Logistics and Supply Chain in the festive season! October 16, 2007Posted by Ramnath Rangaswamy in Business, Emerging Markets, India, Indian Economy, Logistics, Retailing, Supply Chain.
Festivals are trying times for transporters, warehouses and delivery teams. The supply chain is stretched and tested to the limits.Unlike Europe and America, where the festival season is Christmas, in India the festival season varies across the country- Pongal [ January] in Tamilnadu, Holi [March] in the north, Baisakhi [March] in Punjab, Onam [August] in Kerala, Durga Puja [September/October] in Bengal,Diwali [October/November], Id and year-end/New Year nearly throughout India.
The supply chain- warehouse space, warehouse staff, loading docks, picking area, warehouse equipment, trucks – are all planned for normal business volumes with a ‘peak factor’ of 25% to 33%. This is prudent given the need to (i) keep supply chain costs low and (ii) have a high capacity utilization for the warehouse.
So how does one plan for the festival peaks?
Plan in advance: As production is ramped up, to cater to the extra festival demand, transport the products to the depots/RDCs/ warehouses. The intent is to smoothen the number of workload at the plant and the warehouse [number of trucks being loaded and unloaded]. Do not bunch and postpone all despatches and deliveries to the last minute.
Use alternate supply chains: Plan to send trucks straight to the retailer from the Plant and bypass the depots/RDCs/ warehouses. The volumes, the retailer orders, during the festival seasons would justify sending a full truck load to the retailer. If, for tax reasons it is not possible to send trucks direct from the Plant to the retailers, load the trucks so that they can be cross-docked [or the same truck goes to the retailer after picking up the invoice from the depot/RDC- this is a gray area in the Indian Tax Laws].Companies could also give a small discount to the retailer for ordering a full truck straight from the Plant. This will reduce the workload at the depots/RDCs/ warehouses.
Additional warehouses: Extra warehouse space, extra warehouse teams, extra warehouse handling equipment, extra terminals for the warehouse management system [WMS] , 24 hour shifts- are all required to handle the additional volumes at the warehouse.
New overflow or extra warehouse will have to be hired. This warehouse should be physically close to the main warehouse for ease of operations.
The details and process to be followed with the extra warehouses should be clear. Will the extra warehouses hold all products or only some fast moving products? In case he warehouse holds only a few products then trucks will have to get loaded at both warehouses leading to a strain on the loading docks capacity. Or if trucks get despatched at both warehouses, then there would be minor FIFO violations. The trucks coming from the Plant have to be directed and coordinated to the correct warehouse depending on the stock levels at the warehouses.
Both warehouses should have invoice printing facilities.The WMS should be capable of accommodating an additional warehouse location.
There would be inter-warehouse movements to transfer products which are out-of-stock in any one warehouse.
Extra forklifts, pallet jacks, high reach trucks will have to be hired.
Warehouse teams will have to be hired and trained. Training on (i) products and (ii) processes are important to ensure that the warehouse operations are smooth. It would be a good idea to (i) have the warehouse team work in the regular warehouse for 1-2 weeks and (ii) have a mixed team -of experienced and new/tyro warehouse staff.
The warehouse would have to work, round-the-shift for 24 hours for a few weeks if picking area and loading/unloading docks are the bottleneck.
Based on my experience, the element that you overlook is the one that comes and haunts you! Every small detail will have to be taken care of. In my experience, in one instance, I found the number of order entry computer terminals to be a bottleneck. In most cases the picking and staging area becomes a bottleneck.
Transporters:It would be a good idea to share with the transporters, the additional requirement of trucks. This should be done 1-2 months ahead so that the transporter has time to plan and organize the additional trucks. The more detailed the information- number of trucks by destination, by date- the better.
One should also remember that all other companies too would be having a peak at the same time. So truck availability would be an issue, there would be unloading delays at the retailer as all manufacturers would be sending additional stocks, highways and checkpoints would be crowded because of the additional traffic. All this will have to be factored-in while finalizing the festival logistics.
For more details on how Indian businesses prepare for the festive season, click on the link; Business in the festive season