Preparing a warehouse for Black Friday is a key element of the sales strategy for many companies, especially those operating in the e-commerce industry. Although Black Friday is one of the most important days in the retail calendar, it is merely a prelude to subsequent events, such as Cyber Monday, the holidays, and year-end sales. Research shows that sales increase significantly during this period, which for many companies can be the deciding factor in the financial success of the entire year.
Black Friday is undoubtedly the most important shopping event of the year. It is also a pivotal moment for the retail industry, marking the start of the holiday season. According to research conducted as part of the Black Friday Consumer Sentiment Survey, only 8% of Poles have not heard or have heard little about Black Friday. As reported by the Boston Consulting Group, the company commissioned to conduct the aforementioned study, as many as 78% of Polish respondents plan to take advantage of Black Friday deals, which even exceeds the global average (74%).
That is not the end of the surprises, as it turns out that Polish consumers plan to spend an average of 310 USD, the same as wealthier Canadians and significantly more than affluent Australians (260 USD). Of course, the key criterion influencing the decision on where to shop is price (43%).
Omnichannel retailers can be the main beneficiaries, as 58% of customers prefer shopping with retailers that conduct both traditional and online sales. Those who choose to shop online most often select marketplace platforms (52%). A handful of these statistics is the best illustration of how important Black Friday is. It should be expected that sales will increase significantly during this period. For retailers, regardless of whether they operate in a traditional, e-commerce, or omnichannel model, preparing the warehouse for Black Friday is a critically important element of their sales strategy.
Fast delivery and returns handling – the most important challenges
One of the key problems faced by the e-commerce industry is the need to efficiently deliver orders in the shortest possible time. In most cases, it is expected that the goods will reach the customer within a maximum of 48 hours from placing the order. This requires excellent management of the logistics process and a quick response to demand.
Another challenge is the efficient management of the returns process. In the e-commerce industry, returns are a significant aspect of operations. It is estimated that about 10% of all orders worldwide are returned to sellers. In the fashion industry, this number can even reach 20% to 40%. Especially in the German e-commerce market, which is one of the largest in Europe, returns of clothing and footwear reach an extremely high level, hitting as much as 70%.
Analyze forward, act backward
Black Friday is a highly anticipated part of the annual shopping calendar for the retail industry worldwide, including in Poland. The profits generated during this period can constitute a significant portion of many companies’ annual revenue. The exact figures depend on many factors, including the industry, location, as well as economic and consumer trends in a given year. One cannot delay preparations. They should be started as soon as the season ends. Effective preparation for a new period requires, above all, an analysis of activities from previous cycles.
To meet the challenges associated with seasonal demand, it is essential to detect potential limitations in operational processes, known as bottlenecks. These critical points, especially during the peak season, can lead to delays in order fulfillment. Their elimination is crucial for operational fluidity. We start by conducting a root cause analysis. We analyze what went well and what did not work well. The 5 Whys method, for example, is helpful in examining the causes of various irregularities, as it allows for the identification of areas for improvement. It consists of repeatedly asking the question “why”.
Assessing the availability of resources, such as mobile devices, carts, and trained personnel, is crucial for efficient order picking. It is worth evaluating whether resources were sufficient in the previous season and whether changes or investments are necessary before the next season.
The operation of access points providing computer network access to all users may prove critical in handling the sales peak.
Analyzing the season’s results, taking into account successes and mistakes, will allow focusing on areas that require improvement. The 5 Whys method will help understand the roots of problems, and assessing resource availability will help avoid potential issues related to a lack of equipment or properly trained personnel. Identifying bottlenecks and developing a schedule of changes related to seasonality is essential for ensuring smooth operation. We should implement changes early enough, by the end of August at the latest, and test them, because implementing them just before the season can destabilize warehouse operations.
Performance tests, or the dress rehearsal
To check how the warehouse functions under high load, it is worth conducting so-called stress tests and process tests, especially in the context of managing WMS systems and automating order picking processes.
Stress tests are a type of examination that allows for the assessment of system capacity and stability under conditions of extreme load. Thanks to these tests, we are able to learn the warehouse’s reaction to situations where the number of orders or logistics operations significantly exceeds the standard load. For example, stress tests allow answering questions such as: What is the maximum load level our warehouse can handle without failing? Where are the potential critical points that could lead to system overloads? These tests are extremely important, as they allow for minimizing the risk of problems occurring under actual warehouse operating conditions.
Process tests focus on evaluating the efficiency and effectiveness of specific processes in the WMS system. These are more detailed tests that analyze individual logistics operations, such as order picking, goods receipt, or moving products within the warehouse. Thanks to process tests, we can assess whether specific operations are running optimally or if there are unnecessary delays or errors in their execution. Importantly, in a warehouse, all processes occur simultaneously and influence each other. Goods receipt and dispatch take place at the same time.
It should be emphasized that modern WMS systems, such as PSIwms, offer advanced tools for conducting tests. For example, automatic multi-threaded tests allow for the simulation of actual warehouse working conditions, which enables a more accurate assessment of system capacity. The Warehouse Intelligence solution allows for visualizing these simulations. To conduct tests, we must define the logistics processes we will analyze, the resources, and the scope of data. During the test, we monitor KPIs, thanks to which we can determine how the simulation is progressing in terms of performance. At the end, performance reports are generated. This tool allows for identifying areas that require optimization and the introduction of improvements in daily warehouse operations.
Work smarter, not harder
During periods of increased demand for services, e.g., before the holidays, effective management of seasonal workers is an extremely important issue. For new employees to become fully independent and efficient, effective onboarding is essential.
The first step is the onboarding and training of seasonal workers. Quick and effective training, supported by intuitive interfaces of warehouse management systems (WMS), allows employees to understand processes instantly and simultaneously minimizes the risk of them making mistakes.
The WMS system offers a range of possibilities supporting the analysis of the efficiency of individual process execution, including from the perspective of employee evaluation.
Technology at your service
The WMS system plays a key role in efficient warehouse management, offering a range of functions, from goods location, through resource planning and management, to the automation and optimization of picking processes. Warehouse operations are characterized by high dynamics of change. In different periods, different criteria appear; at one time, optimizing warehouse space will be more important, and at another, the speed of order fulfillment. The PSIwms system also offers the possibility of automatically adjusting the system configuration to different situations, e.g., day/night shifts or handling sales peaks.
In summary, preparing a warehouse for Black Friday requires careful planning, analysis, and testing. Overlooking this important moment will affect the results of the entire holiday season, which is the culmination of the year. Lost time will be difficult to make up. Therefore, it is crucial to understand the challenges that seasonality brings and to appropriately adjust resources and logistics processes to meet increased demand. WMS systems, such as PSIwms, offer a range of tools and functions that can help achieve this goal not only during the holiday season but throughout the year. As McKinsey warns, over the next 10 years, companies could lose half of their annual profits due to supply chain problems. Prevention is cheaper than cure.