It’s been a long peak season, both figuratively and literally. As Black Friday sales creep closer to November 1, and faster shipping and more delivery options become table stakes, most supply chains have been finding themselves already deep into holiday operations before trick-or-treaters don their Halloween costumes.
Ahead of the holiday rush, the Kenco team polled more than 125 supply chain experts to understand their approach to peak season. Their responses offered a glimpse into how they planned to manage labor procurement, technology investments and business strategies for a less headache-inducing Q4. Here are a few highlights from our annual supply chain survey:
Rethinking Recruitment
Seasonal hires have long been a critical component of peak season, and this year is no different: 61% said they had already begun hiring seasonal staff in late Q3.
But with unemployment remaining at historic lows, supply chain professionals are ramping up their offers to claim a bigger share of the labor pool. Pay is their main approach, with 39% offering sign-on or performance bonuses, and 37% offering a higher-than-average hourly wage. Still, others are thinking long-term. Forty-six percent said they will consider seasonal employees for full-time positions after the holidays, offering employees more stability come 2024, and reducing operational disruption following the holiday rush.
Automation can also be a powerful recruitment tool. In the past few years, supply chains have upped the number of robots moving their aisles — sometimes even doubling their investment for Q4 — out of necessity, as COVID significantly reduced the labor pool. As it became safer for more employees to gather in the warehouse, robots continued to manage the more arduous aspects of moving goods from picking to packing. Automated warehouses allow employees to stay in a single pick area rather than delivering orders to packing, helping to reframe warehouse jobs as less physical ones.
Seeing Beyond
Robots may be driving automation initiatives on the warehouse floor, but robotic process automation can have just as significant an impact on how the warehouse office plans for peak season. Seventy-three percent of respondents are using AI-driven technologies to track inventory, wary of ever facing another shortage, post-COVID. Thirty-two percent are using these technologies for process optimization, while the same number leverage AI for maintenance and equipment optimization.
Only one in three are using AI-driven technology for forecasting, but it’s an area that shows real promise. Smart forecasting tools can pull in all kinds of intelligence that might fall outside of a warehouse’s usual data streams — for example, weather in areas with highest shipping demand, or flu outbreaks in areas with a company’s largest warehouses. Drawing from a broad range of data can help warehouses understand whether they’ll be understaffed, short on inventory, or delayed in moving goods to buyers’ doorsteps — with ample notice to address these roadblocks. While a supply chain expert might be lucky if their normal forecast is 75% accurate, AI-driven forecasting can push accuracy beyond 90%, allowing for better labor and equipment planning.
Flattening the Curve
While much of the work to manage peak season has been going on behind the scenes, retailer influences on consumer behavior can also help take the burden off warehouses and distribution centers. Shifting sales dates are pushing the norms of peak season planning but, by doing so, shipping demands end up more spread out, rather than having overwhelming peaks in late November.
Thirty-eight percent of respondents said either they or the retailers they sell with are adding additional sales events to encourage shopping outside Black Friday. These sales aren’t based solely on product pricing, either. Many offers also include shipping discounts, with 36% offering free delivery for slower shipping times and 25% offering other incentives for consumers willing to wait a little longer. Another 34% plan to offer seasonal price-matching on products, giving customers breathing room to buy throughout November and December, rather than concentrating on Black Friday and Cyber Monday deals.
Learning for Next Year
Whether revising recruitment efforts, implementing AI-driven technologies, or influencing consumer buying behavior, 2023’s peak season will have seen supply chain professionals both relying on tried-and-true peak season strategies and testing next-gen solutions. Come January, a wealth of Q4 data will drive conversations about how to fine-tune next year’s operations — because the supply chain never stops!
Felix Vicknair is vice president – supply chain solutions, Kenco Group.
