It’s that time of the year again. Holiday peak is right around the corner. The challenge, as always, is to maintain excellent customer service levels while keeping labor costs relatively stable. Too much labor can result in wasteful expenditure and too little of it can cause a slump in customer service. Hence, the need to find the right mix of temporary and permanent workforce to leverage efficiencies in picking. Make no mistake about it. Good quality temporary labor is expensive and hard to source. Fortunately, there are operational and technology strategies that can help you source the right amount of temporary labor needed to support peak season.
The key is planning to hire early. Let’s take the Thanksgiving holiday peak as a case in point. The “peak” itself literally lasts all of 10 days. However, if you’re trying to staff for just that duration, you’re most likely setting yourself up for failure. Firstly, labor is going to be in high demand during this period. Staffing agencies would much rather prefer a longer contract that stretches several weeks leading up to the actual peak. Secondly, if you’re hiring someone for just the peak, you won’t have the time to evaluate if this associate is capable of supporting such a crucial period. Temporary associates aren’t saving you money unless they start performing at a certain percentage of their job function performance goal- and there’s a ramp-up period required to get them there. Early planning and the use of reliable labor standards can help implement a rank-n-yank strategy to cull out the poor performers and retain the best needed for peak.
Another key strategy is to train your permanent workforce across several job functions in preparation for peak. This strategy has two advantages. First, critical work spaces such as Receiving, Putaway and Replenishments areas may need users to operate equipment like Reach Trucks and Clamp Trucks that temporary workers may not be able to without specialized training. Trained permanent associates could be staffed in these areas while temporary associates are staffed in relatively simpler job functions such as picking. Second, even during non-peak season the warehouse may experience intermittent spikes in demand. Cross trained associates allow operational flexibility in such a scenario by allowing supervisors to temporarily shunt trained labor where it’s needed the most.
Using a data driven approach to peak forecasting is highly recommended. Working with cross functional teams from Sales, Demand Planning and Purchasing can help estimate how much inventory will flow through the four walls and how much the order volume spike is estimated to be at peak time YoY. Key metrics to assess include total number of orders, average number of lines and items in multi-line orders and the average number of multi-line orders needed to be cluster picked. In addition, historical labor performance and throughput reports can help assess where bottlenecks existed in the past, giving supervisors an idea as to which department or job function needs additional staffing.
Implementing a labor forecasting and planning system should help ease many of your temp workforce pain points. These systems use quantitative methodologies to predict your labor needs based on several historical parameters. In addition, such tools offer simulation capabilities to release mock waves that will help estimate the number of tasks more accurately along with the number of employees, shifts, and amount of overtime needed based on historical employee performance data.
Peak season is fraught with problems, some unavoidable. Fortunately, there are measures Supply Chain managers can take to mitigate these. Investing in robust labor planning and forecasting systems can solve many concerns associated with staffing. These systems vary greatly in capabilities, and it is crucial that you do the necessary due diligence to select the right tool to deliver great RoI. Bricz’s software selection and implementation methodologies have helped several clients realize lasting supply chain value. If you have questions with how Bricz can help transform your Supply Chain, feel free to reach out to us for a conversation.
Contributor: Deepak Mohan