Pay close attention to the trick-or-treaters who show up at your door this Halloween. If you spot Alice in Wonderland, Waldo from Where's Waldo? or Spider-Man, there's a good chance the costume came from Minnesota-based HalloweenCostumes.com.
The e-tailer does 80 percent of its business during the roughly seven weeks between Labor Day and Halloween, its peak season. This year, the company expects to ship 65,000 UPS packages per day during peak, compared with 2,000 per day the rest of the year.
When HalloweenCostumes.com was looking for a shipping partner willing to help with its crazy but critical peak season, Brian Pike, UPS major account manager, led the UPS effort to assist the company in moving orders cost effectively.
The logistical makeover didn't stop with HalloweenCostumes.com itself. UPS reengineered its own operations so package cars leave later each night. A special sorting of packages takes place between 3 a.m. and 5 a.m. at the Minneapolis airport. The payoff: Costumes ship faster than ever and at a lower cost compared with the company's prior shipper.
Choosing UPS has paid other dividends as well. The road for many costumes coming into the United States starts in China, and visibility into inbound containers had been a problem for a long time, according to Rebecca Perreault, who's in charge of international shipping. "One big reason we ended up with UPS is Flex® Global View, which allows us visibility and detail on a level we've never experienced before with a freight forwarder."
Perreault outlined three key differences: "First, the containers arrive five days earlier, and that makes everyone happier. Second, we can pinpoint where things are. And finally, that visibility means our receiving managers can predict staffing needs. We don't need to hurry up and bring people in, hold them overtime or have people standing around doing nothing."
"Every year we look for ways to improve the warehouse and adjust for peak season," says shipping manager Jerry Westphal. "This year an engineer from UPS spent a week with us looking at our business and what we planned to do, and he confirmed that a lot of the things we were thinking about doing were the right decisions."
The biggest changes involve the way the company puts its products into bins to efficiently use space, he says. "We want to optimize space for products that sell faster than others, so we will position an ‘A' mover like Waldo right next to our autobaggers, and give slower movers less space."
According to Westphal, autobaggers in the shipping lanes dramatically streamline packing. The machine puffs air to open a shipping bag, prints a label on it and closes it. "If we manually pack, label and seal a bag, on average, it takes about two minutes," Westphal says. "Someone using an autobagger can do seven to 10 bags a minute, which is quite an efficiency gain for us."
While UPS does not handle all of HalloweenCostumes.com's international shipping, the partnership approach UPS takes to serving its customers has helped with both inbound and outbound small-package operations in two ways.
"Duty drawbacks allow you to recover duties paid on goods brought into the U.S. that are later sold internationally. We had heard about this before, but all we got from our previous supplier was a two-page pamphlet. We needed a clear explanation, and we didn't know you could recover three prior years' worth of duties until UPS told us," Perreault explains. "UPS gave us the contacts we needed and we are applying for the first time. The most recent three years should involve a six-figure recovery."
Every country requires payment of duties on imported goods, but there is a threshold – the "de minimis" amount – below which businesses do not pay a duty. The United Kingdom, for example, the company's biggest international customer, sets its de minimis at $150.
"Some 90 percent of our orders are under that amount. But we were shipping consolidated, so the value of the goods was well over the threshold every time," Perreault says. "Switching to individual small packages keeps us well under that, and will pull back a huge amount of savings."
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