Summer time is here, the kids are out of school, time to hit the pool, right? I know that you don't want to hear this, but it is prime time to conduct an operational audit to identify those areas needing improvements. Believe it or not there are only 5 months left before the Holiday season is here again! Make certain that you have ample time to implement your fixes, develop strategies and plans for the distribution center. What are the objectives you and your management team have set for improving operations this year?
Here are a few areas to look at for your operational audit in order to determine what changes will be most beneficial to your distribution center and operations:
While it’s still somewhat fresh in the minds of your supervisors and employees, find out where processes broke down – and what ideas they have for improving them. The focus of this operational audit should focus on several key factors, which include:
- Warehouse layout and product flow. Trace the flow of inbound product and returns and outbound customer orders. What do you conclude from this? Is your warehouse layout appropriate for peak shipping times? Where are the bottlenecks and what’s causing them?
- Use of technology. Warehouses are no longer just metal racks that hold inventory. Efficient, profitable businesses understand that technology can play a vital role in supporting the customer, and profitability. Are your systems capable of efficient pick ticket batching, replenishment processes or inventory adjustments? Are you leveraging technology in the warehouse or simply just printing paper? What technology out there - like voice enabling technology - can increase productivity and throughput in the distribution center?
- Use of material handling solutions. The same as with technology, the right material handling equipment (MHE) in conjunction with the right warehouse layout will reduce bottlenecks and streamline process – when done poorly it can sink a business. How could changes in your MHE boost your efficiency?
- Warehouse labor. More than 50% of the cost per order is in labor. And more than half of the labor cost is in pick and pack. What processes and technology can eliminate “touches” of product? Did you have the right ratio of pickers to packers? How would the labor be affected if you had a more efficient layout, material handling equipment or utilized better technology?
- Cost of Shipping. Now is the time to identify whether or not you can reduce your inbound and outbound shipping rates by reviewing and renegotiating your contracts with UPS, FedEx and your freight carriers. How has the new DIM weight rates affected your business over the last 6 months? How can a no-charge freight rate and contract analysis help reduce these costs?
By addressing these concerns now, you will be able to determine what changes need to be made, and have the time to implement, and test the changes. Incrementally raise the bar each year for higher productivity and efficiency. Depending on the types of changes that need to be made, these might take 4-6 months to fully implement.