Successfully Managing Peak Order Volumes
It’s always very busy somewhere at the global multi-user locations of business unit Hightech & Entertainment of Arvato SCM Solutions, where employees can be found hard at work supporting seasonal business, a product launch or a marketing campaign. In our interview, Thomas Becker, Executive Vice President Hightech & Entertainment at Arvato SCM Solutions, explains the key factors that go into successful peak management.
What peaks do occur in the high-tech and entertainment industry?
Thomas Becker: In addition to typical retailer and customer orders, there’s the campaign business and many product launches with associated advertising initiatives, and the volumes that we distribute for those is increasing dramatically. A product launch is often accompanied by a push-distribution system for which all sales channels — such as all European retailers — have to be supplied with sample products. Campaigns, on the other hand, can also be dedicated to established products getting a strong boost from the marketing and sales people. In this case, product bundling and markdowns can be used to reignite a very strong demand for a product.
What sorts of special challenges are involved?
Thomas Becker: The launch of new products like FIFA 19 (more here) can be prepared in great detail, because we get the necessary information from the manufacturer at an early stage and can use it to adjust to the situation. But since marketing and sales can be very creative, we don’t always have a lot of time to prepare, so we sometimes have to react very spontaneously and flexibly. One example is the most recent soccer World Cup, when one of our customers launched a marketing campaign in England in which there would be a ten-percent discount on their products for each goal scored by the “Three Lions” in the preliminary round. We didn’t know anything about it until suddenly the order volume at the warehouse was fifteen times larger than usual. We managed to cope with that too, but it was a real challenge. But, as a service provider, we’ve adapted to this trend in the market, which is increasingly built on marketing campaigns and product launches. With our team, we can overcome peaks much more effectively than a customer would be able to by themselves. It only gets tough if all of our customers decide to launch new products at the same time — after all, we do work with a variety of customers in a “multi-user” environment.
So, a lot of launches take place in the run-up to Christmas and on Black Friday?
Thomas Becker: Definitely. Or at the close of a quarter. We also work for Japanese companies, and they have a completely different calendar year. At the end of the month, we sometimes get incredibly large volumes that aren’t always announced. When that happens with several customers at once, that’s a challenge — after all, we’re talking about volume changes of up to 1,000 percent.
Are there ways to predict future peaks?
Thomas Becker: At the moment, we make predictions based on past figures and current information, and then we reconcile them with the input from our customers. But we routinely see that the actual volumes differ from the forecasts. Sometimes they’re twice as large as what the customer originally expected. So we always try to reach our own conclusions, in order to minimize the challenge posed by these large extra volumes. Space and resources are certainly important factors in successfully coping with these tasks, however the most important factor of all is qualified employees. However, due to the current demand, they cannot always be found on short notice.
How can we make ourselves less dependent on the labor market?
Thomas Becker: We can keep pressing forward with the automation of our locations, in order to allow our employees to focus on more valuable and worthwhile activities in the future. At Landsberg, for example, a driverless transport system is responsible for waste disposal. Another example is Düren, where an automated shuttle system carries out tasks such as order-picking, delivery-based box-sorting and an integrated realization of all customer requirements. These are automation measures that don’t jeopardize any jobs but make work easier for the employees.
What makes Arvato SCM so good at handling peaks?
Thomas Becker: On the one hand, we ask many questions up front and try to think of everything, so we can give customers the best possible support in the preparatory phase. On the other hand, we’re very flexible. This applies both to management resources as well as operating businesses. Our customer feedback confirms that we’re more flexible in our structures than other service providers and often manage to do what seems impossible. For example, we also organize direct trips if a process is delayed and customers can’t keep to their original schedules.
What’s important for the customer when new products are launched?
Thomas Becker: First of all, everything has to be in the right place at the right time. Since the marketing campaigns are precisely timed, even a film on DVD has to be available at all retailers on the set date. Furthermore, there is growing demand for value-added services like bundles, stickers or traditional promotions. In other words, we’re refining products instead of just shipping them. And the more valuable the products are, the more confidentiality and security play a role. We take security extremely seriously; we have high security standards and also make use of preliminary checks.