How do you smoothly run a busy season where you face more than 5 times the regular demand, and over 50% of yearly sales in just 2 months?


This case study explains how we supported this fast-growing Halloween eCommerce manufacturing + retail company get orders shipped on time, achieved the right-sized workforce, avoid as many negative customer reviews as possible, and handle the busiest season yet with certainty and confidence. 

This fun & exciting company was experiencing massive expenses overpowering profits such that even though they were achieving record high annual sales, they were facing some of the lowest profit percentages since inception of the company. With a 2 month busy season period (in which 50% of annual sales are generated), it is easy to see why this company faced a bit of “busy season fear” of not being able to smoothly handle demands during the busy season months (upswings of over 5x regular season demand). The company reputation is also highly dependent on shipping all orders on time and accurately, or face the risk of unhappy customers and negative customer feedback which can be detrimental to rankings on e-commerce platforms like Amazon and eBay.

 

How we supported the owner's goals and visions:


 
 

Doubled staff while keeping payroll cost the same

Sounds impossible right? 

It's not! Here is how we did it:

We took a hard look at the two main drivers of payroll cost: 1) rate and 2) hours. We knew we were facing more than a 40% growth over last year in items to pick and pack but what is the point of all those sales if you are eating up cash with super high payroll? 

 Step 1) Reduce agency staffing rate by 13%

Step 1) Reduce agency staffing rate by 13%

Step 1) We contacted 15+ local staffing agencies to negotiate a better price for temporary staff. Did you know that staffing agencies put their own markup on top of the pay that gets paid out to the workers? Not all overhead rates are the same! By negotiating with the staffing agencies, we were able to reduce the hourly rate by $2.27 per hour, per person - and this was NOT being taken out of the staff worker's pay. For 10 full-time temporary staff for over 2 months, this equates to over $7,000 in savings straight off the bat. The cost? The time it took to make a few phone calls and negotiate. That is $7k directly put back into the business's pockets. This is a perfect example of what we call "costs you didn't realize you were spending". There is no value in spending that $7k to the agency, so we identified that and got rid of it. Cha-Ching! 

 Step 2) Schedule to avoid costly overtime and double overtime

Step 2) Schedule to avoid costly overtime and double overtime

Step 2) Next, we got to detailed scheduling. The best part of this fun family + friend business atmosphere is that people love working and don't mind pushing some serous limits. The busy season prior, a particularly dedicated employee even offered to sleep overnight in the warehouse so he could not even waste time commuting! While this was a gallant effort - we wholeheartedly recommend against it. Not only is it cold and scary to sleep in a warehouse (!), our guy would not be operating at his full, rested potential, risk getting sick or injured, and also - working those kinds of hours racks up those overtime bills. After 8 hours, pay goes up to 1.5x the hourly rate, and then after 12 hours, the pay goes up to 2x (double!) the pay! Should businesses really pay double the rate for a super tired employee? We love the loyalty and dedication, but it just doesn't pay off. We used Excel to make an easy to read scheduling tool to map people up to 8 hours a day (very minimal overtime), and this way were able to hire more bodies in the warehouse and at less of a cost.

 

Consider this:

Two workers working a 16 hour day (not uncommon during a busy period) would equate to $484 in payroll for the day with the overtime and double overtime rules. You could hire FIVE workers (over double the staff) for 8 hours each and still have less payroll costs (a total of $440)!

So not only did you pay less in payroll costs, you got 40 working hours instead of the 32 working hours! 

Would you rather pay MORE for 2 employees or less for 5 employees? Its a no brainer! 

 
 

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