Operations & Fulfillment: Better Than Santa's Elves

For operations professionals in the cross-channel retail industry, the risks and rewards of the holiday shopping season are well known. Order peaks can be five times to 15 times higher than the average week. If you get behind processing orders, you may not recover until Christmas is over. For many companies, the entire year's profit results from fourth-quarter sales.

With this pressure comes the challenges of hiring seasonal associates, integrating them into your workforce, dealing with planned volume and the chaos that makes the disruptive exceptions to the rule, among other things.

Most retailers do their holiday post-mortem in January or February when Christmas past is still fresh in their mind. This gives them the time to consider how major improvements and budget requests for changes in warehouse systems, warehouse layout, material flow and process changes, and material handling equipment (MHE) and conveyance systems can be made to improve throughput and storage capacity as well as reduce cost per order.

While there may not be time to make these major changes before this year's holidays, here are 20 best practices you should consider and can implement before Christmas. These tips can make a big difference in your company's warehouse efficiency and customer service.

The highest benefit areas you can affect are managing labor better — it accounts for 50 percent of your cost per order — and, in particular, the pick and pack department, which represents more than 50 percent of your labor costs. Working with shipping carriers — probably your biggest overall cost — on your holiday plans pays off too. Here are 20 tips to improve your operations this holiday season:

1. Establish hot-pick zones. Put your best-selling items in the most accessible storage areas (e.g., ends of aisles) without creating traffic jams. This may only be 15 percent to 20 percent of your inventory. As much as 70 percent of a picker's time is spent walking the warehouse floor. Reduce walk distance and time and you increase productivity and reduce costs.

2. Implement a slotting system. What data can your merchants give you that provides additional sales velocity information that will help you with slotting product? Planned sales by item or purchase orders expected to have high sell-through during the period can greatly help. Again, reducing the walk time of pickers will improve productivity.