Retailers are under constant pressure to expedite shipping and delivery times while also reducing costs - a task that largely boils down to ensuring the effectiveness and efficiency of their vendors. Already an integral component of the supply chain, there is never a more stressful and chaotic time for shipping and carrier companies than the holidays.
Traditionally, it has been popular practice for organizations to hire more employees during peak demand season. But this approach comes with a lot of complications and challenges. For example, in addition to ensuring compliance with temporary and contract worker regulations, employers face an increase in expenses by adding seasonal workers to the payroll.
Perhaps this is part of the reason why, The Wall Street Journal recently reported, some of the biggest names in the shipping and packaging industry are taking a slightly different approach to handling the influx of e-commerce orders expected to hit throughout the holiday season.
Software mitigates surge in holiday hiring
Rather than relying on holiday hiring to handle the surge in orders and packages that will be flooding their supply chains, both FedEx Corp. and UPS will be turning to technology solutions to optimize workflow operations, the news source explained. This strategy includes opening up new sort-and-ship hubs, as well as leveraging software tools and automation technology to better (and more quickly) manage the processes of receiving, sorting and shipping packages throughout Thanksgiving and Christmas.
The investments the carriers have made in advanced technology tools are intended to eliminate the need to increase staff during peak season without suffering from a slowdown in production. According to The Wall Street Journal, if things remain as is, both FedEx and UPS will maintain the same volume of seasonal employees for the second consecutive year - which is about 50,000 workers for FedEx and 95,000 for UPS. In the past, the organizations were known to significantly increase hiring during the holidays from one year to the next.
Being able to maintain a steady level of employees during peak season is quite an accomplishment - and a testament to the powerful influence the right supply chain technology can have - considering the number of packages has only increased over the years.
For example, the source revealed that, on multiple occasions, last year's peak season brought FedEx 25 million shipments a day. This automation technology will help move packages through the facilities faster and allow the package-delivery company to improve customer relationships. Additionally, the software tools eliminate the need to train workers on routing packages and provide higher levels of accuracy and flexibility - ultimately translating to lower costs, better agility and more time savings.
Optimizing operations for e-commerce evolution
Relying on supply chain technology and automated satellite facilitates are just a few examples of the ways in which logistics and transportation companies are attempting to navigate the increasingly complex landscape of e-commerce, even after the holidays are over.
For example, Internet Retailer recently reported that both the U.S. Postal Service and FedEx increased shipping rates earlier this year, with ground shipping rates expected to increase about 4.9 percent after the holidays. Furthermore, both companies have announced that there will be changes to additional handling rates and fees based on the sizing and weight of packages. According to the source, FedEx plans to adjust the dimensional weight divisor for Express and Ground shipments from 166 to 139. In addition, UPS revealed that it will be reducing the size of packages for which an additional fee applies from 60 inches to 48 inches.
Given the need both retail and shipping companies face year-round to adapt operations in tandem with the rise of e-commerce, it is going to become increasingly necessary to leverage solutions that allow them to reduce costs without delaying production. And if the world's largest carriers' strategies mean anything, it seems one way to do this might be to focus less on seasonal hiring and more on supply chain optimization software and automated technology.