How to Manage Peak Demand

Managing peak demand has always been a challenge. In the past, businesses had the advantage of being able to predict peak demand times based on historical data. Christmas, for example, falls on the same day every year. Depending on where they were located on the supply chain, businesses would gear up for the Christmas season to meet increased demand.

Times have changed, though. We live in a fast paced world where online transactions take place in the blink of an eye and peak demand times can come at more unpredictable and harder to manage intervals. These are some ways companies are handling peak demand in our online marketplace.

Picking Strategies

Many retailers who started selling online after years of selling from physical premises were unprepared for processing online orders. Online orders can come in at any time of the day or night and even if you can predict that orders may come after working hours, when people are at home browsing the internet, you can’t predict what time zone they are living in.

Instead of looking for peak times, more experienced online retailers look for “peak products” — items that are likely to be in demand because they are new or on sale. They then position these products nearer the packing station so they can be more quickly and easily accessed.

Separating Stock

Peak demand comes at different times for different services. Typically:

• Wholesale orders reach a peak towards the end of the month.
• Retail orders peak seasonally and when products are being promoted.
• E-commerce has peaks within shifts.

Businesses that have to juggle all three of these peak demand times have discovered they are more easily managed if they separate their warehousing and packing practices. If e-commerce (direct to consumer) stock is stored separately from wholesale and retail stock and managed by a separate crew, they can process the orders faster. There has to be some flexibility to the system, though, since troughs in e-commerce orders may correspond with peaks in wholesale and/or retail orders.

Cross Training

Traditionally, workers have been hired to do one type of work only. This works when only one skill-set is required throughout a shift. In today’s world, it makes more sense to cross-train full time workers. For example, if you hire a full-time forklift operator, but the forklift is not in operation for the full shift, you are paying the operator for nothing. Meanwhile, a worker with experience using another type of equipment may be overworked. Cross training experienced staff gives you more flexibility to handle today’s often unpredictable work environment.

Interestingly, some companies are discovering that systems that used to work for them now work against them at peak demand times. For example, very narrow aisle pallet picking systems can be too slow to handle rush orders. To handle those peaks in online sales that come in bursts, they have had to separate their stock and change their picking strategy.

If you are just entering the world of online marketing and sales, look beyond your online presence to how you’re going to handle online sales. Train key members of your staff to help manage online traffic and learn how to manage peak demand that will come in bursts rather than predictable seasonal patterns. If you’re ready for your customers, you will be their reliable source for the products you have to offer. If you’re not ready for them, another source is just a few mouse clicks away.