17 Ways to Save Money and Reduce Fulfillment Costs

fulfillment

As part of our distribution consulting services, we have performed hundreds of operational assessments and identified several ways companies can save money through improved order processing and inventory storage.  We have compiled the following quick-hitting list that will assist in reducing your supply chain operating expenses and improving customer satisfaction. 

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When to Consider an Assessment of Your Warehouse Operations?

Warehousing and distribution are dynamic industries, with many facets always in motion – whether it’s the changing supply chain to meet current constraints, continual shipping cost increases, or labor challenges that threaten to impede growth.  The operations in your distribution center must also change, driven by a mindset of continual process improvement as part of your overall supply chain strategy. 

All too often, we see operations that have become stagnant or once optimized but then managed and run the same way for many years with little change.  Many times, they have not stayed proactive, and their costs, processes, and systems do not serve the company well.

Distribution and warehouse operational assessments allow companies to review the people, processes, layout, and systems to identify where, and how, changes should occur.  The goal of any operations assessment is to improve operational efficiencies; drive down costs; increase throughput while meeting or exceeding customer expectations. 

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What Is An Operational Assessment In Fulfillment?

As warehouse consultants, we work with a wide range of businesses, the discussions often surround topics such as, "How do we know if we are as efficient as we could be?  What do we need to change to support the business’ growth and order fulfillment needs?”  The short answer is typically companies need to perform a warehouse or distribution center operations assessment.  operational assessment

So, what is an operations assessment?  It is a methodical and comprehensive approach to analyzing all facets of the operations – from organizational staffing, team members and people utilization; processes, and warehouse management systems; to the layout of the facility; and how material handling equipment and automation are deployed. The objectives are to identify all the ways in which the warehouse operations and the physical assets can/should be improved to meet both the customer’s and management’s expectations and requirements.   These recommendations should then be prioritized based on resources; capital expenditures required as well as benefits to build a roadmap for implementing the recommendations. 

Read: The Ultimate Guide To Operations Assessments

When Should a Warehouse Operations Assessment be Performed?

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9 Distribution Center Benefits From Capturing Item Weight & Dimensions

Operations are under a lot of pressure to continually meet customer demands, as well as to support marketing and merchandising initiatives which often means adding many products, providing value added services to customers, and increasing order volumes. From a warehousing and distribution consultant perspective, we are often asked what the tasks are that the warehouse operations can undertake, that can have the largest impact.

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16 Ways to Increase Distribution Center Capacity

As a basic principle, companies need to ensure that the operations are as efficient as possible, increasingthroughput as much as possible while maximizing the capacity and utilization of the space before opting to move to a new facility.  It is critical that the operations have truly taken advantage of the existing facility, due to the high cost of relocating distribution center operations.  

Relocating a facility can, at times, be inevitable, but the disruption of business and impacts on labor mean that you must at first be sure that you have maximized the existing facility. In addition, most major markets are at record levels of warehouse occupancy rates, and lease costs are at all-time highs.  New warehouses being built on speculation are large centers that may not be suitable for small to moderate-sized businesses. 

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How Automation Is Reducing Labor Cost and Improving Order Turnaround Time

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.

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Use Operational Assessment to Set, Report & Improve Productivity Goals

Many managers look only at the negatives when talking about warehouse productivity. But, most people want to be in Operational Assessment for Productivity Goalsalignment with your productivity goals and to contribute in meaningful ways to the success of your business.

As I conduct an operational assessment with companies focusing on benchmarking and productivity, I find many companies do not openly share their warehouse KPIs and results with employees. Many don’t even have a formal, weekly process for capturing and reporting the KPIs. Those that do a good job of the weekly reporting often don’t have department and individual employee productivity goals and don’t publicly publish the results. You can’t improve something you haven’t measured.

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Taking Physical Inventory: 13 Best Practices for Counting Inventory

taking-physical-inventory-best-practicesInventory is typically the largest balance sheet asset in most companies. Accurate inventory is required to deliver timely and accurate customer service as well as calculate profitability correctly.

The process of taking physical inventory once or twice per year to correct on hand counts by SKU is tedious, time consuming, expensive and disruptive because they generally halt all production through the distribution center.

Causes of shrinkage include theft, poor inventory processes, inaccurate systems, lack of use of cycle counting and not having full bar coding of products.

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Dock to Stock: 10 Efficiency Ideas

Understanding Dock to Stock Times 

dock-to-stock-efficiencyEvery fulfillment center faces the same daily pressure to meet service levels, and much of this starts with the receiving process. This makes dock to stock time one of the most important metrics. What is dock to stock time? Dock to stock time measures how long it takes to process a receipt until it put into a stock location.

In the supply chain, best in class companies have a dock to stock time that is typically around two hours. This is really only achievable by having, ASNs, dock scheduling, a strong vendor compliance manual, and strong warehouse management systems. For many companies, we tend to target a window of approximately four to eight hours for dock to stock times.

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Warehouse Inventory Management During an E-Commerce Warehouse Relocation

The biggest challenge you’ll face in relocating a warehouse is disruption to your business. If you are fully invested in inventory at an existing 3PL or your internal facility, how will you transfer inventory to start up the new facility without having to shut down for days or even weeks?

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