Business leaders know that perfect service is the key to retaining existing customers and bringing in new ones. While the term “service” encompasses numerous things, a significant portion of it depends on your ability to consistently deliver on-time and in-full. Whether you’re B2B or B2C, your customer wants whatever product they ordered when it was promised to them.
If you can’t do this, you’ll struggle to maintain your foothold in the market. No amount of apologizing will save you - things are too competitive in these economic conditions, not to mention that on-time delivery expectations are higher than ever due to the Amazon effect.
While there’s multiple factors that make consistent on-time fulfillment a challenge, the largest culprit is the fact that order volumes fluctuate constantly and unpredictably for most manufacturers and distributors. When relying on the traditional staff to averages approach with only a fixed workforce, trying to address this without inflating costs becomes an eternal struggle.
In this article, we’ll cover why staffing to averages leads to average performance, and how Veryable’s on-demand labor model helps businesses achieve perfect service, cut costs, and achieve rapid, sustainable growth.
The traditional approach to operations is to staff based on historical averages, relying on overtime to keep up during busier times and eating the excess costs during slower times.
Here’s why this is ineffective:
As previously mentioned, your order volumes aren’t the same each day and often shift unpredictably. The graph below shows average vs. actual demand for one of our distribution partners. While not every business’s demand will fluctuate exactly like this, our experience working with thousands of businesses tells us that this is a common pattern.
As you can see above, very rarely is demand ever at the average threshold. If relying on the staff to averages approach, this business would be over or understaffed the vast majority of the time.
When overstaffed, this business would be paying workers to stand around and destroying profit margins. In this situation, layoffs would make no sense because this business would likely need these workers just a few weeks later. With how costly and time consuming it is to hire and onboard new FTEs, whatever cost savings were achieved by scaling down for a few weeks would disappear when it comes time to scale back up.
When understaffed, this business would have been forced to rely on overtime to keep up. Paying time and a half isn’t cost effective, not to mention that asking employees to work longer hours oftentimes lead to mistakes that are just as costly as a late delivery. Not only that but high overtime reliance leads to high turnover in the long run. Backfilling turnover with new hires is expensive as it is, but even more so when workers quit at inopportune times and cause you to miss important deadlines.
The bottom line is: staffing to averages makes it impossible to get all orders out on-time and within cost targets.
Thankfully, Veryable unlocks a new option.
Our on-demand marketplace for manufacturing and warehousing labor connects businesses with thousands of skilled and vetted workers at the click of a button, enabling businesses to create a flexible extension of their full-time workforce called a labor pool.
By building a labor pool, businesses gain the ability to scale labor up and down in tandem with demand.
Here’s what this looks like:
Instead of staffing to historical averages (left side of graphic), just keep your full-time headcount at your minimum average volume (purple dashed line).
When demand comes in above that minimum threshold (closer to the pink dashed line), that’s when you flex up your capacity with your on-demand labor pool.
When your volume is lower, (closer to the purple dashed line), reduce usage accordingly. Now you’re perfectly right sized to meet lower demand and not destroying your margins by being overstaffed.
With the nature of the platform in which you post work opportunities for one day or shift at a time, you can bring in extra help last minute to cover turnover, no shows, or last minute orders without having to pay someone for more than you’ll need them for. Additionally, with thousands of skilled and vetted workers in each of our markets, there's no limit to how drastically you can scale up. In fact, one of our partners who was in the middle of their peak season and already using on-demand labor to keep up was able to scale up even further and seamlessly acquire a competitor without falling behind.
Giving your operations team the ability to match headcount to demand on a daily basis means orders will go out on-time regardless of volume. Last minute orders, FTE turnover, etc will no longer impact your ability to meet your commitments, as your operations team will be able to bring in extra workers at the click of a button.
In fact, many Veryable users are able to successfully bring in extra help even on the same day. As RTIC Outdoor’s Innovation Engineer Jared Murphy puts it, “The nice thing with Veryable is that we can really adapt quickly. So from one day to the next day, we can adapt, but also we've had some situations where the same day - we come in on a Monday and we have three thousand more orders than what we were expecting. And so by ten o'clock, we can have another group of people coming in.”
By leveraging best in-class service, sales will be able to more effectively retain customers as well as win new business. Also, think about how much more effective your marketing campaigns and sales collateral will be when you're able to showcase your best in-class on-time fulfillment. Additionally, with essentially infinite flexible capacity at your disposal, you’ll no longer have to turn down orders during busier times due to capacity constraints or have to hope and pray that your team can keep up. Instead, you can be aggressive and go after every opportunity out there.
As JaNiece Cranmer, President of Scentsational Soaps & Candles puts it, “We onboarded a new customer that put in 1.2 million units in just six months. We would not have been able to take on that customer without our Veryable labor pool”.
Eliminating the costly nature of constantly being over or understaffed will drastically reduce labor costs. With labor costs being one of your largest expenses, reducing costs here will have significant impacts on your bottom line. You’ll also be able to eliminate detention fees and other expenses related to expediting orders. This not only allows you to maintain an edge over your competitors with lower prices, but it frees up funds to reinvest into your business.
As Wilson Duke, Warehouse Director at Made-In Cookware puts it - “it's all about keeping our cost per unit, labor cost per unit as low as we possibly can by being able to throttle up and throttle down with our labor. That allows us to put money in other places, whether, you know, it's R&D, marketing, somewhere instead of having this big bucket for just labor costs. So it allows us to grow our brand… and sell more products.”
Lastly, best in-class service means you can eliminate the costly nature of always having to replace disappointed customers.
Let’s say you just spent several months trying to acquire a new customer, only to lose them shortly after because you couldn’t deliver on your promises. Even if they did business with you for a short period of time, when you factor in the cost of acquisition, you likely made zero profit off this endeavor. Now, instead of a customer that’s potentially worth millions of dollars in lifetime value and can potentially refer other businesses to you, you have a disappointed one who will likely never do business with you again. Eliminating situations like this will have significant impacts on your bottom line and allow you to offer lower, more competitive pricing.
The Folde, an Austin, TX based laundry delivery service had been operating for 5 years and wanted to keep growing, but was having to turn down orders due to labor constraints. In fact, they had to turn off successful marketing campaigns because they couldn’t fulfill any additional orders. Despite their best efforts, labor constraints kept the team from retaining customers because customer support issues began piling up. The owners and managers were already folding clothes until 3am some nights to keep up, and this led to burnout and retention issues among both employees and management.
By building an on-demand labor pool skilled in laundry folding, housekeeping, and general laborer duties, the Folde gained the ability to match labor capacity to demand on a daily basis. This helped them get all orders out on-time regardless of daily volume, and take on more business without having to burn out managers and employees or make risky decisions.
After just 6 months of using Veryable, The Folde achieved the following results:
To see the full case study, click here.
At the end of the day, your ability to grow your sales and maintain an edge over your competition depends on your operations team's ability to get orders out on-time and within cost targets.
By leveraging Veryable’s on-demand labor model, you’ll be giving your operations team the tools they need to deliver the maximum return for the business and the most value for the customer. Furthermore with essentially infinite flexible capacity at your disposal, you can focus on growing your business without having to worry about whether your team can keep up.
The first step in getting started is to create your free business profile - this only takes a few minutes. Our team of experts will reach out shortly after to answer any questions you have and ensure your operations team is set up for success.
If you need any help, please contact us.
To learn more about the Veryable solution, click here.
Create a free business profile today to explore our platform.
