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Automation
15
MIN READ
June 19, 2024
June 19, 2024

Warehouse Optimization during Peak Season: Strategic Guide

Get ready, and explore strategies for peak season operations. Learn to manage inventory, leverage technology, and improve operations for seasonal success.

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TABLE OF CONTENTS

Autumn signals a busy period in warehouse fulfillment, prompting retailers to gear up for the holiday surge. Managers face the challenge of storing, picking, and fulfilling orders efficiently to match the increased holiday shopping demand. Successful navigation of this critical time hinges on strategic warehouse optimization, ensuring operations are efficient, responsive, and capable of meeting surging demand.  

This guide delves into the nuanced strategies and innovative solutions for warehouse optimization during peak season.

Key takeaways

  • Proactive planning: Advanced inventory management and high-density storage are essential.
  • Tech integration: WMS, AI, and automation like AutoStore boost efficiency.
  • Operational flexibility: Adapt and position inventory to handle demand surges.
  • Continuous improvement: Post-peak reviews and scalable solutions ensure ongoing optimization.

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Understanding peak season: What is it?

Peak season refers to specific times of the year when businesses experience a significant increase in demand, typically due to holidays, sales events, or seasonal trends. For the retail and logistics sectors, peak season can include periods like Black Friday, Cyber Monday, and the end-of-year holidays. During these times, warehouses face the challenge of managing a surge in inventory, fulfilling a higher volume of orders, and maintaining service levels, all while operating under increased pressure to perform efficiently.

Consequences of failing to meet peak season demand

When warehouses underperform during peak season, the effects can be immediate and damaging, impacting both the business and its customers. Here are the main consequences of not meeting peak season demand:

  • Delayed deliveries: Inability to fulfill orders promptly can lead to longer wait times for customers, potentially driving them to competitors who can deliver faster.
  • Stock issues: Poor inventory management can cause stockouts of in-demand items or surplus of unsold goods, both of which hurt the business financially.
  • Rising costs: Efforts to cope with demand, such as hiring temporary staff or paying for expedited shipping, can significantly inflate operating costs, reducing profitability.
  • Customer dissatisfaction: Delays, mistakes, and stock shortages can lead to unhappy customers, harming the brand's reputation and customer loyalty.
  • Operational stress: The pressure to perform can lead to errors, reduced safety, and lower employee morale, affecting both current and future operations.
  • Lost sales: Failure to meet demand can result in lost sales opportunities and diminished market share as customers seek alternatives.
  • Supply chain impact: Warehouse issues can cause wider disruptions in the supply chain, affecting relationships and efficiency across partners.

Addressing these challenges requires strategic planning, including demand forecasting, inventory optimization, and investment in technology and training, to ensure readiness for peak season demands and safeguard against potential repercussions. A key aspect of this planning is effective order prioritization and adherence to Service Level Agreements (SLAs).

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Prioritizing orders and meeting Service Level Agreements (SLAs)

Effective order prioritization and adherence to Service Level Agreements (SLAs) are critical to maintaining customer satisfaction and operational efficiency during peak seasons. SLAs are formal commitments to customers regarding the timely and accurate delivery of their orders. Meeting these agreements is particularly challenging during periods of heightened demand, such as Black Friday or the holiday season.

Understanding SLAs and their importance

SLAs define the standards for order fulfillment that a business promises to its customers. These agreements typically include delivery timeframes, accuracy of orders, and overall customer satisfaction metrics. Failing to meet SLAs can lead to customer dissatisfaction, increased returns, and a negative impact on the brand's reputation.

Strategies for meeting SLAs

  1. Order prioritization: During peak seasons, it is essential to prioritize orders based on their delivery commitments. Orders with tighter delivery windows should be processed first to ensure compliance with SLAs. Offering customers incentives for slower shipping options, such as no-rush shipping credits, can help manage workload and focus resources on urgent orders.
  2. Proactive order management: Utilizing advanced inventory management systems, like AutoStore, enables warehouses to prepare for incoming orders in real-time. By placing frequently picked items at the top of the storage grid and ensuring continuous availability, fulfillment times can be reduced, helping meet SLA requirements.
  3. Cycle time optimization: Reducing the cycle time from click to ship is crucial. Implementing technologies that streamline the picking and packing process can significantly enhance efficiency. For example, Boozt in Sweden achieved a cycle time of 49 seconds from click to ship, showcasing the potential of optimized processes.
  4. Data-driven decision making: Leveraging data analytics to forecast demand and adjust operations accordingly ensures that resources are allocated efficiently. This proactive approach helps in maintaining high service levels even during unexpected surges in demand.
  5. Communication and coordination: Establishing clear communication channels and coordinating efforts across different departments, including marketing and customer service, ensures that all teams are aligned with SLA objectives. This holistic approach enhances the overall ability to meet customer promises.

With a good understanding of how to meet SLAs, it's time to delve into comprehensive strategies for peak season preparation, ensuring your warehouse is ready to handle the increased demand smoothly and efficiently.

Strategies for peak season preparation

Effective planning and strategic implementation are essential to navigate the complexities of peak season successfully. Below, we’ll go through the planning process, the adaptation phase of peak season dynamics, and how to get proactive for the future.

1. Advanced planning for inventory and storage management

The foundation of warehouse optimization during peak season lies in a thorough approach to inventory management. Utilizing high-density cube storage systems, such as AutoStore, can significantly increase storage capacity without requiring physical expansion of the warehouse. These systems maximize the use of available space, allowing for a greater volume of inventory to be stored efficiently. In general, configuring storage and picking systems to handle increased demand proactively is essential to prevent bottlenecks and ensure smooth operations during peak periods.

Also, incorporating advanced technology is pivotal for enhancing warehouse operations, especially during peak seasons. The adoption of advanced Warehouse Management Systems (WMS) allows for comprehensive management of inventory, from receipt to dispatch. These systems provide real-time visibility into inventory levels, enabling better forecasting and planning. Additionally, leveraging AI for predictive analytics transforms the efficiency of picking and packing processes. AI can analyze past data to predict future demand, optimize picking routes, and automate decision-making processes, thereby streamlining operations, minimizing errors, and increasing throughput.  

Integrating these technologies creates a robust framework for managing peak season challenges effectively.

2. Adapting operations to peak season dynamics

Meeting the surge in demand requires strategic foresight and operational flexibility:

Managing the order surge

Peak events, such as Black Friday, necessitate a strategic approach to order management. Prioritizing orders based on customer expectations, inventory levels, and delivery commitments is crucial. Strategies like pre-sales and extending promotions help smooth demand spikes, distribute workload evenly, and maintain service quality. Offering customers incentives to delay shipment, such as no-rush shipping credits, can balance the workload by focusing on same-day shipping for premium orders.

Strategic inventory positioning and benchmarking

Effective inventory management involves strategic placement of inventory to ensure fast-moving items are easily accessible and optimizing storage for slower-moving products. Inventory benchmarking allows businesses to prepare for peak demand by comparing their readiness against historical data and industry standards. For example, the AutoStore system ensures that inventory bins required for picking are readily available, minimizing wait times and maximizing efficiency.

3. Proactive measures for future peak seasons

Building a resilient operation involves learning from the past and planning for the future:

Enhancing warehouse resilience

Future-proofing warehouse operations necessitates a thorough review of past performances to pinpoint improvement areas. Conducting post-peak season analyses, evaluating key performance indicators (KPIs), and gathering feedback from staff and customers are vital steps. The development of a holistic improvement strategy through cross-functional teams underscores the importance of collaborative efforts in optimizing warehouse operations.

Embracing automation for growth

The strategic adoption of automation technologies is crucial for long-term optimization. Selecting automation solutions requires consideration of ROI, scalability, and compatibility with existing systems. Case studies of businesses such as PUMA, Boozt, THG, GetInspired, and Benetton, that have leveraged AutoStore automation solutions demonstrate the impact of automation on efficiency and scalability, both during peak season and beyond.

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4. Enhancing operations with best practices

Implementing best practices is critical for operational excellence during peak seasons:

Operational excellence blueprint

Achieving smoother operations during peak season extends beyond strategic planning to the execution of best practices designed for peak period challenges. From workforce management strategies, such as training and flexible scheduling, to optimizing shipping and logistics for timely delivery, balancing operational efficiency with customer satisfaction is key.

Leveraging data analytics for improvement

Last but not least, utilizing data analytics is indispensable for warehouse optimization during peak season. Analyzing operational data to forecast demand, optimize inventory levels, and refine fulfillment processes outlines a pathway for using data to boost operational efficiency.

Implementing these strategies can significantly enhance warehouse operations during peak periods. However, the ultimate goal is to transform peak season from a period of stress into one of efficiency and calm. Let's explore some key strategies to achieve a calmer peak season.

3 strategies for a calmer peak

The possibility of achieving calm during peak season operations is a significant consideration for warehouse managers. Reflecting on previous peak seasons to identify areas for improvement can help businesses transition from chaotic to well-planned operations. Let’s look closer at some of those strategies.  

1) Wider order window

Expanding the order window allows for collating, batching, and order allocation processes to consider a larger number of orders simultaneously. This approach increases commonality across orders, boosting picking performance across all systems. However, balancing this method is crucial to avoid inventory contention issues.

2) Extend hours

Operating bottleneck areas during breaks and maximizing productive hours throughout the day can significantly enhance efficiency. Tagging out critical functions during breaks helps maintain continuous movement, while minimizing transition time between shifts ensures optimal operation.

3) Batch picking/Batch singles:

While discrete order picking is accurate, handling dozens of matching single-unit orders simultaneously—known as batch picking—can create significant operational leverage. This method enables offline processes away from bottlenecks, allowing for the efficient completion of orders during peak periods.

By proactively planning and optimizing workflows, businesses can achieve smoother and more productive peak seasons. To further enhance operational efficiency, it's crucial to focus on the efficient use of inventory capacity.

Efficient use of inventory capacity

Efficient use of inventory capacity is a cornerstone of successful warehouse management, especially during peak seasons. Maximizing space utilization and ensuring that storage is optimized can significantly impact a warehouse's ability to handle increased demand. Several factors play into efficient space utilization, including the footprint dedicated to storage, usable space, storage types, and packing density. Changing these factors before peak can be challenging, but unconventional considerations can enhance space utilization.

Video Showcasing AutoStore's Storage Density.

Factors for efficient space utilization

  • Footprint dedicated to storage: The physical area allocated for storage needs to be optimized to accommodate as much inventory as possible without causing congestion or inefficiencies in retrieval.
  • Usable space: This involves making the most of vertical and horizontal space within the warehouse. High-density storage solutions, such as those provided by AutoStore, help in utilizing the full potential of the warehouse space.
  • Storage types: Different types of storage (e.g., shelving, racking, automated storage) need to be strategically used based on the nature of the inventory.
  • Packing density: Efficient packing methods can maximize space utilization. Ensuring that items are stored in a compact manner without compromising accessibility is crucial.

Read more: Maximizing warehouse optimization

Unconventional considerations for efficient space utilization

  • Detrashing at receiving: Removing unnecessary packaging materials upon receiving inventory can save significant space and increase picking speeds. This step ensures that only the items that need to be stored occupy valuable storage space.
  • Counting: Regularly counting and auditing inventory can unlock hidden space by identifying and eliminating outdated or redundant stock.
  • High-speed pick lanes: Setting up high-speed pick lanes in areas not typically used during peak times, such as inbound docks, can enhance picking efficiency. This approach ensures that additional space is leveraged to speed up the picking process during high-demand periods.

Maximizing the use of inventory capacity not only improves operational efficiency but also contributes to meeting customer expectations during the busiest times of the year. The next sections involve integrating advanced solutions to further enhance warehouse efficiency, where automation stands out as a transformative approach to addressing the myriad challenges of peak season operations.  

Let's explore how automation, particularly through AutoStore, can revolutionize the supply chain and elevate warehouse performance to new heights.

Source: Element Logic

Transforming the supply chain with automation

Automation is a powerful tool for transforming the supply chain, especially during peak seasons. Implementing automated systems can address many challenges that traditional warehouse operations face, such as space constraints, labor shortages, and inefficiencies in order processing. The AutoStore automation solution provides a robust framework for optimizing warehouse operations.

Common triggers for transformation

Do more with less

  • Squeeze in more space or throughput capacity: Automation systems like AutoStore high-density storage enable warehouses to maximize space utilization and throughput capacity without expanding their physical footprint.
  • Replace antiquated processes: Automating outdated manual processes with modern technology can significantly improve efficiency and reduce errors.
  • Solve labor shortages: Automation can mitigate the impact of labor shortages by handling repetitive and labor-intensive tasks, allowing human workers to focus on more complex activities.
  • Address a lack of capital to expand the facility footprint: Instead of investing in new buildings, automation allows for better use of existing space, thus avoiding the high costs associated with expanding the physical footprint.

Growth

  • Build new regional capacity: Automation can support the creation of new regional distribution centers, enabling businesses to expand their reach and improve service levels.
  • Create new in-house capacity: Implementing automated systems within existing facilities can increase their capacity to handle more inventory and process more orders.
  • Consolidate multiple facilities: Automation can help in consolidating operations from multiple smaller facilities into fewer, larger ones, improving efficiency and reducing operational costs.

Automation is a powerful tool for transforming the supply chain, especially during peak seasons. Implementing automated systems can address many challenges that traditional warehouse operations face, such as space constraints, labor shortages, and inefficiencies in order processing. The AutoStore automation solution provides a robust framework for optimizing warehouse operations. Let’s take a look at the actual impact of investing in the AutoStore system during peak seasons.

AutoStore contribution to warehouse optimization during peak seasons

The AutoStore system enhances warehouse operations during peak seasons through several key capabilities:

  • Optimized throughput: High-density cube storage and technology configurations maximize throughput, allowing warehouses to handle increased volumes efficiently.
  • Efficient order processing: The system supports efficient order processing, ensuring timely fulfillment and meeting SLAs. The automated storage and retrieval system of AutoStore reduces the time taken to locate and pick items, enhancing overall productivity.
  • Flexibility and adaptability: AutoStore provides flexibility to adapt to changing demand patterns, contributing to smoother peak operations. The system's scalability ensures that warehouses can adjust their capacity in response to fluctuations in demand.
The image shows a warehouse automation system featuring several black robotic units moving along a grid-like track system. Each unit has the label "AutoStore" along with the Puma logo and the number "021" displayed prominently on the front. The robots are designed for efficient storage and retrieval, indicating a modern and highly organized logistics setup. The background reveals more of the warehouse environment with high ceilings, yellow support beams, and industrial lighting. The scene conveys a sense of precision and advanced technology in automated warehousing.
Puma's AutoStore Robots on the Grid.

AutoStore real-world cases

Puma's increase in capacity

Puma implemented the AutoStore solution to enhance their outbound process during peak seasons. By integrating high-density storage and the automated retrieval system by AutoStore, Puma increased their capacity by ten times, enabling them to handle peak demand efficiently. This implementation reduced order processing times and improved overall fulfillment accuracy.

Read here: Puma's increase in capacity

Boozt's successful journey

Boozt, a leading e-commerce retailer, uses AutoStore to optimize space utilization and scalability during peak seasons. By leveraging the high-density storage and automated system, Boozt achieved significant improvements in their warehouse operations, enabling them to handle increased volumes without expanding their physical footprint.

Read here: Boozt's successful journey

AutoStore Q&A

Do people generally enjoy working with this type of automation?

Change can initially seem challenging, but AutoStore has a quick learning curve. AutoStore customers only require  30-minutes to 1-hour to onboard new employees. Most individuals find the shift enjoyable, considering it fun and futuristic. Managers and associates appreciate its simplicity, ergonomic design, and efficiency. Quick adaptability contributes to a positive experience.

How fast can an automation project be implemented?

Historically, automation projects took multiple years, but the modular system of AutoStore has completed projects in as short as three to four months. Medium-sized projects typically take five to twelve months, while large-scale projects may take about nine to twelve months, considering project lead times and facility build-out. Automation availability is within twenty-six weeks, allowing for rapid deployment.

How do individuals access all SKUs when they are buried in the system?

A common concern addressed despite the long market presence of AutoStore. The system arranges items like a Rubik's cube, with fast-moving items on top and slow movers gradually moving down. Natural slotting keeps fast-moving items accessible, even at very short cycle times. Bins are proactively prepared based on upcoming orders to maintain efficiency. High associate utilization ensures timely access to needed inventory.

Conclusion

Warehouse optimization during peak season is an ongoing process that requires dedication, strategic planning, and the willingness to embrace innovation. By applying the insights and strategies outlined in this guide, businesses can transform the peak season from a period of stress and challenge into an opportunity for growth and improvement. The journey towards operational excellence is continuous, with each peak season offering new lessons and opportunities for refinement.  

AutoStore offers a solid foundation for achieving operational excellence, empowering warehouses to not only meet but exceed expectations during the busiest times of the year. With the right planning and tools, peak operations can feel more like day-to-day year-round processes.

"With the right planning and tools, peak operations can feel more like day-to-day year-round processes."

Erica Wood

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