To save cost on warehouse management and to reduce the rework, an effective warehouse management strategy is necessary. However, the value of your existing warehouse management strategy will be diminished due to the poor decisions and assumptions that may lead to the upsurge of inefficiencies. Your strategy must be built on efficiency to ensure that it promotes profitability and tackles the right challenges. Efficiency can be achieved if the warehouse management strategy is built on these principles.
A warehouse manager quipped that managing a multichannel warehouse is a piece of cake. All you have to do is manage the freight, labor and inventory until a thousand other factors assault you. He was right in some ways. Shipping has become the most important factor that requires constant review and modification to keep the expenditure balanced and minimize the factors that can influence the quality.
The improvement in economy is slow and the cost of labor is increasing day by day. Most of our ideas focus on ways to gain maximum productivity from the labor per hour when we are faced with the increase in minimum wages. The most important balance sheet asset in multichannel businesses is inventory. The tracking of the product within the boundary of warehouse and the fulfillment processes is possible by slotting and location control.
Following ten strategies will help improve the warehouse efficiency and reduce costs.
Controlling inbound and outbound freight
It must be a number one focus to prevent profit erosion. Virtual libraries are filled with the ways to optimize this area of cost. You can take the services of a consultant to help you bid competitively. The experienced consultants can still help in identifying areas that negotiate reductions without hurting the levels of service even when carrier agreements are propriety.
The greatest improvement in labor productivity comes from properly engineered incentive pay for performance. More than half of your warehouse labor works in picking and packaging, so focus there first. You have to make sure that you are not paying for the areas from which you are already receiving profit with optimal productivity or the areas from which you can get the profit in other ways.
Simplify Processes – Reduce Touches – Reduce Costs
If you have been layering new functions and processes over long term existing ones and the product or order flow no longer makes sense; take a fresh look at the steps involved in product flow, order fulfillment and other physical processes. Fewer steps mean fewer touches and lower costs.
Feedback to the Employee
Your operation should capture and manage the critical key performance indicators. You should be well aware of the critical costs and productivity on shipped orders, cost per line shipped and the cost per box. Some of the large companies even do not know these critical metrics. How can you assess and put the cost reduction measures in place if you are not aware of the baseline? Therefore, it is vital to know how much various types of errors cost and how much the returns cost.
You can provide a regular feedback to the employees on departmental and individual performance once these things are established. They will respond and their performance is more likely to improve.
Develop More Efficient Frontline Managers
Effective managers realize that it is all about execution. The quality of customer order fulfillment, all the costs and worker morale depends on the ability of a manager to effectively manage all the aspects of warehouse radically. However, a few aspects about the managers also need to be taken care of. Know their individual needs and how exposure to the other aspects of your merchandise will aid them in understanding your business, vendors and customers. Look for the training resources available online and locally.
6. Inbound Supply Chain
To manage the yard and the receiving dock better and for scheduling the inbound purchase orders, changes to supply change are required. Develop the policies with vendor compliance including the terms and conditions for purchase, item specification and quality, on time delivery, importing and routing guides, product labeling, packaging and the standards of drop shipping vendors. The Product is ready to be put away or shipped once the quality and value added services are pushed up the supply chain to the vendors. This also reduces the labor that has to be utilized in the reworking of mistakes.
7. Voice-Enabling Technology
In order to make this technology available to the businesses of different sizes, some vendors have reduced the costs. For better inventory control and enhanced productivity- voice enabling can be applied to all the departments and processes from receiving, shipping to returns. These systems require no IT or modifications to the WMS, have quick install times, have a fast return on investment and do not require an extensive training. However, all the voice applications are not created equal so it is better to do some investigation before using one.
8. Consider Third-Party Fulfillments
Third party fulfillments do not necessarily benefit everyone. Many of the clients believe they can execute the operations in lower costs with higher quality. Nevertheless, good experiences with the third party fulfillments have been witnessed at the costs competitive with the internal costs. Using a third-party fulfillment service means that the capital is not tied up to the new systems and facilities. 3PF lets the management concentrate on merchandising and marketing functions essential to sustain growth for smaller companies. Consider 3PF as an option when you need to increase warehousing order or storage capacity.
9. SaaS Versus Licensed On Premise Systems
The investment in enterprise wide, WMS systems and new order management systems is something that companies do once in every 5 to 10 years because of the time frame for investment and implementation. The model for SaaS subscription provides an option for acquiring a new system at less expense. However, it is mandatory to understand that SaaS system cost long term as compared to the one time purchase and the annually supported traditional systems.
10. Continuous improvement process.
Successful merchants and marketers thoroughly examine their promotions and results and measure everything. Assess and evaluate everything comprehensively and work out a plan. For improvement set accountability and fixed objectives, review your progress and start again.