Peak Resilience

Challenges in finding available labour, combined with rising costs, prompted logistics service provider, iForce, and their client, The Works, to re-think their approach to achieving peak for the leading toys and stationery retailer. Ensuring reliable fulfilment would require a commitment to advanced automation including state-of-the-art, right-size packaging technology from Sparck.

Established in 1981, The Works has grown to become the go-to multi-channel value retailer for reading, learning, creativity and play, with 525 shops in the UK & Ireland and an online store visited by over 41.5 million customers a year.

Customer service is of prime importance to the business – efficient fulfilment of online orders, along with prompt delivery of well packaged items is essential for winning repeat sales. However, with the industry wide scarcity of suitable labour, and the inevitable rises in labour costs, delivering increasing peak volumes was becoming ever more challenging.

To address these issues, in 2020 iForce embarked on a business-wide initiative to develop a strategy for investment into advanced warehouse automation, and as a key client The Works was fully involved and supportive of the move.

Neil Lavercombe, Business Planning Manager at iForce, responsible for ecommerce development, explains: “Like every business in the industry labour was becoming increasingly difficult to find and more expensive, and that put at risk our ability to deliver peak for our clients. So, we decided to develop a strategy around automation, based on lowering our dependency on labour, particularly at peak, therefore de-risking our ability to deliver.”

There were three elements to the strategy: robotic goods-to-person order picking, robot assisted picking and automated packaging systems. However, it was absolutely critical that all three should work in perfect synchronisation with each other.

The Works was a prime candidate for robot-assisted picking linked to an automated packing machine. Lavercombe points out: “When it came to evaluating the different packing solutions on the market, we quickly determined that the principle of auto fit-to-size packaging had big advantages over the traditional box-closer systems, and the supplier that really stood out was Sparck Technologies with their CVP Impack machine.”

The CVP Impack measures, constructs, tapes, weighs and labels each parcel in just a matter of seconds. The operator simply places the item(s) to be packed onto the machine and scans the order. The system identifies the order and automatically conveys the items to a 3D scanner to measure and calculate the minimum box size required. The cardboard is then cut and folded to create a snug fit around the goods and tape is applied on just two sides to secure the box. Then an in-line scale checks the weight against the order and, finally, the box is automatically conveyed to a label printer where a carrier compliant label is created and applied.

The decision made, installation of a dual feed CVP Impack machine took place at iForce’s Rugby warehouse in June 2022, well in time for The Work’s busy autumn peak season. The dual operator feed facilitates a seamless and continuous flow of orders, from order-totes arriving at the machine, to complete, perfectly sized packages, weighed and labelled, ready for despatch.

Speed, throughput and reliability are core attributes of Sparck’s fit-to-size auto-boxing technology, an important capability given that at peak The Works will see around 70% of their ecommerce parcels created automatically by the CVP Impack.

Typical ecom challenges around very changeable order profiles at peak, multi-item orders and SKU variance play to the strengths of the CVP Impack and the inherent flexibility of Sparck’s fit-to-size technology. According to Lavercombe: “Order profiles, in terms of items per order together with the physical size of orders, can vary throughout the year, ranging from a typical ecom profile of one or two items per order to 10+ items per order. The CVP Impack simply produces the right sized packaging for whatever orders we have, a far simpler and less complex process than using traditional fixed size cartons, with the added advantage that void fill is completely eliminated.” As a consequence, significant savings in material costs have been achieved.

Sparck Technologies’ latest CVP machines now offer the possibility to select up to three input feeds, each with a different width of cardboard, which allows the machine to automatically select the most appropriate board size – saving on material waste.

There are important benefits for the customer too. By creating custom sized packaging for each order, the customer receives a compact, right-sized box, which is more convenient to carry, eliminates ‘consumer distress’ over wasteful packaging and delivers a positive environmental message. A further advantage of the fit-to-size cardboard packaging is a snug fit to the product, which prevents items moving around, providing better protection without the need for bubble-wrap or void-fill.

“We wanted to keep things very simple,” says Lavercombe. “The packaging machine had to integrate with both our existing manual processes and our new robotic systems – once again the simple approach of the Sparck machine worked for us. It seemed designed from the bottom up to do the job, rather than an adapted system. For example, a great feature is the way components needed for day-to-day maintenance are readily available and a drawer system offers easy access – well thought out design, from day one.

“Also, if we have issues with the machine at any time, Sparck engineers can remotely access cameras mounted on the machine and give us guidance. These are advantages well in advance of the market,” he says.

So, how is the machine performing? “Feedback from the Rugby site has been really excellent,” says Lavercombe. “Basically, the machine does exactly what Sparck said it would do and, importantly, what we needed it to do. On the rare occasion there has been an issue, the speed of response, the information provided, and the way Sparck has handled the situation has been really, really good. If an engineer was needed on site, they arrived very quickly.”

He adds: “Installation too went exceptionally smoothly. The machine arrived on Monday morning and there were boxes coming off the line the following Friday. It was fully operational within two weeks.”

Summing up, Lavercombe says: “Sparck is supporting us all the way. It truly feels like a partnership rather than a customer – supplier relationship.”

How delivery firms are approaching personnel for peak period

With the UK logistics industry preparing for the busiest time of year, many companies are facing more pressure around ensuring their business and workforce are set for the inevitable annual spike in demand. Recruiting and onboarding new subcontractors has always been one of the main areas of strain for the logistics and courier industry. Typically, recruiting new self-employed delivery drivers involves advertising the role, finding the best-suited candidates, contacting them individually and manually sorting out all required documentation such as driving licences, ID, toxicology, tax and right-to-work documents.

All of this can take considerable amounts of time for business owners throughout the year, but this becomes even more of a burden during peak period when delivery firms need to grow their driver workforce. Now, as we move towards the end of summer, UK businesses are harnessing software to improve their processes around personnel and make sure they’re in the best position to manage this year’s Christmas peak.

In order to maximise efforts ahead of the 2022 peak period, many last-mile delivery firms have now opted to use innovative workforce management technology to streamline their processes around onboarding, payments and much more. This use of cutting-edge technology allows business owners to drastically cut down on paperwork and admin whilst freeing them up to focus on growing their businesses.

These workforce management systems, such as Wise, provide improved clarity to main contractors so that they can see a complete overview of their subcontractors as well as their pipeline of incoming drivers, which is vital at the busiest time of year.

Managing compliance around self-employment is essential for any thriving delivery business and managing everything from contracts to documentation is an integral part of this.

Traditionally, many firms have spent vast amounts of time worrying about everything from IR35 to employment status and potential readiness for an upcoming HMRC audit. Now, with the introduction of user-friendly software, these firms are able to receive expert legal support, sign and share contracts digitally and keep an online record of all documentation ready for any enquiries from the taxman. All of this combines to not only provide stress-relief for the business owners, but means that the subcontractor drivers can be confident that they’re also protected.

Traditionally, self-employed individuals haven’t been able to get some of the perks that are often given to full-time employees. Now, through third party software, many delivery business can offer their subcontractors access to essential products such as accountayc and invoicing support, whilst even getting them access to unique high-street discounts. By providing these different facets to improve the self-employment experience, logistics business owners are able to not only create a more attractive offer than their competitors, but again increase their driver retention rates.

James Orton is Chief Technology Officer at Wise, a tech firm specialising in improving self-employment within the UK delivery sector. He said: “We have seen the key areas main contractors have been struggling with for years in terms of engaging with a self-employed workforce and know how this is only exacerbated during peak period. “Now, with the free Wise platform easing these stress-points for over 250 UK delivery firms, we’re seeing how business owners can not only save time, money and stress for themselves, but create a vastly improved self-employment experience for their drivers at the same time.”

Could Autumn peak be riskier than usual?

84% of UK businesses are planning on moving from JIT to Just-in-Case supply chain models. But what will this mean for pre-Christmas planning, asks Matt Whittaker (pictured), Commercial Director at Bis Henderson Space.

Many retailers depend for their profits on the ‘golden quarter’ – the season running roughly from Halloween through to the January sales, and including, besides Christmas, Bonfire night, Black Friday and other excuses for conspicuous consumption. To meet demand, many businesses require space for warehousing, order picking and dispatch over and above their normal needs. Depending on the trade and the characteristics of the supply chain, the requirement may be short and sharp or more ‘shouldered’ over several months – and may be extended by the need to accommodate and process returns – but in a tight warehousing market companies will have to act now to secure the space they need.

Unfortunately the coming season is more than usually difficult to predict and companies are reluctant to commit, lest the ‘golden quarter’ turns out to be fool’s gold. There are real uncertainties on the demand, supply and logistics sides of the equation.

On the demand side, the ‘cost of living crisis’ is becoming a reality. Will this result in a general tightening of belts, or will consumers enjoy one last splurge? They could of course do both – cutting back on eating out, for example, reducing hospitality trade demand, but investing more in entertaining at home and thus buying more groceries. (Another unusual variable is the small matter of the football World Cup – if England or Wales enjoy a good run this could have a significant impact on consumption patterns).

Supply side problems are well known – the Ukrainian war, Chinese lockdowns hitting semiconductor (and many other) production lines, unusual weather impacting harvests, and logistics problems, at scales from international container shipping, through Channel port disruption, to internal factors from driver shortages, through fuel prices, to rail strikes.

A recent study by Retail Economics for ‘Retail Week’ suggested that while inflation will ensure that the value of consumer goods sold in this year’s ‘golden quarter’ will increase, volumes – which are what matter for warehousing – will be down, compared with 2021, by anywhere between 2% (food and groceries) to 13% (electricals) in every sector except health and beauty (a modest 0.2% rise). Although the comparison is with a particularly buoyant largely post-lockdown Q4 2021, that doesn’t mean the volumes of goods in the system which need warehousing, is necessarily lower – this year’s goods, now with luck on the High Seas, were often ordered back in the Spring.

A recent survey by SAP reveals 84% of UK businesses, manufacturing and retail, are planning to move from Just-in-Time to Just-in-Case supply models, likely increasing demand for warehousing as they stockpile critical inputs as and when they are obtainable (or affordable) and increasing competition for quality space. Meanwhile, as we have reported previously, most new-build space recently has been snapped up, especially but not solely by e-commerce firms, even before completion.

So predicting a company’s need for short-term space over the golden quarter, and then securing it, could be a nightmare. But we suggest a number of principles that businesses faced with this quandary should follow – and not just this year.

Firstly, it is almost never advisable to scale permanent warehousing and associated capacity for a single seasonal peak (although there are firms that have successive peaks, perhaps in different lines, for which this may not be true). But generally, the business is committing to a continuing expense which for much of the year is not producing a return. It might also be claimed that excessive space availability simply encourages lax inventory management, which can have a negative impact on cash-flow and even stock redundancy.

Second, it’s vital that businesses contract for the right type of space. Storing pallet loads in a bulk store, or even in the container in the yard, may be reasonable when they arrive in August, but if they can’t be accessed to pick and dispatch on demand as the orders come in over the Autumn, there are likely to be lost sales. Facilities that enable efficient, perhaps automated, picking and packing, are more costly so it’s financially sensible to restrict hiring these facilities to when they are needed, at peak.

Thirdly, location is key. Bulk storage and distribution, perhaps somewhere in the Midlands, works very efficiently in times of normal, steady demand. At peaks, and especially when sales may be fashion or trend driven, a model which holds more stock closer to the end user, whether retail store or e-commerce consumer, may be much more appropriate. But again, this isn’t necessarily a facility that makes sense to operate all year round. Seriously high fuel costs, and driver shortages, are also impactful considerations in peak season distribution planning.

Using an independent warehouse space consultancy that has extensive in-house expertise – and a wide network of contacts with available space – can pay significant dividends. An experienced, well-connected consultancy can help a business ‘right size’ its warehousing needs to meet seasonal patterns of supply and demand.

Through tapping into an ‘off-grid’ database of unused or underutilised warehousing space, suitable available facilities can be found on a short-term rental basis – ranging from bare sheds to shared, fully serviced DCs. And, short-term rates can often be highly competitive.

Creating a flexible space strategy for a potentially difficult Autumn peak season is a great way to mitigate risk.

Congestion is not just for Christmas

Shippers across the globe might have to battle the effects of supply chain congestion and record high ocean freight rates for some time to come. The question remains – when will they get relief?

The wave of congestion that is sweeping through global supply chains delaying deliveries of seasonal goods and essential commodities, stranding many shippers between meeting impossible delivery deadlines while paying record shipping rates is not set to subside anytime soon

“This is proving to be the ‘peak season like no other’, just as we predicted,” says the Global Shippers Forum, the voice of cargo owners in international trade.

Speaking at a High-Level Maritime Dialogue, hosted recently by FIATA, James Hookham, GSF’s Director, highlighted the challenges that importers and exporters face in getting their goods on shelves and in warehouses for the winter holiday season. They are struggling with historically poor levels of service from shipping lines, ports and terminals, and inland logistics providers, yet paying the highest shipping rates and surcharges seen for decades.

Hookham said: “Global shippers are riding a tidal wave of congestion this peak season that started in exporting countries and is now arriving on the shores of importers and sweeping inland. First, we had lockdowns in Chinese ports, then an inexplicable shortage of empty containers, then the ships suddenly all maxed out and slots were like gold dust (and costing as much). Now our goods are queuing to get into ports, waiting for a crane to unload the box and then for a driver to move it inland to where we need it. It’s been a tough ride and it’s not yet over, but most of us are still standing, although, sadly, there will be ‘wipe-outs’.

“The most vulnerable businesses are the importers and distributors fighting to meet delivery deadlines, set by their retailer customers.  They simply cannot predict when the goods they have paid so much to have transported actually will be available. Not only have they blown their logistics budgets this year, but they are facing stiff penalty charges for late delivery, and possible loss of future contracts. These are the businesses that are the victims of the maritime industry’s collective struggle to manage the ‘Great Shipping Crisis of 2021’.

“But with most deliveries expected to land in the next few weeks, and Thanksgiving and Christmas probably safe for this year, big questions remain – Will this congestion continue well into next year. Will tight market conditions persist through 2022? Or will consumer demand slacken and will capacity and resilience improve service levels prices become more predictable?”

To continue the surfing analogy, was 2021 a freak wave or a permanent rise in sea level?

“Just about every shipping line is predicting the latter,” continued Hookham. “And why wouldn’t they when they are collectively expecting to turn profits exceeding $150bn this year? But there is good reason to query the hype of continued congestion.

“The expectations for consumer inflation levels in most developed countries are hardening and most central banks are expected to increase interest rates next year. That won’t affect retail prices immediately, but it could trigger a rapid change in consumer sentiment that means the ‘click-fest’ of on-line shopping that has reportedly fuelled the surge in shipping demand for the past 18 months could be extinguished as quickly as it ignited.

“Sure, maritime congestion will take some time to unwind, but if the ‘Great Shipping Crisis of 2021’ proves to be just that, then the speed at which shipping rates shadow the drop in demand will be a critical indicator of the responsiveness and competitiveness of this market.”

Hookham concluded by reflecting on the fact that amongst its global membership, GSF now includes operators of container ships.

“There is, of course, that small heroic band of shippers out there who made the trip to the Dark Side during 2021 and hired their own vessels to move their own goods, because shipping line predictability had got so bad, and rates so out of kilter with actual operating costs. I don’t know what their charter terms are, or what their experiences have been, but I expect they will soon be needing to decide whether to ‘give up the hobby’ or make it a part of their routine operations. These endeavours have been dismissed as an aberration by most shipping industry observers, but it tells you something when a few guys in the audience think they can whistle a better tune than the full orchestra!”

 

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