Harry Stiastny in conversation
The new normal
There are increasing numbers of peak periods in the supply chains managed by Gebrüder Weiss. Flexible working hours, advance capacity planning and dynamic pricing models help meet this challenge.
Logistics manager Harry Stiastny has been working at Gebrüder Weiss for 38 years. But he hadn't experienced today's growing number of peaks until recently. "Our task is to ensure we can manage the chaos that ensues when everything gets squeezed into a very small window," he says with a smile. He cites "Singles Day" – November 11, the day with the highest online sales in the world – as one example of the frenzy. "The whole of China goes berserk with people splurging on absolutely everything within a 24-hour period. The orders may enter the supply chain but they aren't all processed that same day," Stiastny says. He knows what he's talking about.
This is how the new normal can manifest itself: JD.com, China's largest retailer, posted sales of 23 billion U.S. dollars during the first 11 days of November 2018. Its e-commerce rival Alibaba sold goods worth 30.8 billion U.S. dollars in a single day. The online shopping binge is fast taking hold in Europe too, as are Black Friday and Cyber Monday from the United States. The Christmas market for consumer goods powers up in early Fall. Four or five months before the holiday season, sea freight prices pick up at the shipping lines that transport containers from Asia to Europe. Warehouses too begin to fill up in September.
"The trick is to spread the high peak demand and thereby reduce excess capacity during the rest of the year," explains Christian Kille from the University of Applied Sciences in Würzburg-Schweinfurt. The professor of commercial logistics is an expert on the so-called bullwhip effect, the standard pattern of fluctuation that occurs in distribution channels. Kille maps out a typical week: "On Monday the logistics managers receive the preceding weekend's orders." But this predictable peak can also shift to other weekdays following public holidays – and that's when the problems start mounting. "The shortfalls in personnel are a challenge," Kille explains. That is doubly true at Easter and during the holiday season.
"We normally spend the Saturday and Sunday before Christmas in the warehouse, and then resume work again at 3 a.m. on the Monday," says Stiastny. Gebrüder Weiss cushions the increasingly frequent peaks in the logistics chain with new staffing rotas tailored to extended operating hours – and with flexitime and working time accounts. "These allow our staff to respond dynamically to fluctuations," the logistics pro says.
Different industries may have regular peaks and lulls, but these don't necessarily coincide. For this reason Gebrüder Weiss operates multi-customer warehouses where, for example, sporting goods are stored together with construction industry products. Skis can share a single shelf with gutters, screws and metal fittings – with the winter and summer merchandise divided by just a few meters.
The sticking point is still capacity planning: the earlier a contract is negotiated, the easier it is to manage the peaks. "That's why we, as an external service provider, also agree annual contracts with the shipping lines and look for customers where we can use them," says Stiastny. Gebrüder Weiss customers benefit from these longer-term arrangements. He emphasizes, "We can only fully utilize our capacities or otherwise secure them on the market if we know how much our customers' needs normally fluctuate." To that end, the logistics manager requires forecasts from these customers with regular, up-to-date information on their sales planning.
Stiastny has also identified another trend: "dynamic pricing," a phenomenon better known from air travel. "In the logistics sector we can also expect more and more dynamic pricing models keyed to supply and demand. The sooner customers know what they need, the more they can benefit from our capacities and prices." In other words, these fluctuations might also soon become the norm.
Kerstin Kloss is a freelance journalist specializing in logistics based in Hamburg.