How Arvato SCM Solutions is facing the Christmas business

Santa and his Arvato-Elves

If Santa Claus could pick a service provider to support him in the area of logistics, he’d surely choose Arvato Supply Chain Solutions. Arvato has practically unrivaled expertise in the timely delivery of goods to stores and consumers, and its employees are in top form during the christmas season as they help fulfill orders for beauty and fashion products, consumer electronics and toys.

As specialists in both the B2B and B2C areas, the people at work in the various business units know exactly what their customers, and the customers of those customers, expect at Christmas. Fast processes and short delivery times are essential for success in the demanding period leading up to the holidays. The efforts involved during this season are greater in other parts of the supply chain too, however, as a result of extra services like customer support queries. In the business unit Consumer Products, for example, the number of products that are dispatched as a result of purchases in web-shops is many times the normal daily volume. But there is also a marked increase in product-related inquiries and therefore in the time needed to respond to customers. In the unit Hightech & Entertainment, the holiday season is distinguished primarily by a large increase in the numbers of electronic games and technical accessories that are shipped. And it isn’t just online commerce that has to run smoothly — business volumes grow substantially at brick-and-mortar stores too in the months before Christmas.

Dr. Karsten Jakuschona - Director Sales Toys at Arvato Supply Chain Solutions

Beside the typical consumer goods industries, there is naturally one sector that takes on special prominence at Christmas, a holiday so important to children: the toy industry. Arvato Supply Chain Solutions performs the logistics for several major toy manufacturers. And these companies have their peak business in the lead-up to Christmas.

Innovative science kits, vanity cases for little fans of popular Disney series, and brightly colored stuffed animals whose big eyes capture young hearts — when the VVA Customer Service department opens its doors, you might think you’ve landed in a toyland for children and adults alike.

The hottest Christmas gifts of the season can be found on almost every shelf. But the team is not here to play — there’s hard work to be done. Anyone who buys one of these brands’ products — whether from the toy section of a department store or from an online retailer — can be certain that it was picked in Verl and dispatched from there. And in the weeks leading up to Christmas, the order volumes are traditionally very high. “The last three months of the year are the main distribution time in the toy industry,” says Dr. Karsten Jakuschona, Sales Director for Toys at Arvato Supply Chain Solutions. “More than half of the total annual order volume is dispatched during this quarter alone. That means we are processing four times the usual number of orders during this season, on average.”

Flood of Packages at Year’s End

After the season, things are getting back to normal quite quickly, but until then, store shelves need to stay fully stocked over the coming weeks, to make sure every Christmas wish comes true. But that’s easier said than done. Karsten Jakuschona is concerned about the shipping providers, who are difficult to get right now: “When Christmas approaches, the transportation business starts booming. People are buying more and more gifts on the Internet each year. That has a huge impact on the availability of transportation resources.”

This development poses huge challenges for Arvato Supply Chain Solutions as a service provider and fulfillment partner — given that the aim is to keep appropriate supplies of goods on hand, and to maintain additional buffers in warehouse capacity and personnel, in order to compensate for an up to 150 percent increase in order volumes during this time. The growing online business, in particular, is bringing with it massive spikes that are getting more extreme with each passing year.

Harald Wittenstein, Technichal Manager at Arvato Supply Chain Solutions in Verl

Santa’s Little Helpers in Verl

Things are bustling in the receiving area of the toy distribution center – the storage slots are all filled. Between the pallets full of toys and stuffed animals, the forklifts are racing through the maze of goods and picking up the specific pallets they need. But how do they know where to find specific items? “It’s simple,” explains Harald Wittenstein, Technical Manager at Arvato Supply Chain Solutions in Verl. “Each storage space is managed electronically, and we’ve even had a new navigation system in operation for the past week, directing employees straight to the storage slot of the specific product.”

When toy stores or online retailers order plush animals, trading cards or board games for their customers, these products are sure to pass through the 40,000 square meter distribution center in Verl, which serves as a highly efficient distribution hub. For instance, if a toy company designs a new product and orders it through a chinese manufacturer, the company has it delivered directly to Verl, where it is stored until a retailer places an order for it. The site is equipped with an infrastructure that is customized to the needs of the toy industry and whose efficient process chains guarantee that retail customers are supplied throughout the entire year. 

Sabina Altmann (l.) and Tina Simon (r.)

“Christmas mode” in full swing

From the outbound goods area, we move on to the order-picking warehouse. The spaces are filled with rainbow-colored unicorns, sparkling dragons, and reindeer with green antlers – all waiting to be packaged and shipped to retail customers.

Up to 2,500 boxes are filled with various items here each day and shipped to retailers. Alongside the order-picking line are boxes with up to 400 items; and during the current phase, some of these boxes have to be refilled several times a day. “In the run-up to the holidays, we work exclusively in the area of dispatch, where we’re in charge of order picking,” says Sabina Altmann, who really enjoys her job, despite the heavy workload. “The employees sometimes feel like Santa’s elves in a movie, helping him get ready for Christmas.”

But instead of wearing a red-and green cap with a little bell on the tip, the busy Arvato elves carry a small computer in their hand. These handheld devices have displays that even show a picture of which stuffed animals and games belong in which box. “The most important thing is maintaining a high level of quality – though this is also one of the greatest challenges, given the current volume of orders.” The hand terminals developed by Arvato provide valuable assistance with this task. Since they have been in use, the error rate has gone down to nearly zero.

In spite of the heavy workload, they haven’t grown tired of Christmas. “I’m certainly looking forward to Christmas, and I enjoy wrapping gifts,” says Tina Simon. “But I prefer shopping in physical stores rather than online, and it can be nice chatting with the salespeople there. Toys and games are popular gifts with everyone – and they’re also interesting to talk about.” Of course, not all styles of toys suit her taste. “The same goes for me,” agrees Altmann, with a laugh. “But when I head out for my Christmas shopping, I see a lot of products from Verl. When choosing gifts for my grandchildren, a lot of my inspiration comes from products I’ve seen here.”

When “Santa’s little helpers” have packed the stuffed animals, the toys continue through the conveyor system in their boxes. As soon as the boxes have left the picking area, their weight is checked. Since the system knows the exact weight of the empty boxes and the individual items in them, misloaded packages are prevented from passing through the system. As soon as a package is registered as being too heavy or too light, the computer automatically removes it from the line. Then an employee has to review the contents. If everything is fine, the box is closed and can continue toward the shipping area. “But before the papers can be printed, the retailers’ special requests still need to be fulfilled,” says Wittenstein. “And in the toy industry, these requests can be quite diverse.” They range from packaging and repackaging requests, to special stickers, labels, ribbons and stamps, to the assembly of store displays designed for the sales floor. “Almost every package we process involves some type of special service – that’s just part of the job.” After all, the retail industry also has its holiday wish list.

And, just like Santa and his elves, the employees at Arvato Supply Chain Solutions in Verl want to make sure every wish comes true. The finished boxes might not be loaded onto a sleigh, but the trucks that leave the facility each day are certainly filled with all kinds of Christmas gifts...

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