In the world of operations and logistics, seasoned vets of commerce operations are accustomed to receiving coal in their stocking every year. Holiday fulfillment means things will fall apart, things will get delayed, or things will fall through the cracks. But it doesn’t matter, ops teams are used to getting their hands dirty every holiday season. Every one of them has already been planning for months beforehand to tackle yet another unpredictable holiday season, using two absolute truths as the core of their playbook:
1. Forecasts are crucial. If you don’t plan ahead, you plan on hurting.
Planning ahead makes it easier to handle the inevitable rush of demand. Servers and systems can be upgraded to handle the website traffic while warehouses and carriers can be prepared to staff up the infrastructure-heavy pieces.
2. Forecasts will fail.
The holiday season is a capricious one. Something can literally fall out of the sky to ruin your best laid plans*.
*Protip: It doesn’t matter how smart you are, sometimes you just can’t outwit heavy snowstorms hitting all of your Midwest hubs.
Contradictory? Of course it is, it’s the holidays. The magical season where absolutely anything can (and usually will) happen. This is where our story starts – at the junction of best practice and actual execution.
The Week Before Christmas…
One of our clients had planned to receive a shipment of containers filled with their products the week before Christmas.
That’s a lot of Christmas presents that needed to get out of a container, onto shelves, picked and packed into boxes, loaded on a carrier pick up truck, processed at a sortation center, put on a plane, processed again at a sortation center, loaded on a delivery truck, and lowered into someone’s chimney. Again, because of the work required to process these products, proper forecasting was required to get the necessary labor to keep things running smoothly. This was built into our forecasts, which we then used to prepare our warehouses and carriers for staffing. There was ample time to receive the inventory and fulfill 40,000 orders with it.
That’s when we got another holiday season curveball: the containers got delayed at customs by a week, which made our forecasts as useless as the paper it was printed on. Let’s look at the fallout.
Receiving and Fulfillment
Once a shipment of product arrives at the warehouse dock, several things need to happen before the contained products are put on shelves for order fulfillment:
- The shipment needs to have a record and must be associated with a client.
- Its contents need to be sorted and counted, while damaged units must be separated.
- The units are then transported to the pick locations.
I’ll let you visualize how many man hours are needed to receive a container full of product. All of this must be done before orders can be processed, picked and packed into boxes, and picked up by the carrier.
Thanks to our rockstar warehouse partners, we carefully orchestrated staffing and overtime schedules to receive the shipment. As inventory numbers increased, our systems slowly released eligible backorders to their fulfillment systems. Over the weekend, all 40,000 backorders were ready for shipment. Now, it was time to get these backorders where they belong – the customer’s doorstep.
At this point, it’s four days before Christmas Eve, and our warehouses managed to process 40,000 boxes that were needed to be under Christmas trees all over the U.S. Normally, trying to push 40,000 extra orders onto our carrier networks wouldn’t be a problem, but not on the 51st week of the year.
Here’s a little context:
Each year, the news labels UPS or FedEx as “The Grinch Who Stole Christmas” depending on each carrier’s holiday performance (or lack thereof). Not wanting to be in headlines this year, FedEx invested $1.6B (yes, with a B) upgrading airplanes and package-sorting systems in addition to hiring extra drivers and package handlers for the holidays. They even installed enhanced vision systems on their aircraft so pilots could land in low-visibility conditions. All of this to accommodate a projected 12.4% increase in holiday shipments. They worked with the largest shipping accounts, including us, to get accurate shipment projections so everything would run smoothly and they would avoid the “Grinch” label.
The 51st week’s projections were mostly Express shipments, but these additional 40,000 packages put us out of compliance with our forecasts. I thought this might be a good time to rope in our carrier account managers, who we have built great relationships with over the last four years. I thought, “No problem, let’s just call them and see if they can fit in a last-minute request. I know these guys, I know they’ll come through.”
Except they couldn’t, even if they wanted to. Our carrier partners couldn’t take more than a portion of the packages on the Express network. Their planes were simply at capacity*.
*Protip: You can’t beat physics. If you can’t fit those boxes in, you can’t fit those boxes in.
So I called my team for an emergency brainstorming session. It wasn’t because I wanted them to partake in the client’s agony, but because I knew this was a problem that needed a creative solution. After spending what seemed like eons (but was really only two hours), we had a strategy:
In 2015, Symphony launched multi-warehouse capabilities, which afforded 2-day transit times to anywhere in the United States, provided the client had inventory in all locations. For this client, the inventory was only being replenished in one location, and the ship methods for all packages was express. So we disregarded the requested ship methods, and superimposed the recipient zip codes with the carriers’ zone-map. We discovered that roughly 45% of all orders would see a 2-day transit time on ground networks and another 20% or so within 3-day transit time.
We hopped on calls with the carriers well out of business hours and managed to negotiate accommodation of 35% of the packages in their express network in lieu of utilizing their (basically empty) ground network. Once acknowledged, we proceeded to electronically modify the orders with updated ship methods. Our warehouse had the packages relabeled and ready to be picked up by Monday afternoon.
The end result? Out of the 40,000 shipments, 39,560 found their way to their recipients’ doorstep before Christmas.
Which brings us to a new truth that I’ve added to my playbook:
3. You have to think agile. And agility is the result of innovation and execution.
There were three things that came into my favor this year – one was the highly talented set of fulfillment operations managers on my team who were able to think and act fast. Two was the great relationship we have with our carriers that helped us absorb deviations from our forecasts. Three was our capability to fulfill out of multiple warehouses, which was only possible after some very hard work by our Product team.
For clients that have high sales velocity and low SKU counts, shipping out of multiple warehouses is an obvious choice. Not only do they get the benefit of lower ground shipping costs, they also get to outwit the holiday shipping traffic by leveraging underutilized ground networks. Plus, it acts as insurance against Mother Nature, who’s more than capable of rendering a particular warehouse location inoperable.
So while it was the Ops team who did the heavy lifting to pull us out of this Christmas pitfall, it was actually a company-wide effort (even if they weren’t reading zone-maps with us) to get this done. Our engineers and QA teams worked countless hours to implement a great multi-warehouse feature that didn’t fail under such complex use cases. Our brand strategists kept the client apprised of our progress in real-time (and allowed everyone to work towards a solution undisturbed). I can’t think of another service that would go this far for their clients. To us, however, it is just another day at Symphony.
So there concludes our crazy holiday story. If you have one of your own, we’d love to talk.