F. Curtis Barry & Company Blog

With labor expenses increasing, small parcel shipping becoming more expensive and carriers struggling to support the volumes, companies are implementing new strategies with Micro Fulfillment Centers (MFC).

According to Indeed.com, the job employment website, the average base pay for warehouse workers is $12.92 in the U.S. However, when you factor in benefits such as healthcare, training and more – the fully loaded cost balloons to $22.22 per hour. Companies typically have the following costs over and above the base pay:

• Benefits and healthcare 35% of payroll costs
• Workers comp and unemployment 8% of payroll costs
• Training 4% of payroll costs
• Recruitment, hiring and HR 25% of payroll costs

An efficient warehouse maximizes its space use, streamlines operational functions, and increases employee productivity. A Warehouse Management System (WMS) standardizes and manages the four-wall activities and inventory management. When a warehouse is efficient, customers receive their orders on time, and the company's costs are in-line with management’s financial plan.

Below are nine major ways a WMS improves operations efficiency.

To say 2020 was a curveball most businesses would be a gross understatement. While Americans suffered and many small businesses closed permanently, multichannel businesses as a whole saw significantly higher volumes, largely from direct-to-customer orders. The difficulty was in trying to keep workers safe and have enough labor to ship customer orders without falling more than a few days behind. For some clients, the goal was to merely not fall more than 10-14 days behind.

Like many consumers, you may indeed still be anxiously awaiting gifts for family and friends due to the record-breaking parcel volumes shipped during this past holiday season. Whether you are a retailer, manufacturer, or eCommerce shipper, 2020 has no doubt been a challenging year for most from a Supply Chain perspective. With the record parcel volumes for UPS, FedEx, USPS and the Regional Carriers since the beginning of Covid-19 through the holidays, carriers were challenged like never before to meet this surge of parcel volumes and maintain service standards.

“If you cannot measure it, you cannot improve it.”

That’s an observation that famed British physicist, Lord Kelvin, made about scientific experimentation and operational improvements over 100 years ago. It’s still pertinent today as we seek to improve e-commerce operations, be competitive and look to improve our profitability and customer service.

In order to improve operations, we first need to measure key metrics, which are units of work such as the total warehouse cost per order, shipped cost per carton, the cost per line on an order and cost per unit. Once we understand what these metrics show, we can then develop options for processes that reduce steps and therefore cost; or improve service levels in the warehouse such as order turnaround time measured in hours.

Companies that utilize third party fulfillment (3PL) services sometimes reach a point where they consider transitioning from the 3PL services to internal warehousing and order fulfillment. Some of what drives these decisions is to control costs, whereas others have had a bad experience with 3PLs and now only trust themselves with their product. Using a 3PL isn’t for every company.

Reviewing contracts for third party logistic (3PL) providers can be a daunting task – especially for those not familiar with the process.  One of the most critical aspects in any 3PL contract is the language surrounding pricing and rate increases.  It is vital to ensure that the language is fair for both the customer, as well as the 3PL.   

Most companies want to improve their operations and become more efficient. The desire and need to improve is there. However, their systems are holding them back. FCBCO sees time and time again during operational assessments, the majority of the recommendations for becoming more efficient and moving to the next level operationally, cannot be implemented without implementing a new system. The right Warehouse Management System (WMS) for your company makes improvement possible through stronger functionality and improved warehousing processes.

In our consulting practice, we often hear the question "how does my cost per order compare to others". Management wants to be sure that the warehouse and distribution expenses are in line, and as efficient as possible. Companies typically benchmark against other warehouse and distribution center operations, to measure the performance of their company’s services, processes and metrics against those of another business.  Companies also benchmark against the best in a specific industry (i.e. “best in class.”). The point of benchmarking is to identify internal opportunities for improvement as companies strive for continuous process improvement.