A number of years back, there was an industry movement to instill lean and Six Sigma practices and principles – powerful efficiency tools in manufacturing – in warehouse operations. Great idea though much work remains to be done to bring many warehousing operations up to the efficiency levels that manufacturers have attained.
Many moving pieces must work in sync, from inbound/outbound to pick/pack/ship. Without efficiency and a culture of continuous improvement, important KPIs like dock-to-stock time, on-time order fulfillment, fulfillment accuracy and cost per order suffer. Worst case, shipments are late, out-of-stocks increase, customers are unhappy and unit profitability drops.
3PLs with a focus on warehousing and value add services have had to implement and improve on lean strategies in order to continually bring value to their clients. The below strategies are a few that 3PLs and great internal warehouse DCs have implemented to improve KPIs while reducing costs.
According to Instawork’s 2023 State of Warehouse Labor report, 64% of respondents said they had to forego business worth more than 25% of their 2022 revenue due to labor shortfalls.
With labor the largest variable cost, this area presents many opportunities for efficiency gains.
Strategies that improve the productivity of the labor force include:
Inventory management and visibility are hot topics these days, with good reason. Many companies found themselves way overstocked in 2022, a reaction to pandemic-era supply chain shortages, which they’ve been working furiously to trim since to avoid massive carrying costs. Some tactics include:
Also remember that accurate inventory begins at the receiving process. A barcode based receiving process with checks against the packing slips ensures that inventory is right starting with the first put away.
Your order fulfillment schedule needs to be managed properly in order to line up with inventory availability, customer demand and promised delivery dates. This includes maintaining adequate inventory on hand based on short- and long-term forecasts, creating staffing schedules and adjusting lines to optimize order flow.
There are many excellent systems on the market for gathering and analyzing this data, while a top 3PL partner can handle this function for you.
We’re seeing an increasingly volatile market, with supply chain issues, labor shortages and economic uncertainty. Thus, it’s a challenge for shippers to meet ever increasingly difficult SLAs as fulfillment grows complex and costs rise. This is why more companies are looking to warehouse 3PL providers. They’re realizing operational demands will continue to grow and the warehouse is not the core competency of their business.
There are many benefits to partnering with an experienced 3PL warehouse manager. They handle key labor-intensive functions such as kitting and assembly and pick/pack/ship, from their DC or your facility. A 3PL can also handle omnichannel distribution to retail/wholesale as well as ecommerce orders via DTC and marketplaces.
One thing is certain: Your warehousing operations will grow more complex and costly over time, not less. It will become increasingly important to implement operational improvements with a strong digital foundation to meet customer demands.
Not sure where to start? Productiv, an industry-leading 3PL warehouse provider, can help you gain efficiency and improve performance using engineered solutions based on lean principles tailored to your needs. Productiv’s industry-tested solutions include warehousing, transportation management, returns/reverse logistics, supply chain data analytics and a wide range of value-added services. Ready to get started? Speak to an expert today.
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