F. Curtis Barry & Company Blog

Warehouses are expensive for companies to operate considering the total fulfillment costs of labor, occupancy, and storage and material handling assets. Often, warehouse space is 15 to 20% of the cost per order.

Increasing capacity of the warehouse should not be confined to changes in space use and increasing stock locations only. The assessment and solutions need to take into account the warehouse layout, product flow, labor efficiency, storage and material handling options, safety, throughput, and warehousing system functions, to name a few elements. It’s the integration of these elements that makes for efficiency.

Many businesses moved from inventory management system solely maintaining records and reporting on inventory to more strategic inventory requirements to plan, project and fill customer orders and improve profitability. With all of the options available today, how do you know which solution will work best for you and your business? And what features should you be looking for?

Even with technology advancements and headlines alluding to robot-operated warehouses, most fulfillment centers and warehouses rely on manual labor. In fact, only the largest companies employ and justify advanced automation. Despite the cost prohibitiveness of automation for many companies, manual labor is not cheap, either.

The function of a spare parts warehouse is to stock all critical inventory parts, material, and tools necessary to maintain and keep a manufacturing line up and operational.  Often, spare parts warehouses are treated as a stepchild to the procurement or manufacturing of a business.  Neglecting your spare parts warehouses will not benefit your business as they often must go through transitions to improve their support of growing production volumes. 

When you look at all of the metrics multichannel companies can use to measure customer service, Initial Order Fill Rate (IOFR), or the percentage of orders that shipped complete, is the one that we think is best. But it’s also not often used.

Many consider IOFR to be just an inventory measure. But, its usefulness goes far beyond that. Here are four fill rate metrics and their formulae that companies use:

A barcode is a visual, machine-readable representation of data – it is essentially electronic data entry using a scanner.

The data contained in the barcode is typically tied to something, such as a SKU or a purchase order. Once scanned, this data is accessed and displayed for the user to learn more information or take an action.

Managing vendor relations is an essential part of today’s ecommerce operations. Vendor compliance is a great strategy for reducing costs in your business. A well-thought-out, formal vendor compliance policy can:

To determine if your warehouse operation is as efficient as it can be, start with a warehouse operations audit or assessment. This audit takes into account quantitative and qualitative aspects of the warehouse operations, processes, and systems.

First, assess your center’s processes and costs then answer these questions:

• receiving, putting away and storing the product.
• fulfilling orders through picking, packing, shipping.
• reverse logistics or returns processing from customers.

Historically, fulfillment managers only looked at the labor portion of the CPO. But, this may only be 50% of the costs. A fully loaded cost per order is a better metric and includes facilities and occupancy costs and packing material costs.

This blog shows you how to calculate the fulfillment cost per order, cost per line, and cost per box shipped.

A backorder is a customer order for a product from a retailer or supplier that cannot be shipped immediately or by the promised date.  Simply stated, backorders are a temporary out of stock condition.  An order is not a sale that you can take to the bank until the item is shipped or picked up at the store, the transaction is invoiced, and funds are deposited.

The rate of backorder – the percentage of order lines that cannot be shipped out of the total items ordered for the day - is an excellent measure of your inventory management and the customer service you are providing.  An even better measure is the initial customer order fill rate, discussed below.