“Peak season” is not what it used to be. Data on the number and type of picks handled at warehouse and distribution centers, plus insights gleaned from customers, experts, and salespersons, all point to the fact that the volume usually associated with the holidays is now common throughout the year.
There is still a bump during Q4, but the norm is much closer to that peak than ever before. Plus, the demands are no longer just about volume. The demands on ecommerce fulfillment and parcel handling are much more varied, creating ever-shifting complexities day after day. There is now year-round pressure on fulfillment centers exacerbated by the use of alternative packaging, special boxes, and even decorative tape during certain seasons and holidays.
Why is “peak” now all year?
Warehouses and distribution centers traditionally view the Q4 holiday period as the year’s peak season. Using their decades of fulfillment data, these logistics facilities could anticipate typical consumer demand and make adjustments to satisfy a predictable temporary increase.
But since the COVID-19 pandemic began in 2020, there has been a sudden and colossal rise in demand for ecommerce fulfillment and parcel shipping. Part of this is due to shipping individual products more often. Just a few years ago, orders would often be batched to help mitigate logistical challenges and, for consumers, to reach minimum shipping quantities. Now, it is much more common for one product to be shipped at a time. This entails increased volume as well as increased complexity on the shipping end due to parcels of wildly different sizes, shapes, colors, and weights.
Additionally, the traditional shopping holiday shopping season is starting earlier and earlier. A Bankrate study found that 11% of consumers said they planned on starting holiday shopping in August, 14% in September, 25% in October, and 38% in November. That means the vast majority of purchases are occurring well before Black Friday and December.
Another explanation for the year-round demand has been the surge in subscription models like FabFitFun, BarkBox, or Dollar Shave Club — and so many others — in which consumers receive regular shipments of curated goods. In 2021, the global subscription box market was valued at $22.7 billion and is expected to reach $65 billion by 2027, according to imarc. Most of these operate on monthly shipments, which translates to continuous and growing pressure on fulfillment centers.
What’s the best way to manage this demand? Flexibility.
Imagine this scenario: a company is fulfilling a subscription box program whose demand has surged thanks to a recent mention by a popular influencer. It causes them to run out of corrugated boxes sooner than expected and they won’t be able to restock in time to satisfy customers. Due to this, they switch to polyurethane bags in the short term. That may sound simple enough on the receiving end, but the shipping end now has to cope with parcels of completely different shapes and rigidity, changing the way they are handled. The solution here is not simply having the capacity to handle the order volume — it is also tied in with how flexible the processes are at adapting to the new scenarios along the parcel path.
This two-fold challenge of volume and flexibility requires a two-fold solution.
The relentless efficiency of automation is well recognized for successfully increasing throughput in fulfillment and distribution centers. Where humans tire, become distracted, and lose productivity throughout a time-limited shift, machines can constantly perform precise tasks with only the occasional break for maintenance. Combined with the ability to deploy additional robots as necessary, these qualities enable a facility to successfully meet perpetually high demand. However, exceptions caused by changing parcel types, as mentioned above, or altering steps in the process with special packaging for certain holidays, for example, can hamper the efficiency of automation.
To cover such situations, facilities also need the awareness, knowledge, and adaptability of human employees to complement and enhance automation. Whether through co-bots or robotic supervision software, human guidance can aid robotics in adjusting to changing and unusual situations in sorting, parcel handling, depalletizing, and more. A single person overseeing a fleet of robots can allow them to quickly solve exceptions and adapt to new packages or processes in a matter of moments. Couple this with advanced AI vision software and machine-learning capabilities, and you have the necessary tools to handle a wide range of parcel types as well as the benefit of continuous improvement. This provides a high degree of flexibility in automated workflows throughout the year. Plus, working with automation can increase employee satisfaction. A survey from Salesforce found that 89% of employees were more satisfied with their job as a result of using automation in the workplace.
However, there is still the question of when and how to bring in such solutions. Is the cost going to be prohibitive? Is there an ideal time of year to integrate? Where is the best area of the facility to start? Recent advancements in RaaS (Robotics as a Service) and SaaS (Software as a Service) options have changed the answers to each of these questions.
Flexibility is attainable by treating automation as an OpEx.
Traditionally, automation has been treated as a capital expenditure (CapEx), a one-off upfront purchase of fixed assets that benefit a business over time. But many companies are reluctant to approve CapEx costs, particularly for equipment that will depreciate or become obsolete within just a few years. This can cause long delays in implementing automation technologies and prevent warehouses and distribution centers from meeting their fulfillment potential.
But with the recent improvement of RaaS and SaaS solutions, companies no longer need to purchase these technologies outright. As a result, automation can now be treated as an operating expense (OpEx), an ongoing payment that facilitates daily business activities. Since OpEx costs are generally lower and immediately impact profitability, companies can approve and implement automation much more quickly, leading to greater productivity in minimal time.
Additionally, most RaaS and SaaS solutions can also be integrated and de-integrated as needed. This empowers logistics facilities to scale their operations in response to trade fluctuations, allowing expenses to match demand in near-real time and limiting unnecessary labor costs.
Where should automation be applied?
Whether new to automation or refining an existing setup, areas should be prioritized in which goods are received or shipped. While some automation technologies require significant alterations to warehouse or distribution centers, optimizing areas where products are shipped and received allows for something closer to augmentation than full-scale change. The processes handled near the dock are often very simple to automate and can deliver quick ROI, compared to center-of-the-facility processes such as storage and retrieval — which can require more time-consuming, expensive, and logistically complex changes to the operation.
No matter which aspect of an operation is being considered for automation, the most important factors to consider are speed and reliability. Automation technologies should be flexible enough to meet the changing demands of a business throughout the year, while also clearly improving efficiency and throughput.
When is the right time to make a change?
As an old saying goes: “The best time to start was yesterday. The next best time is now.”
The transition to a continuous peak is not on the horizon. It is already here, and it is showing no signs of slowing down.
Luckily, the speed and accessibility of RaaS and SaaS solutions means that companies can adopt automation and robotics more easily than ever before. The sooner a logistics facility is automated, the more likely it is to successfully meet the increased consumer demand both now and long into the future.