Yikes – Not our finest hour, and likely to get worse before it gets better. 

Hey there, I’m usually the bearer of good news (and check out my next post, it’s epic) but this is quite sobering. I’ve never communicated anything like in the 20 years since I founded SCS. 

SCS NZ, overall, is performing at our lowest levels ever, our accuracy levels on some accounts has dropped up to 0.5%, which sounds small but is HUGE we always perform in the 99.7 to 100% and for the first time ever we are seeing some order accuracy KPIs in the low 99% this is impacting both out our customers and our CS teams on top of which we’re behind on orders, half of our facilities are 2 days behind and in one facility we’re currently 5 days behind.  It’s gut wrenching for a company that built its reputation on being the best, I wanted to share the kind of challenges we’re experiencing, I want to thank the customers that are understanding and I especially want to thank the staff, many of whom are going above and beyond like never before, you are our unsung heroes and if people actually knew the extraordinary lengths many of you are going to you’d all be getting a medal. 

What’s the go?

Covid is hammering us, yeah I know, we’re all over hearing about Covid but its impacting us in ways that no one is talking about, late last week I learnt of a third suicide. In the last two weeks I know of two young men and one woman who have taken their lives that are closely associated with people who are just on our SLT. We know one at least was directly related to Covid generated stress, new business, invested everything, business failing, debts mounting, with all the uncertainty it was too much, only 30 years old. 

The stress this time around is insane, much higher than the previous lockdown, we have had key staff on stress leave which is awful but unhelpful as it creates more stress for already stressed staff when the leaders are not there to … lead. 

Global supply chains are dysfunctional at levels never seen, not only are freight prices up to 4 x higher which is making some businesses unviable, the delays are unprecedented and downstream impacts are significant, for us we are thousands of pallets over capacity, we get very lumpy inwards and have been forced to spin up 4 additional facilities which drags staff away from order processing and forces our normal 9-10 hours days to be 16 hour days for many of us which exhausts staff which creates errors and takes a toll on wellbeing. 

The key things that are impacting SCS are:

1. Storage, there is no spare space in AKL, lots of our clients are overordering to compensate for unprecedented global supply chain issues. This has seen us spin up 4 overflow facilities in the last 6 months, which has been impossible. Spinning up a facility is a HUGE job both from an IT and labour resource perspective. Spinning up one facility per annum is a BIG job, takes a lot of planning and people. Four in six months is impossible, exhausting and puts unprecedented pressure on the business. It basically forces a lot of key staff to increase their work load by 50% (up to 60-80 hours per week) which introduces fatigue, stress and errors.
   
2. Labour, its soooo hard finding quality staff. We have had to find 60 staff in the last 2 months, in the middle of pandemic with no immigration in a city that is in lockdown. Miraculously we’ve found 50 staff thanks to key staff literally working 7 days  for the last 2 months, the usual methods of advertising and using 4 agencies have yielded poor outcomes (staff don’t want to interview during lockdown) some of our best results came through an idea to launch recruitment campaigns through Social Media sites that I got Glass Elephant to spin up, we’ve got signs outside all of facilities touting the benefits of SCS as an employer of choice (something we don’t do enough) and tapping our network like mad, that said there is a % of people we would not normally hire outside of these covid induced conditions that that are creating the new level of errors which slows us down further fixing issues.  The other challenge is trying to jam 12 months of training into a few days. The upside is we’ve fund some AMAZIONG new people to join the family which we’re super excited about.
3. Bubbles, we can’t move staff around to hot spots (high activity accounts), one thing we do brilliantly outside of covid is shift teams around to manage order peaks for clients to maintain industry leading fulfilment times. During covid we can’t, our only option is to keep driving existing staff harder to do more and longer shifts which results in fatigue which results in errors which adds more stress. Someone I know runs a medical center in South Auckland and is operating at 50% of the legal requirement but they have no choice…this scenario of being under-resourced, no immigration to support NZ businesses and being forced to overwork stressed staff is epidemic in our country atm. In Melbourne where hospo is reopening and trade is up 200% staff are down 50%. 
4. Infection, we had our second suspected covid case on Friday and been instructed to shut down a shift of 40 staff until all the testing is done this means we will lose yet another 3 working days in that facility. Earlier we lost a shift of 14 staff for 4 days in another facility. The stress to perform with unprecedented increased B2C volumes, no immigration and government mandated shift closures that shut facilities down for days is beyond challenging. 
5. Covid management, we have to adhere to very strict rules around shift management, timings, temperature checks, new staff induction protocols,  cleaning schedules and deep cleaning responses all slow us down piling more pressure on top our ability to get orders out fast and accurately, the risk is we rush to catch up which inevitably creates more errors which cost time to fix which slows us down which creates more stress. 
6. Carriers. One of our key providers is up to 8 days behind (mainly AKL) dealing with a 60% increase in expected volume and they cant find enough staff which is creating even more stress and consuming our CS teams with queries and complaints from sometimes angry and frustrated customers the carriers are overwhelmed and wait times have blown out from say 10 minutes to up to 40 minutes before we can even speak to someone meanwhile its affecting our CS teams ability to respond in our normal time frames to our standard customer enquiries. I fielded an angry call from a client whose shipment has been missing since the 8th of Oct and its the only piece in the country and their customer has had to close the business until its found – the cost and stress is unfathomable. 
   1. In our USA facility last year we used FedEx their performance was insane hitting a 2 day 98% DIFOT USA wide through Xmas when competitors were up to 4 weeks behind however the volumes were so high they put caps on their largest accounts, we were capped at 5000 orders per day during peak which caused a lot of stress – clients had to actually slow down their sales to comply with the caps…its possible NZ may experience similar issues my biggest recommendation is buy Xmas pressies right now and try and encourage your retailers to move forward their purchases a month. It’s only going to get worse under continued lockdown as we now head into the silly season.
      
      
      

The good news

Our people, I am SOOOO proud of our SCS staff. The conditions we’re operating in are both unreasonable and unprecedented. The stress is the highest I’ve ever seen, in my life,  most of us are stepping up with many working 6-7 days a week and extended shifts. As soon as we learnt of the potential covid case on Friday, ~15 of our wonderful staff stepped up to volunteer to extend shifts and work weekends to help the business and our customers – incredible. The personal sacrifices many of our staff are making on an almost daily basis to help our clients is awe-inspiring. We’ve even had some staff step up and help our key courier partner NZP who is experiencing delays of up to and over a week with AKL deliveries.   On Saturday Michelle and I volunteered to help out with their backlog for a day were we hit a new corporate volunteer record of ~140 parcels (it was v cool delivering some SCS parcels but we were shocked at the number of people not at home on Sat during a lockdown that would require subsequent delivery attempts what a huge waste of time). 

As mentioned in AKL most of our facilities are 2-3 days behind on orders with our new facility 5 days behind but CHH is up to date! The good news of having so many facilities is that we have an inbuilt covid mitigation strategy, whilst it’s terrible when a shift gets shut down there are two upsides, firstly it only effects that facility and secondly most of our facilities were split into double shifts within 12 hours of the initial lockdown announcement so even with one shift locked down we can still limp along processing critical orders.  Where smaller businesses only have one facility and one shift they are die as everything just stops. 

We’re doing better than a lot of others, I was speaking to the SC Manager of one of NZs largest retail companies who have a very large ecom business yesterday, with tens of millions invested in their fulfilment capability they have recently clawed back from 13 days behind to 8. I’ve personally been waiting 5 weeks for some wood for a home project from the local mill, getting the wood isn’t the issue, it’s finding staff to process the orders. I am hearing this everywhere. 

We are turning away potential 3PL customers every week including some significant ones i.e. >1000 pallets. They are either frustrated by the current 3PL or the 3PL is firing them as their way to manage with their own space and labour challenges… SCS went on a sales freeze in July this year until May/June next year as we focus 100% of our attention on our existing customers and clients who had committed to us before the freeze. The flood of new business enquiries is unprecedented. SCS usually goes on a sales freeze between Nov and Feb as we focus all of our energy on the silly season, occasionally we will support an “emergency extraction” where a client’s business is close to failing due to an underperforming 3PL (4.25 out of 5 3PL relationships fail to achieve their expected outcomes at the time of signing) this year I’ve had to turn away two such cases for the first time and it’s not even Nov. 

We have space for our ALL of our existing clients, SCS launched a strategy last year to open a stunning 20,000 pallet capacity facility which will be investing robotics solutions into. We expected to fill the new facility by the end of 2023, bar one small space allocation left (which I am waiting on one final commitment for) it is all pre-sold.  I am fielding calls from competitors and large chain stores looking for space every week atm. 

So its crazy times. Whilst L3 continues it will remain like this and of course the next challenge is we are about to hit the silly season where things are going to really get funky so hold on!

So more than anything, yes I want to thank all of our clients are supporting us through the lockdown and understanding of the extraordinary pressures we and other logistics companies are facing but more than anything I want to make a HUGE SHOUTOUT to our amazing staff. 

Thank you for going the extra mile for our customers

Thank you for going the extra mile for our business and having our back

Thank you for the extra hours 

Thank you for enduring the stress

Thank you, Thank you, thank you. 

#teamSCSuROCK

Brad