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Five Ways to Improve Warehousing and Distribution Operations

When it comes to warehousing and distribution operations, there are a lot of components that affect overall performance, such as picking, putaway, storage, and more. And when it comes to sourcing tools to optimize operations, not all solutions are created equally; it takes careful thought and research to choose what will work best for each operation. While it may seem like the newest most high-tech option is the best route to take, that isn’t always the case.

The folks over at Inviscid Consulting know quite a bit about how to improve distribution operations, and how to look beyond the shiny new toy. Inviscid’s consulting founder, Stephen Hopper, shared his insights with Unboxing Fulfillment. You can watch his interview here, or read below where we expand on five ways to improve warehousing and distribution operations. 

1: Prioritizing Profitability
One of the most common pitfalls warehousing and distribution operations face when addressing efficiency is a lack of focus. Oftentimes, an operation may be chasing the newest technology without thinking about its impact on profitability. At the end of the day, the goal of a business (unless they are a non-profit) is to improve profitability and meet shareholder goals. Therefore, when an operation wants to address its efficiencies, it needs to discover what problem needs to be addressed first, and then decide on what new process to implement. That starts with goal-setting.

2: Defining and Setting Goals
Every operation will have a different set of goals. The first step is to define the operation’s goals and to ensure they are measurable. More importantly, operations must track metrics that affect warehouse performance and the broader logistics network. Some metrics to consider include:

  • Warehouse Capacity Utilization
  • Inventory Accuracy
  • Shipped Order Accuracy
  • Dock to Stock
  • On time, in full (OTIF)
  • Order processing time
  • Inventory shrinkage rate
  • Order fill rate
  • Employee turnover rate

With clear, measurable goals, operations can discern what processes are working and which ones need to be modified or replaced. This is how warehouses can work on increasing profitability and improving accuracy. The good news is that warehousing problems tend to be math-driven, for example: hours worked, units in stock, and available storage space, can all be measured. All of these mathematical figures will factor into a warehouse’s overall efficiency and play a part in a warehouse’s key performance indicators (KPIs). 

3: Activity VS Productivity (value-added activities VS non-value-added activities)
It’s important to distinguish the difference between productivity and activity. While an operation may look busy, that doesn’t necessarily mean it is being productive. Certain tasks, like picking and packing, are productive, while others, like walking or driving, are not. One has a positive effect on the bottom line, and the other a negative one. When an employee spends half their time walking back and forth between different warehouse areas, that’s time that could be spent doing something productive. Taking note of these inefficiencies and knowing which activities don’t add value helps operations identify areas that need improvement. There are certain steps operations can take to discover what processes in their warehouse are value-added and which aren’t. 

  • Define what presents value from the client’s perspective
  • Map every warehouse process from start to finish, step by step
  • Analyze the steps
    • Which steps directly add value for the client
    • Which steps don’t directly add value, but are necessary due to safety or regulatory requirements
    • Which steps don’t add value and aren’t required, including transportation, idle time, overproduction, overprocessing, or defects
  • Assess each step to see if it contributes directly to client value
  • Use data and KPIs to quantify the impact of every process, this will help highlight areas of improvement

With this information, operations have a roadmap to what steps are hampering productivity and can identify ways to eliminate them or reduce their impact. Sometimes, it may be automation, or a hybrid solution combining automation and manual labor. The important thing is to know what requirements are necessary, and then solicit a solution, and then look for ways to successfully implement it. That’s why understanding the operation’s business requirements is a must.

4: Employ a Requirements-Driven Strategy
Business requirements allow companies to distill exactly what they need to succeed, they serve as a guide. With requirements in mind, warehousing and distribution operations can examine the various industry offerings available and determine which is best suited to effectively address their needs. The principle is to be requirements-driven, not solutions-driven. What operations need to avoid is investing in a solution and then trying to find ways to make it fit into the operation. Start with the problem you want to address, and all else will follow.

As Stephen Hopper puts it, “You don’t want to use a chainsaw to cut butter.” Knowing your requirements empowers operations to find a solution that addresses their actual needs, not the needs of a larger, more complex warehouse. With an understanding of the operation’s business requirements, one can have a more focused look into the different technology offerings and how they will best work to address the operation’s specific needs.

5: Maximize Existing Resources
Before investing in new technology, operations should complete a thorough assessment of their processes to see how they can best use resources already in place. An assessment is like an annual physical, it provides information on the current health of the operation and allows one to see what is working and what needs attention. Optimizing current resources and streamlining existing operations based on an assessment is a great way to maximize existing resources before investing in any new tools or technologies. This is an opportunity to look at low-hanging fruit, easy changes that may make a big difference, perhaps a process change that has been on the back burner and is finally ready to cook. 

Regular assessments are a great way to ensure operations are always hitting their KPIs. It’s also a great way to determine whether a newly implemented system is yielding positive results as expected, or if changes need to be made. 

After streamlining operations based on the assessment, businesses can evaluate whether physical automation or a software change is still necessary. For some, streamlining current operations is all that’s needed, for others, a bigger change is required. Every operation will vary, but going in with a data-centric approach is the best way to ensure the investment made is a worthwhile one, and not one made because of the allure of implementing new technology. 

Ready to Improve Your Warehousing and Distribution Operations?

By following these five steps, you can transform your warehousing and distribution operations while safeguarding your bottom line. Establishing operational priorities, defining goals, ensuring processes are productive, employing a requirements-based strategy, and making the most of current investments will go a long way in helping operations thrive. After those steps are taken, operations will have all the information they need to determine whether automation, robotics, or the use of artificial intelligence will aid them, or slow them down.Not all operations have the resources to complete a thorough assessment, that’s where Cornerstone Edge can help. Trust us to complete a thorough analysis of your operations to ensure your next step is in line with your business requirements. Contact us, and together we can see what changes (if any) are needed to ensure you’re getting the most out of your supply chain.


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