spending during the holiday season. When the economy does well, people spend more. When unemployment is high and there’s more uncertainty, they might tighten their purse strings and cut back on holiday spending. Having some flexibility as an e-commerce retailer, such as being able to adjust your stock levels or order more popular products quickly, will help you successfully navigate the holiday season.
- Be open: Listen to input and suggestions from others, whether they are employees on the warehouse floor or customers who might be happy or not-so-thrilled with your company. Taking advice and listening to ideas can help you decide what you can do better during the next holiday season.
- Use technology to your advantage: Software, apps and devices such as mobile barcode scanners can streamline your inventory management processes and speed up things on the warehouse floor. The technology available for inventory and logistics management has gotten lighter and more affordable over the years. It’s a good idea to investigate your options and choose a platform that will simplify your processes during both the busiest times of the year and the slower periods.
How Finale Inventory Can Help with Inventory Management
Finale Inventory can help you prepare for the busy holiday season in several ways. Our cloud-based inventory management software gives you insight into your past sales and lets you quickly see what you have on hand now. You can use the software to predict ordering needs and sales for the holidays based on past sales. The mobile barcode scanner and app speed up the process of receiving shipments at your warehouses or other locations. The scanner also makes quick work of order picking so your team can pick and pack products for shipments efficiently.