• 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.

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?

Installing automation and conveyance systems in your fulfillment and distribution center is a major capital expense and long lead time. It requires considerable expertise, time to plan, and implement these systems properly.

As we shop this Christmas season, we have had three examples that stand out from all the rest:

•  We had our first same day order and same day delivery from Amazon.com. It wasn’t something we requested but we pleasantly surprised to get. Amazon has two distribution centers in Richmond, VA where we live. The order was placed on a Saturday in the late morning and delivered within four hours to our home. Frankly, I know that this isn’t an economical option for most businesses (maybe including Amazon). But I’ll tell you it is a formidable marketing weapon. It was extremely fulfilling to receive the item so quickly without leaving home. 

In many cases, businesses are holding on to their installed order management system or ERP for more than 10 years – sometimes 15+ years – if they believe they’re the right fit. On the face of it, this is sound thinking; considering the time and expense involved in implementing a new system.

Your order management system or ERP may be right for your call center, the merchandisers’ management of inventory, accounting systems and integration with your web platform. But are your fulfillment system requirements the same as they were 10-15 years ago? For many businesses, the answer is a resounding no.

Maybe you’re being too conservative by expecting incrementally greater productivity from your distribution center’s warehouse management system each year without additional functionality. In most companies, direct and indirect labor accounts for more than 50% of the total cost of fulfillment, excluding cost of shipping. People productivity in a DC is largely based on the feature/function set designed into the systems.

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: 

Once viewed as a cost center and a necessary evil, warehousing and fulfillment are now being seen as a potential competitive advantage. The enhanced overall view of the supply chain is placing increased emphasis on the importance on the warehouse and operations.

A well thought out material handling solutions plan can improve the bottom line of many businesses, but a poorly thought out or implemented project can put the entire business at risk. We see many cases where warehouses are misapplying the available technology to their specific problems or issues.

Consideration has to be given to the reason for considering the technology or material handling solutions to determine what desired results or objectives are needed. This information will help determine if the proposed solution is appropriate and will deliver the results needed.

Deciding to move into a new distribution center is no easy task and certainly requires planning that many companies are not accustomed too. If not done properly, the warehouse planning process can be doomed from the beginning. The first major challenge is conducting an operational assessment determining how much space you need to accomplish the existing tasks and to support sales growth. And then how will the space be best used?

Here are 10 important factors to take into account regarding whether a potential warehouse will work for your company.

Author: Thomas Openo Jr., Director, Preferred Realty & Development

Think inside the box. Does your warehouse and warehouse layout meet the strategic objectives for your multichannel business? 

Many older warehouses, distributions centers and locations are obsolete in today’s “point and click” world. Higher volume ecommerce sales and increased competition are quick to expose warehouse inefficiencies. Today, consumers expect fast delivery, which requires automation and technology but with an outdated warehouse layout; operations such as high-rise racking are not an option.