Peak Season Planning during COVID-19
For the Furniture industry, Fall is traditionally the “peak” quarter with higher than average sales volume driven by consumers refocusing on their homes after spending time outdoors in the Summer months. Further driven by Thanksgiving, Christmas and year-end bonuses, Furniture retailers usually experience their highest furniture sales for the year. This year, the furniture industry should anticipate the following additional complications in year-end operational planning:
Higher than normal sales volume we are already experiencing due to the “cocooning” effect combined with the impact of a potential second round of stimulus checks. According to DigitalCommerce360, online sales increased 55% year over year in July with Salesforce forecasting a 30% increase in global retail sales made digitally this Holiday season.
Increased outbound delivery volume as inbound (overseas) supply chains improve to deliver backordered product on sold merchandise. Many furniture retailers we are working with ended the quarter with backlogs of 25% or higher.
The unknown and unquantifiable impact of state and federal mandated retail closures due to changes in the spread of the coronavirus. This is the wildcard – we do not know how the virus will spread and how local municipal and state governments will react.
The potential exists simultaneously for either extremely high levels of sales – or – widespread COVID-19 related closures with the related decrease in sales. Retailers and Manufacturers must therefore develop robust operational plans capable of rapidly scaling up or down based on business conditions.
Easier said than done, right? How should furniture retailers and manufacturers accomplish this seemingly contradictory feat?
Profit Chain recommends the following methodology:
Develop staffing plans for the high end of sales projections based on target productivity rates. Examples: Units per hour in your distribution center or Stops per Call in your call center.
To avoid physical infrastructure limitations like number of dock doors available, or equipment like forklifts and order pickers, consider:
Expanding from 1 shift to 2nd and 3rd Shifts.
Expanding from 5 days per week to 6 or 7 days.
Recruit, hire, and train in phases – small batches to quickly ramp up
Pay attention to your target productivity levels to avoid over or under hiring
If sales do not hit your expected levels – or decline – scale back, but maintain your target productivity level. Determine reduction in force levels based on your target productivity levels – not on gut level instincts. This is where many companies go wrong and cut too deep – adversely impacting sales and service levels.
The above methodology requires cross-functional collaboration between your Sales, Purchasing, Logistics, Distribution and Finance functions. The key is flexibility. Don’t wait – get started now to have a plan in place before it is too late!
Contact us if you would like help with your peak season planning:
Profit Chain is a management consulting firm specializing in supply chain and logistics operations for the Furniture, Mattress and Appliance industry. We are helping clients across the country make informed decisions in Distribution, Home Delivery, and Customer Service. For more information please visit our website to schedule a free consultation.