Interview

Interview: Planning for peak – the Hermes view

In the first of a series of interviews where we will focus on planning for peak Jon Ormond, director of hub and depot operations at Hermes, reveals how his company prepares for a period that last year saw it handle more than 36 million parcels between Black Friday and the New Year. 

What steps do you take to ensure you are ready for peak period when it comes to home delivery?

We have a peak planning and delivery team, specifically formed of senior employees handpicked from different departments, who work closely together to develop and execute a precise strategy for each peak season. Each member has their own area of ownership, providing necessary insight and expertise, whether that is within operations, client development, IT, human resources, fleet management, etc. The team regularly provides updates to clients, the board and all relevant departments.

When does home delivery peak period planning begin?

We consider peak planning a year round process! As soon as the previous peak season is over, the team will present a detailed presentation to the board, sharing performance figures and volumes. They will then hold a session to evaluate last year’s peak, examining the strength of the whole network and any risks that were posed, before outlining a plan for the following year. The team will then meet on a weekly basis to share progress updates.

What are the main lessons learnt from 2016?

Over the last few years, both retailers and carriers have learnt that significant preparation is the key to a successful peak, and therefore the whole industry has performed more efficiently. Our extensive planning ensured we were able to enjoy our busiest peak season to date, handling more than 36 million parcels between Black Friday and the New Year. This success is the result of continuous investment in our network, outstanding working relationships with our customers, and most significantly, down to the hard work of our teams.

What are the definite not to dos during this period? 

It is important that you do not rest on your laurels. Carriers must continue to invest to ensure they can quickly strengthen their network to cope with increased volumes. For instance, last year our team implemented a peak investment programme that included the introduction of two temporary hubs in Listerhills and Tamworth, as well as expanding our network of self-employed couriers to 15,000. We also added 400 trailers to its fleet as well as 242 additional depot vehicles.

We are already building on last year’s success by further strengthening our infrastructure, which includes the opening of our 270,000 sq ft Midlands Super Hub in Rugby, as well as prioritising innovation in order to boost our portfolio of services and solutions.

How do you decide between the balance of later cut-off dates and possible customer disappointment when it comes to home delivery at peak? 

Retailers and carriers need to decide if the priority is to grow network capacities to service the Black Friday/Cyber Monday spikes faster (and at a cost) or just to smooth demand through operational constraints. All retailers I’ve talked to so far want the latest cut-offs and to delight the customer. It is our job to provide the service.

Is it better to under promise but over-deliver or to be honest?

Carriers have a responsibility to work with their retail clients to accurately forecast peak volumes and to understand the best way to fulfil volumes in an efficient and timely manner.

How is mobile’s continued growth affecting peak planning for home delivery? 

We are seeing that more and more consumers are now using smart devices to shop online and we have an obligation to our clients to develop our own innovative solutions to extend that experience to the delivery process. Our Parcel Manager app allows online shoppers to track the progress of deliveries via smartphones and tablets, providing consumers with up-to-date information that helps to reduce the number of missed delivery attempts during the peak. We have also completed an integration with Alexa, so consumers can use an Amazon Echo Dot to track their parcels.

How do events such as Black Friday and Cyber Monday affect peak planning – does it make it easier or harder and what’s the balance of home delivery for such peaks?

The emergence of Black Friday and Cyber Monday means the peak season now stretches back a lot further than in years gone by. Therefore, carriers must guarantee they have the necessary infrastructure in place to cope with growing volumes over longer periods, which requires investment. It is also important for carriers to scale up and down their operations quickly. For instance, we will see a massive spike in the week following Black Friday and we expect to deliver over 10 million parcels. Either side of the Black Friday volume, peak forecasting is more difficult but a strong relationship with clients is critical to our success.

This pattern has been established for a few years now, so it has become easier to manage, and our peak planning and delivery team does a fantastic job monitoring trends and forecasting volumes.

What trends are we likely to see this year and how or what should retailers and carriers be doing to be prepared to combat these?

I believe you have to put yourself in the consumer’s shoes and ask what do they want when purchasing items on Black Friday or during peak. The main objective for online shoppers at that time of year is to secure their preferred goods at the most attractive price, or to buy items for family and friends ahead of Christmas. In the majority of cases they do not need to receive these items within 24 hours, and as long as the presents are wrapped and sat under the tree by the Christmas break then customers will be satisfied.
I don’t think there will be a huge change in consumer expectations this year, however it is still vital for retailers and their logistic partners to work together to satisfy those needs through increased efficiency and visibility.

Jon Ormond is director of hub and depot operations at Hermes