15 Ways Identified Through Operational Assessment to Reduce Expenses

Through the hundreds of operational assessment projects we have worked on over the years, we haveOperational Assessment Ideas compiled the following quick-hitting list that will assist in reducing your operating expenses in the distribution center.

READ: Key Principles to Assessing Your Warehouse Operations

Here is a summary:

  1. Efficient receiving. Inventory accuracy and product flow through the distribution center all start with receiving. The single biggest improvement companies can often make is to develop and implement vendor compliance policies.

  2. Reduce freight costs. Outbound freight now exceeds direct labor in many distribution centers. Don’t be too proud to ask a consultant to help reduce your cost of shipping and to help identify areas on your carrier contracts that will reduce your rates. Many times these consultants will work on a project basis or on a shared savings basis. There are too many dollars at stake not to have someone help you.

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Operational Assessment to Improve Distribution Center Capacity

Is your distribution center running out of space? Did you feel the pressure of needed space this pastOperational Assessment for Capacity Holiday season? Considering the following tips could add on two to five more years in your facility. Here are the top factors we review during an operational assessment when looking at warehouse layout to improve capacity.

  1. Thoroughly understand the flow and utilization of the current layout, including rack configuration, slotting/pick philosophy, receiving, putaway, replenishment, inventory management, and packing and shipping. Include peak seasonal trends and a thorough volume analysis of inbound and outbound product flow.

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Operational Audit: Getting Ready for the Holiday Season

It seems never-ending, but yes, its time that you kick-off your operational audit in order to identify those Conduct Operational Auditproblem areas from this past Holiday season. This should give you enough time to implement any recommendations, plans and strategies developed to prepare for the upcoming Holiday season. What are the objectives you and your management team have set for improving operations?

Here are 8 steps for determining what changes will be most beneficial to your operations:

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Operational Assessment Shows Cost of an Error to Your Business

Many multichannel businesses are partners with marketplaces like Amazon and eBay, and big-box retailersbigstock-Portrait-of-screaming-business-64199725 like Sears, Walmart and the like.  With them, you’re not just processing orders, managing inventory and agreeing to performance standards.  Working with one of our clients recently in their call center’s support operations for their marketplaces, we focused our attention on the cost of an error.  

READ: Key Principles to Assessing Your Warehouse Operations

When was the last time you conducted an operational assessment to analyze the cost of various types of errors? Not just the number of times monthly or annually a particular error occurs, but what is the actual cost of that type of fulfillment error?  The types of errors I’m referring to are mis-picks, customers' lost packages by the carrier, packages damaged in transit, etc.  The best place to obviously capture these are in the call center and fulfillment center.  

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Warehouse Improvements to Implement Before Holiday Season

Believe it or not, there is still a window of opportunity to make sure you are ready for this Holiday Season. Just think back to last year's peak season for a moment. Can you and your business afford to have Round 2 (and for some of you it may be Round 10 or 12) of the issues that you faced in past peak seasons? You may have completed a brief post Holiday Season review of what worked and what needs to change in your operations. Dust off that document and review with management the outlined issues that occurred last year and the ones that still need to be addressed. This should be done before any other areas are assessed and tackled.

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Managing Your Warehouse Labor to Reduce Overall Expenses

Labor generally makes up 60–65% of the total cost of warehouse fulfillment (not including shipping). While hourly labor rates have increased 10% to 15% in the past five years, overall DC productivity has remained flat—so the cost per unit worked has increased. High turnover (15–25% or more in many distribution centers) adds even more costs. With most businesses struggling in the current economy, it’s imperative to get more from the resources you have.  Selecting, training, and retaining good employees is one key to controlling rising costs in the warehouse.

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Four Critical Areas to Evaluate in a Warehouse Assessment

There are four key areas that should be evaluated during a warehouse assessment. They make up the most critical aspects of any fulfillment operation. They are:

  1. Labor
  2. Facilities
  3. Workflow and procedures
  4. Systems

Labor is incontestably the most expensive area on your profit and loss statement relating to fulfillment, so it’s important to get the most for your payroll dollar. Labor, in turn, consists of four areas, the first two of which can be easily quantified; the others are more difficult to quantify but should not be ignored.

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Planning A Warehouse Move - Issues And Questions To Resolve

We recently have been working with a few warehouse clients that are involved in moving to a new warehouse facility. Along the way, it became apparent that the planning for the move required a lot more time and effort than originally thought. What seems like a simple concept can become a daunting task in a hurry.

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Warehouse First Impressions Tell A Lot During Assessments

When we are asked to perform a warehouse operations assessment for a client, the first thing I like to do is take a quick walk around the warehouse. It may surprise you, but it is usually possible to determine what we will see during the detailed assessment in the first minute or two of the walk around. The initial impression gained in the warehouse is a pretty good indicator of how efficient and productive the operation will be.

I usually put together a few observations occurring in that first few minutes that can be a good indication of what to expect when the detailed operations assessment is underway.

These are some actual situations I have encountered recently during the first quick walk around:

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Changing Your Warehouse's Culture

On one of our recent warehouse projects, something struck me that I knew existed but always seemed to lurk in the background. This particular project brought it to the forefront. It is a simple observation but one that can cause havoc in an organization. What I observed was the staking out of territory to the point that the sum of the parts was far less than the whole.

It is human nature to want to protect your turf and do what is best for your area of the operation. When we look at the warehouse function and the multitude of other functional areas that impact or are impacted by fulfillment, it is frightening to think that the “silo” mentality is as strong as it is. With all of the external issues a company faces today, the last thing you need are internal conflicts that are aimed at sub optimizing the profit potential of the whole business.

There are many ways that this phenomenon manifests itself. One way is the approach that is based on the supposition that everyone else needs to change the way they handle their jobs and everything would be all right. Looking inward to see where improvements can be made is a tough process. It is much easier to look for ways that others can change. This attitude will never result in effective change taking place that can improve your business.

READ: 38 Fulfillment Cost Reduction and Productivity Improvement Ideas
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