When you outsource one or more parts of your logistics process, such as warehousing, inventory management or order fulfillment, you’re utilizing a third-party logistics (3PL) provider. It’s an increasingly popular option for retailers and e-commerce businesses, making it possible to focus on your company’s core competencies while taking advantage of the efficiencies and expertise of a third-party company that specializes in logistics. In this article, we’ll review what third-party logistics is, the various types of outsourced logistics and what to look for in a 3PL.

What is third-party logistics?

Third-party logistics is an arrangement where you contract out one, some or all of your logistics operations to independent entities otherwise unaffiliated with your business.

Why enter into such an agreement? For one thing, logistics isn’t easy, particularly in today’s omnichannel environment. Depending on the size, scope and niche of your business, essential logistical operations like trucking and warehousing can cost serious money for not only the initial setup but also the day-to-day expense. By using a third-party provider, you avoid the headaches and expenses of running a truck fleet, maintaining staffing and operating commercial warehouses. Done right, 3PLs can improve customer service for both purchases and returns, streamline logistics management and reduce operating costs.

Before determining whether a 3PL solution is right for your business, you’ll want to know more about what exactly the term encompasses.

What is outsourced logistics?

Outsourcing logistics is simply working with other businesses to fulfill your company’s delivery, storage or transportation needs. The concept has been around for decades, but it has been dramatically advanced during the internet and e-commerce age. Warehouse automation solutions and integrated online platforms have now made it effortless to share real-time fulfillment data — information that’s necessary for 3PLs to work seamlessly in today’s era of next-day shipping.

To put some context on just how effective and widespread 3PLs have become, consider that 80 percent of Fortune 500 companies rely on it in some form or another. That statistic rises to 96 percent when you look only at Fortune 100 companies.

What are the types of outsourced logistics?

It’s important to note that 3PLs aren’t the only solution available when it comes to outsourcing your logistics; there are actually several options that can be leveraged depending on the level of integration you’re looking to have with external suppliers. These solutions are known as 1PL to 5PL. Here’s a quick look at each of them:

• 1PL, or first-party logistics, are in-house transportation services. A great example would be a florist who uses their own delivery van to drop off purchases to local buyers. In this scenario, there is no additional party involved – just the florist and the customer.
• 2PL introduces a courier of some sort. In the 2PL vs. 3PL debate, 2PL solutions aren’t integrated with your company when you contract their services. Shipping products directly from your facility through USPS, FedEx or UPS are all examples of 2PL solutions.
• 3PL creates an integrated system that allows for data sharing between your company and the 3PL. A 3PL provider doesn’t just receive customer fulfillment or transportation information like a 2PL business might — they are fed data in real-time. This allows the 3PL to create a streamlined, efficient solution that is reliable, long-term and in complete synchronicity with your business.
• 4PL is similar to 3PL, but the relationship between the third-party logistics firm and your business is brokered by a middleman.
• Lastly, 5PL introduces logistics consulting services.

Of all the above options, it’s not surprising to see why 3PL has become the preferred option for manufacturers and retailers looking for an ideal solution in today’s e-commerce marketplace. Because a 3PL provider can fully integrate with your company’s inventory and fulfillment software, you’ll enjoy seamless real-time data transfer between the home office and the outsourced warehouse, helping to ensure correct picking and timely shipping.

Services to look for in a 3PL provider

A third-party logistics provider is most easily visualized as a warehouse — and indeed, product storage is one of the most popular 3PL offerings — but there are more options available to you if you’re looking to outsource other elements of your operation or want additional capabilities beyond the basic storage and transport expectations. Here’s a rundown of the most important 3PL services you should look for in a provider:

Intermodal transportation & expedited freight

Intermodal shipping, or the use of mixed transportation methods to move goods from A to B, is a common 3PL specialty. Companies well-versed in this niche of logistics are responsible for all the paperwork, compliance and guesswork involved with intermodal shipping, and they can typically facilitate expedited freight requests as well — a must-have in today’s environment.

Warehouse storage & inventory management

Some shippers rely on 3PLs for warehouse storage, and nearly all logistics providers will offer some form of warehouse support. The key is to find a firm that uses today’s most innovative technologies to manage inventory levels, automate ordering and process returns.

We recommend finding a 3PL that incorporates cutting-edge solutions like our autonomous mobile robot (AMR), Chuck, which can help create a wall-to-wall fulfillment solution. The innate flexibility and system configurability of Chuck can result in dramatically improved operational efficiency, making this robot a smart investment for both a 3PL and its clients.

Partnering with a 3PL with these kinds of technological capabilities will save you money and improve your insight into just how efficient and effective your outsourcing strategy really is.

B2B & B2C fulfillment capability

Some 3PLs specialize in B2B logistics fulfillment, while others focus on B2C. Some might offer both services. When you’re shopping around for a 3PL, consider what kind of fulfillment options you’re looking for and ensure any potential partner will be able to deliver — literally.

Value-added services

A more recent phenomenon in the 3PL world is the support of value-added options, which are customized product features such as personalized notes, stickers or even custom packaging. The successful implementation of a value-added strategy at scale adds another layer of complexity to 3PL pick and pack order fulfillment but is well within the purview of a qualified provider.

Benefits of partnering with a 3PL

Without deep pockets, setting up and operating your own in-house logistics operation is likely not a feasible or realistic solution. That’s where a 3PL comes in. Thanks to their economies of scale, they can help you realize the benefits of a complete warehousing and transportation ecosystem at a price that will look more and more like a bargain as you compare it against alternative long-term options.

For a sixty-second take on why partnering with a 3PL can be so advantageous, consider the following:

• The cost savings associated with using a 3PL can be significant, as it eliminates the need for any overheads relating to warehouse facilities, fleet management and additional staffing.
• Your customers will benefit from a better-connected and more expedient shipping and return center that enables fast deliveries and easy returns.
• Your team can stop worrying about intermodal compliance, IFTA and other common logistics concerns.
• You can continue to scale the manufacturing and sales sides of your business without worrying about running out of warehouse capacity or overtaxing your logistics operation.

The bottom line? There’s a reason so many top companies choose to work with 3PLs. When you take advantage of their services, you can focus on your business’s core competencies while leaving the complex logistics processes to a third-party that specializes in them. Contracting with a 3PL can lead to a long term, strategic partnership.

The post What is third-party logistics (3PL), and how does it work? appeared first on 6 River Systems.

Warehousing can be a challenge for manufacturers and retailers of all sizes. Finding the right space, running an effective order fulfillment system and sourcing great talent are just some of the many challenges facing operations managers. And besides, how many growing companies have the deep pockets to fund these expenditures or even the in-house expertise to get a warehouse up and running?

That’s where third-party logistics providers come in. Commonly known as 3PLs, these are businesses that specialize in providing outsourced logistical support. Used effectively, a 3PL provider can be an invaluable asset, allowing you to focus on scaling up production (for manufacturers), procurement (for retailers) and streamlining your overall operations rather than get bogged down in warehousing hangups. By taking over the day-to-day management of your logistics needs, 3PLs let you focus on what you do best — growing your business.

3PLs offer a wide array of logistics services, but warehousing remains far and away one of their most centralized offerings. If you’ve been wondering how 3PL warehouses work, let’s take a closer look at their operations.

How does a 3PL warehouse work?

A 3PL warehouse is owned and managed by a third-party company. Once your goods arrive, the 3PL team will document the inbound delivery and then stock the fresh inventory. When orders come in, the entire physical fulfillment process — from picking an item off the shelf to readying and releasing it for shipment — will also be completed by the third-party provider.

If you observe these operations firsthand, it looks much like any other modern commercial warehouse. The biggest difference is behind the scenes: the 3PL is running the show, not you and your team. You’re ultimately entrusting the 3PL with the responsibility of handling your inventory and order fulfillment needs.

Benefits of using a 3PL warehouse provider

Why would retailers or manufacturers relinquish control of their warehousing needs? There’s a long list of compelling reasons, from affordability to scalability to efficiency. Here’s a review of some of the primary motives driving companies to consider a 3PL service:

Value

Warehousing is an expensive endeavor. For starters, there’s the acquisition cost of an adequate facility, which can run well into the millions of dollars even for a modestly sized space. There’s also staffing to contend with, not to mention ancillary expenses such as equipment purchases and building upkeep. These unavoidable costs can make it prohibitively expensive to run a warehouse, especially for smaller retailers or manufacturing companies.

3PLs, however, already have the necessary physical assets and personnel in place. Though it costs money to partner with these firms, they’re offering an essentially turn-key operation that’s tested, proven and optimized. Once a contract is established, a 3PL can quickly begin providing complete logistics support. Not only is this hit-the-ground-running approach faster than setting up internal warehouse operations from scratch, but it can also cost less upfront.

Ease of scalability

For small and midsize retailers or manufacturers — or any business, really — scaling up production is difficult. Along with expanding manufacturing capacity or expanding to new retail product lines or markets, companies should expect to need more of everything, from marketing support to raw materials to storage space for the increased output.

That last need is where a 3PL can come in. These firms typically offer a wide range of solutions for their clientele, the goal being to offer growing businesses a chance to capitalize on their success without being hamstrung by inadequate logistics. You’ll likely be able to work with your 3PL to increase your warehousing capacity as your inventory and storage needs grow.

This kind of flexibility would be difficult to match with an in-house operation, which would require more time, money and energy to secure additional facilities or space beyond what’s already available. These internal roadblocks could hinder scalability, particularly for smaller businesses with limited resources.

Improved efficiencies

3PLs are the experts. These companies live and breathe warehousing, fulfillment and shipping, and they’ve long ago put into practice effective tools and processes to promote efficiency. The best 3PL companies also boast the latest technologies and digital innovations to further maximize productivity and reduce warehousing costs.

Independent companies like retailers and manufacturers trying to self-manage their warehousing needs likely won’t match these efficiencies. Why? Because logistics is one aspect of their business, not the entire focus of it. It fits in like a puzzle piece within their larger supply chain, which itself fits into a larger operational matrix. But logistics operations are the bread and butter of 3PL providers. It’s why 3PLs put serious effort into developing best practices, leveraging technology and streamlining warehouse operations.

For example, innovations developed by 6 River Systems, such as system-directed picking and case replenishment optimization, have quickly become commonplace among the leading 3PLs in the industry. In fact, 70 percent of the top 3PLs are 6 River Systems customers. These segment leaders know that advanced technology is the key to improved order fulfillment, better warehousing techniques and happier customers.

Drawbacks of 3PL warehouse providers

Like anything else, there can be drawbacks to working with a 3PL, and you’ll have to decide whether these are outweighed by the potential benefits. Here’s what we’d keep in mind before signing on with an independent logistics provider.

Lack of control

When you contract with a 3PL, you’re willingly ceding control of the logistics and inventory management of your business. And while your ability to have certain inputs and insight might not completely disappear, it is somewhat limited. The relationship hinges on trust and communication.

That’s fine for many businesses, which are typically more than happy to free themselves from the responsibilities of managing a complex warehousing environment. But other manufacturing companies and retailers might not like the prospect of handing over their inventory management to a third party. Maybe that’s because they’ve incorporated certain processes that they want to remain in charge of, or it’s due to the nature of their personalized products (though the best 3PLs can accommodate customization needs through various value-added service options). For companies not yet ready to entrust logistics to a third party, keeping things in-house is worth the added complexities and responsibilities.

3PL service costs

While it’s costly to acquire, staff, and run a warehouse, you’ll also have to pay for 3PL services. The higher-priced options often include additional perks like larger trucking and distribution networks or more advanced automation and software solutions, but the monthly service costs can be high.

Businesses will have to consider whether the higher upfront costs of setting up an internally operated warehousing facility outweigh the monthly service fees charged by many 3PL providers. This is a particularly relevant concern for smaller retailers or manufacturers that may not have sufficient order quantities or inventory levels to justify recurring 3PL service fees.

What businesses should use a 3PL warehousing service?

Most types of manufacturing and retail businesses could benefit from a 3PL service. If your business is making goods at scale, the finished product needs to be stored somewhere. Paying a specialized logistics provider to handle inventory receiving, storage and delivery is an investment that buys access to state-of-the-art warehousing strategies and techniques while also helping your team gain back precious corporate bandwidth. By finding the right 3PL partner for your company’s needs, you can unlock savings, efficiencies, and potential you may not have even realized were possible.

The post What is a 3PL warehouse, and how does it work? appeared first on 6 River Systems.

E-commerce is here to stay and continues to impact consumer expectations and buying behavior. As the number of buying channels, online shoppers and customer orders continue to rise, companies need to deploy solutions, strategies and innovations to better manage their fulfillment process.

While still adapting to the reverberating effects of the pandemic on global supply chains, brands need to meet customer expectations. Otherwise, they risk losing their customers to more agile competitors. A great way to achieve this while remaining profitable is by improving fulfillment management operations so that the fulfillment process flows seamlessly from start to finish.

Why is fulfillment management important?

Order fulfillment has a significant impact on the customer experience. Effective order fulfillment promotes customer satisfaction and loyalty, bolsters your brand reputation and cultivates customer advocates. When done right, fulfillment management facilitates seamless execution of order picking, packing and other inbound/outbound logistics activities. It also ensures inventory is kept at optimal levels to satisfactorily fill customers’ orders without incurring high storage costs or overstocking inventory with low turnover.

Since supply chain disruptions (due to COVID) severely impacted the ability of suppliers to get inventory as needed, many businesses coped by realigning their fulfillment management strategy with current realities. They began to shift from Just in Time (JIT) lean inventory to Just in Case inventory (JIC) — to minimize the chances of falling behind production schedules or running low on goods required to fulfill orders on time.

Delivering on your brand promise with an efficient, transparent order fulfillment process not only impacts customer satisfaction, but it also affects the company’s bottom line: You’ll reduce unnecessary expenses (such as long-term storage costs for slow-moving inventory) while also earning repeat business from customers who appreciate prompt, seamless order fulfillment.

To help you achieve and surpass these objectives, let’s take a look at six ways to improve fulfillment management.

1. Identify inefficient processes

Identifying inefficient and redundant fulfillment activities is a great way to kickstart your improvement efforts. Outdated technology, siloed operations, slow restocking, inaccurate inventory and the use of the wrong picking methods can result in lost sales, high operating costs and a steep decline in customer satisfaction metrics.

Of all these, inaccurate inventory can do the most damage to your fulfillment operations. It negatively impacts your ability to store, pick, package and ship out customers’ orders accurately and on time. A lack of accurate, real-time inventory monitoring could also cause stockouts, deadstock and backorders. One way to resolve this is to consolidate inventory across all channels by deploying warehouse and inventory management software. These solutions can help facilitate efficient inventory replenishment processes and real-time data integration from every aspect of your fulfillment operations.

Optimizing picking operations also improves fulfillment management. Even the smallest inefficiencies during each phase of a picking process can significantly impact the speed, accuracy and successful outcome of your entire fulfillment operation. Review your processes, warehouse layout and available technology before choosing a picking method. Identifying and organizing top-selling SKUs in the most accessible locations (and collating similar product orders into a single pick list) can improve order processing times and efficiency.

2. Automate manual processes

Allowing workers to make decisions during fulfillment activities slows down the entire process. Lack of automation and coordination during picking activities could also increase physical strain on workers, the possibility of errors, damage to products and equipment and even accidents.

Deploying inventory management solutions, order tracking software, forecasting systems and the latest trends in warehouse automation goes a long way in resolving many of these challenges. These systems, in addition to autonomous mobile robots (AMRs) and automated pick/pack systems, can help streamline the order fulfillment process, making it easier for you to achieve fulfillment management goals with minimum hassle.

Download this white paper to learn more about why autonomous mobile robots are the future of fulfillment and deliver a bigger bang for your buck than traditional automation.

3. Outsource to competent 3PL operators

One way to avoid dealing with the hassle of fulfillment management is outsourcing your supply chain to a 3PL. A lack of industry/technical know-how, strategic partnerships, experienced personnel and infrastructure will hamper your ability to efficiently manage fulfillment operations.

Without these resources, your customers may likely experience late deliveries, damaged products and incorrect orders. This will negatively impact bottom lines and increase your workload due to the need for reverse logistics operations to correct mistakes, handle customer complaints and reabsorb returned products into inventory or dispose of products that can’t be resold. Working with an experienced 3PL is a great way to easily improve fulfillment management and gain cost/process efficiencies with minimal effort.

4. Leverage omnichannel fulfillment

Although consumers order products in small quantities, they typically order a more diverse range of SKUs than enterprise customers. This makes it more challenging to manage and collate customers’ orders, especially across several sales channels. Using omnichannel fulfillment strategies to facilitate an integrated approach to inventory management can help businesses better handle customers’ orders and improve fulfillment management workflows. Learn more about “omnichannel fulfillment.”

5. Optimize last-mile logistics

Last-mile delivery is the final and most expensive part of the fulfillment chain, accounting for nearly 40% of the entire supply chain costs. Previously seen as a necessary evil, last-mile logistics is now considered a valuable tool with the potential to enhance the customer experience.

Last-mile delivery poses several challenges: staff shortages, shipping complexities and the higher delivery costs associated with faster shipments. With more customers expecting same-day delivery (for free), retailers and e-commerce businesses must learn to work around these challenges to meet customer demands and drive positive fulfillment management outcomes. This can be done by bringing distribution/fulfillment centers closer to major customers’ markets and automating/optimizing route planning by leveraging the right route management software.

6. Improve reverse logistic operations

Fulfillment operations don’t truly end until customers have received and are satisfied with their orders. As the number of product returns continues to rise (especially during the holiday season), returns management is quickly becoming an indispensable part of fulfillment operations. Although this presents brands and 3PLs with some challenges, companies that do it right can leverage returns management to drive sales and service differentiation.

Optimizing this aspect of your operations will drive positive outcomes for other fulfillment management activities. Working with resourceful 3PL partners with returns handling expertise can help you turn returns management into a success factor for your fulfillment operations. Such partners have reliable procedures for receiving, inspecting, tracking and reallocating returned products to inventory for resale.

Achieve fulfillment management success

In today’s consumer-driven marketplace and economic landscape, e-commerce and retail stores are expending considerable resources to ensure that order fulfillment and last-mile shipment activities flow seamlessly. Silos and inefficiencies in fulfillment management can negatively impact these vital processes, thus slowing business growth, reducing profits and negatively impacting customer satisfaction.

The above steps can help you achieve fulfillment management success by reducing the time, effort, and resources spent on fulfillment activities. This leaves you free to focus on other important aspects of your business, such as reviewing operational blind spots in marketing/sales strategies and identifying opportunities for process improvement, integration and cost efficiencies.

The post 6 steps to improving fulfillment management appeared first on 6 River Systems.

Looking to discover the secret to an effective and efficient returns management process? The returns management process is part dispute resolution, part customer support, part logistics and part inventory management.

The way you design and execute your returns management process is becoming increasingly important, and improving these processes is among the top warehousing trends in 2022. Returns management influences your customer experience and by extension your bottom line. The ideal returns management process is cost-effective for retailers and stress-free for customers.

With consumerism narrowing the competitive gap in marketplaces across the globe, a streamlined returns management process is necessary for businesses to reduce associated costs and differentiate themselves and their brand in the minds of shoppers. To help you get up and running, let’s look at six ways to optimize your returns management process.

1. Collect and analyze returns data

To avoid the hassle of dealing with unhappy customers and unnecessary returns, take the time to understand why customers return products. Forward-thinking retailers use automated returns management solutions to track, view and analyze returns data in one place.

Tracking relevant returns data to identify which products have the highest rate of returns and why. Such products may have poor packaging or are defective. Improving product quality assurance reduces the number of future returns by identifying defective products before they’re shipped out. Analyzing your returns data provides in-depth insights into every step of the returns management workflow and should help you understand:

• The return rate for each product and product group
• The percentage of returns resold at full price or discounts
• The percentage of returns salvaged
• How returns routing decisions can be optimized for efficiency
• The cost per unit to process returns through each return channel

2. Properly design your returns management workflow

Strategically (re)designing your returns process can improve visibility and transparency for stakeholders and reduce the time between a customer initiating a return and their receipt of a refund or replacement product.

Making it easy for your shoppers to make returns builds trust and significantly impacts customer loyalty. There are several ways to streamline the returns process and experience for your customers. They include:

• Have a clear return policy
• Offer free return shipping
• Provide shoppers with the ability to track their returns
• Issue refunds or credit customers’ accounts with equivalent store credits on time
• Deploy a robust returns management system
• Leverage autonomous mobile robots with Returns Putaway capability – to return items back on the shelves to maximize warehouse space and profitability.

Download this white paper to learn how to optimize returns management.

3. Write clear return policies

Writing concise, easy-to-understand return policies and sharing them with shoppers across all sales channels can save you a lot of hassle and benefit both shoppers and your business. Your return policies should clearly state:

• The timeline for returns (2 weeks, a month, a year, etc.)
• Conditions for returns (tags on, receipt of purchase, original packaging, etc.)
• Exceptions
• The time it takes to process refunds
• Timeline and options for customers to receive refunds (store credit, cash/card refunds)

If it’s not feasible to provide all shoppers with free returns, consider offering free returns for items over a certain value or to loyalty members. You can also make exchanges free but charge a fee for returns or offer free returns to shoppers who drop off the product at a store.

4. Automate the returns management process

Automating the reverse logistics workflow reduces costs and inaccuracies. It also increases the efficiency of routing and processing return requests. To this end, a returns management system can help you manage everything that goes into the returns process from start to finish. This includes configuration/optimization of return workflows (to drive a faster returns process), returns merchandise authorization (RMA) initiation, returns processing, customer portals, and customer notifications.

This facilitates a convenient self-service return experience for your customers and an efficient, hassle-free process for you. With this in place, your customers can quickly exchange items they aren’t satisfied with rather than issuing chargebacks or blacklisting your store.

Savvy businesses also leverage automated order-picking solutions that can work in reverse to restock returns. Autonomous mobile robots (AMRs) with Return Putaway capabilities, like 6 River Systems’ solution, are flexible and scalable solutions that retrieve information from the returns management system. 6 River Systems’ AMRs guide associates through tasks to streamline putaway processes so returned items can be quickly and accurately placed for restocking, repairs or disposal. Businesses leveraging 6 River Systems’ solution can improve productivity by 40% over manual carts, improve accuracy, reduce in-aisle travel and eliminate long walks through the facility.

5. Integrate outbound shipment with returns pickup

Incorporating reverse logistics into the outbound logistics process will significantly improve your returns management process. The right logistics application or 3PL provider can provide you with the ability to quickly redirect delivery drivers within the vicinity to make return pickups from nearby shoppers.

When planning the routes and schedules for deliveries, make provisions for product returns as well. This speeds up the return process for shoppers, creates a great customer experience and helps you save resources. You can also make plans to expand capacity for your returns handling operations during peak seasons.

6. Outsource your returns management process

Businesses typically partner with third-party logistics providers for outbound shipments and handle other ecommerce fulfillment processes and activities in-house, including returns management. However, you can choose to maximize your partnership with your 3PL by letting them handle returns. Doing this allows you to take advantage of your logistics partners’ systems, processes and expertise. While outbound shipments form the core business for most 3PLs, others offer returns management as a special or add-on service. Such services include:

• Vendor management for returns, related fees, etc.
• Inventory management tracking, cash flow, freight & labor
• Valuation, appraisal and sales of products not going back into circulation
• Test, repair and refurbishment of products
• Recycling options where necessary

Looking ahead

Returns management is an integral and unavoidable aspect of the retail and e-commerce fulfillment process. And although it is an expense, the proper identification, sorting, reshelving or disposal of returned products can significantly impact the way returns affect your bottom lines.

While it will require resources and dedication, taking the time to optimize your reverse logistics network for effective returns management is well worth the effort. Combining skilled personnel with the right automation solutions can help speed up the identification, repackaging, restocking and resale of returned items. Likewise, the above strategies can help you deliver a seamless, hassle-free returns experience for your customers and a stress-free returns process for your business.

Learn more about autonomous mobile robots and how they can help to streamline your fulfillment and returns management processes by downloading our white paper, The Business Case for Autonomous Mobile Robotics.

The post 6 steps to optimizing the returns management process appeared first on 6 River Systems.

E-commerce behemoths such as Amazon have forever changed the perception of how orders should be fulfilled, both in terms of time and accuracy. But, while your company might not be promising same-hour delivery, these changing expectations are not to be ignored– in fact, they should be shaping your ever-changing warehouse order picking strategy.

Furthermore, the COVID-19 pandemic is straining supply chains around the world, disrupting business activities and impacting both manufacturers and consumers alike. The aftershocks of this era will also shape warehouse order picking activities going forward and guide warehouse managers in the design of agile and more resilient strategies for dealing with possible future occurrences.

Because we’re your ally in all things warehouse systems and types, we’ve compiled this best practices guide to guarantee that your business is putting its best foot first as it operates in the fluid world that is order fulfillment.

In this guide, we’ll discuss:

• What is warehouse order picking?
• The different types of warehouse order picking
• Tried and true methods used in order picking
• Best equipment for warehouse order picking
• Best hiring practices for warehouse order pickers
• Best practices for improving warehouse picking productivity
• Further reading on warehouse order picking

What is warehouse order picking?

Warehouse order picking is a simple concept, but in practice, it can be quite complex. Simply put, warehouse order picking refers to the necessary labor and parts involved in pulling an item from inventory to fulfill a customer’s order. It’s a process that might sound like the most uncomplicated aspect of your business, but when you crunch the numbers and realize that it amounts to an average of 55% of operational costs within any given distribution center, budget-conscious warehouses quickly find that ineffective systems could stop them from further innovation.

If your business fulfills orders, it’s key that you develop a warehouse order picking strategy that emphasizes speediness, order pulling accuracy and organization, as well as investments that might aid the three points as your demand shifts in the future.

Generally speaking, order picking and order selecting falls entirely under the umbrella of warehouse logistics, but that doesn’t mean your current practices must always be assessed by the decision-makers at the top. For instance, if your competitors are undercutting you in terms of fulfillment time or you have received public online complaints concerning order accuracy from customers, the first factor you need to reassess is your warehouse order picking process.

By streamlining your business’ methodology, staff and technology, you can:

• Offer faster order fulfillment times to customers
• Invest in technologies that can promote automation
• Promote accuracy in your orders
• Retain trustworthy, able and happy warehouse staff
• Minimize cost and maximize asset utilization
• Save precious time and money that will help you focus on the future of your business

Though best practices for warehouse order picking are not “one-size-fits-all,” the right organization, communication, smart investing and good common sense can help you make the most of your fulfillment process.

The different types of warehouse order picking

Warehouse order picking strategies must be customized to fit your business’ unique fulfillment needs. Selecting an overarching plan from the most used categories below will help you to develop a framework if you are reworking your current order picking plan — or even starting from scratch: 

• Zone Picking — Zone picking often is put into place when the warehouse is compiling orders that contain multiple components and in large warehouses to reduce walk times for individual pickers. The inventory is organized into “zones” where an order picker or automated piece of equipment is stationed with the unique SKUs found only in their zone. To fulfill an order, bins or totes move through each zone, with associates simultaneously collecting products for multiple orders. Once a bin gets to a zone, the picker puts in the required number of SKUs to fulfill several orders at once. The bin passes from zone to zone until all items are collected.
• Discrete Picking — In discrete picking, instead of the worker being assigned to a specific “zone” in the warehouse, they compile each piece of necessary inventory in the order, one line at a time. This plan might work well for a warehouse with a small team that isn’t inundated with complex customer orders. While it may take more time in the pick area, the tradeoff is that it minimizes the number of touches to ship an order. An order can be picked with one touch, without having additional sorts in a discrete picking methodology.
• Batch/Multi-Order Picking — This works well for businesses that are interested in picking up the pace in regards to order fulfillment. Batch picking calls for managers to assess current orders for popularity and place them into batches by their SKU. From there, pickers are in the best location of the warehouse to get orders fulfilled as quickly as possible. Batch picking works especially well for e-commerce businesses with somewhat predictable ordering trends, like those specializing in food and apparel.
• Cluster Picking — Efficiency is the name of the game for cluster picking, which involves a single picker compiling multiple orders at a time, usually dealing with a variety of SKUs. This method can give you a serious leg-up when it comes to speed, but you will need to integrate special technologies and resources to make it successful in your warehouse, such as a sharp, well-trained picker, a mobile cart, automated equipment and voice solutions.
• Wave Picking — Wave picking makes a whole lot of sense if your warehouse is grappling with high fulfillment demand coupled with plenty of diverse inventory. In wave picking, a single picker prepares each order, line-by-line, but instead of simply being compiled in the number that it was placed, all warehouse orders are first assessed to maximize shipping and picking operations. This strategy allows “waves” of orders to be shipped and compiled throughout the day, prioritized by time and importance.

In addition to the five most common picking types, many companies will combine two or more to better fit the unique needs of their warehouse. For instance, managers may integrate the successful points of the above to make a zone-batch picking, zone-wave picking or zone-batch-wave picking plan that fits their changing needs best.

Tried and true methods used in order picking

When it comes to implementing an order picking process that works best for your warehouse, picking one or more of the above types is key, but you will need to consider a host of supporting factors first. From available space to strategies to comprehensive training practices, a full order picking re-vamp entails an investment in both time and sometimes capital in order to pull off a change successfully.

Let’s take a look at how you can do this:

• Ensure that your production schedule allows for 100% availability of inventory — Offering competitive and guaranteed shipping dates to your customer must be a standard and predictable part of your business. In order to make this a sustainable reality, you must have a minimum level of inventory per day, as well as an effective communication procedure for when you might be running low on an item. 
• Plan your picking routes carefully — Just because your warehouse’s picking routes improved your productivity when they were first implemented doesn’t mean that they shouldn’t face constant scrutiny as your business grows. Require your warehouse manager or picking specialist to establish routes that eliminate backtracking, which can cause major slowdowns. Also, keep in touch with your pickers to better understand the factors that may be slowing them down.
• Implement velocity-based slotting — Your warehouse manager might be a whiz when it comes to organizing your inventory with the trusted warehouse slotting method, but have you made them aware of your current product velocity analysis? Those working behind a desk may be aware of this information, but that doesn’t mean that everyone notices how often a product sells, specifically if your business’ warehouse is a booming one. This means that, based on its specific velocity, a product might be sitting in a “prime slot,” even though it hasn’t been picked in days. Make the appropriate manager aware of each product’s velocity so that they can make the necessary, time-saving changes in your warehouse’s overall organization.
• Invest in smart automation — Smart automation is the future; its inherent qualities promote more accurate and time-efficient picking, all in ways that can be completely customizable to your business. This investment can be a big decision, but it is much less overwhelming — and a lot clearer — if you include all warehouse managers and supervisors in the conversation, instead of simply keeping it between a salesperson and a boardroom. That way, you can assess all factors to select what smart automation equipment best fits the needs of your growing business.
• Keep records of error data — It’s easy to blame picking errors on negligent employees, substandard equipment or inefficient shipping companies, but coming to a quick conclusion might mean that you are hastily selecting a “fall guy.” Instead, keep thorough records of all error data, including missed time targets, and properly analyze it to get a better idea of who is to blame. If you have a hardworking, honest staff, for instance, it might be time to implement a velocity-based slotting plan, integrate smart automation or re-assess your inventory routes.

The best equipment for optimized warehouse order picking

You might have invested in the best and brightest staff to establish your warehouse’s order picking strategy, but that doesn’t mean that it can’t all fall apart due to faulty, out-dated or unnecessary equipment.

Here’s a look at a few commonly used types of order picking equipment that can help to optimize your warehouse’s picking processes:

• Mobile Robots — Over the last few years Robots have quickly increased their level of intelligence and flexibility as machine learning and artificial intelligence (AI) have been built in. The result of these innovations is a new style of robot that is suited to work side by side with warehouse pickers. Modern warehouse robots are designed to complement traditional picking processes. These robots have been designed to operate on the floor in the same spaces where associates are at work, often in collaboration with those associates. In this model, the robot is assigned a task and automatically navigates to a pick location. When it arrives at a location, a picker will pull product from a shelf or carton and place it in a bin or tote on the robot. The robot is then directed by the software controlling the system to the next pick location until all the items for an order are in the tote and ready for delivery to the pack station. Mobile Collaborative Robots can be very effective for fulfillment centers with a high variety of orders, including a significant number of multi-product orders. Because the robot is responsible for all of the non-value-added travel between tasks, associates on the floor are more productive because they remain in their zone where they are focused on picking items from the shelves.
• Heavy-Duty Equipment — This can include anything from the aforementioned smart automated robots to forklifts that have a larger load capacity than the one you are currently using. Whether or not your warehouse is using either of these tools is beside the point; the main takeaway is a simple one — big capital expense, less manpower and more machinery. Of course, not all facets of a warehouse will — or should — be completely automated, but if the available warehouse picking tools save your company more time and money in the long-run, take advantage of the technologies and order picking machines out there.
• Voice-Picking Equipment — The term “voice picking” refers to the paperless, hands-free system that gives pickers instructions in real-time. This technology is a big one as it allows workers to keep their hands and eyes free as they move about the warehouse. In terms of equipment, voice-picking usually requires a headset and microphone connected to a wearable device along with a manual cart that they pull around the warehouse. A big advantage is that many voice-picking devices are also equipped with multi-modal feedback functions, which allows pickers to communicate necessary information back into your system.
• Barcode Scanners — Barcode scanners have been used for years throughout the field of inventory tracking, but that doesn’t mean the piece of equipment is out-dated. In fact, the newest barcode scanners have cutting-edge features that promote automation throughout the supply chain. Today’s best barcode scanners cut down the possibility of human error, eliminate paper and printing costs, give time-saving information on SKU location and are hooked up to software that automatically analyzes your inventory. For even more efficiency, you can use a mobile put-to-light system in conjunction with barcode scanners and mobile robots to inform pickers of inventory location.
• Weight Scales and Software — Yet another way to reduce errors in the form of under- or over-packaging orders is through implementing electronic weight scales in your warehouse. Weighing the package before it goes out for shipment ensures that the correct items are, in fact, a part of the order. Additionally, the data compiled by the smart weight scales software can help predict changing shipping costs.

Best hiring practices for warehouse order pickers

There’s no question that order selecting and picking are tough jobs, especially considering today’s pickers are under more pressure than ever when it comes to efficiency. Over the past several years some companies dealt with a fair amount of blowback from pickers who were overwhelmed by strict picking quotas. Of course, corporations don’t set out to overwhelm its pickers, which means that faulty hiring practices could be to blame for the bad publicity.

Here are some qualifiers and tips to ensure that your pickers can handle the demanding work:

• The pickers are physically and mentally able to perform work in the long-term — Most successful warehouse picking requires the worker to move from task-to-task in the most timely manner possible. It might not be a trying job when it comes to strategy or innovation, but it is one that requires some physical and mental prowess. Make sure that each prospective employee knows exactly what the job entails in terms of physical expectations, walking speed, lifting requirements and efficiency before you move them forward in the hiring process.
• The pickers understand the job’s low margin for error — Picking is not a job for those who cannot follow directions. This might be a hard thing to determine in the hiring process, but their application, previous experience or general behavior might be good indicators as to just how meticulous they will be in the warehouse.
• The pickers are put through adequate training — If your company is at all interested in precision, it’s key that you supply your picker with the most thorough training possible before you put them on the line, and on-the-job, they should be provided with tools that give them constant feedback.

These might be common-sense hiring techniques, but they are all integral in guaranteeing that the right products get into the hands of your customers in the timeliest fashion possible.

Best practices for improving warehouse picking productivity

Order picking is one of the essential functions of a warehouse operation. Utilizing the right picking methodologies, leveraging technology to streamline processes and following sound hiring practices will go a long way in optimizing your workflows and contributing to the bottom line.

To help you further optimize order fulfillment workflows, let’s take a look at best practices for improving warehouse picking productivity.

Design your warehouse for optimal flow

Each functional area of your warehouse should be designed and positioned to flow from one activity to the next. This design is based on how inventory flows through each area, from receiving to outbound shipment. For instance, goods flow through a typical warehouse this way: Receiving – Storage – Replenishment – Order picking – Sorting – Packing – Shipping.

Such a logical flow of inventory eliminates scenarios in which associates have to double back across areas to perform an order fulfillment activity. Also, each area should be designed to accommodate the expected amount of traffic. Aisles should be wide enough to facilitate the smooth flow of associates and equipment without causing congestion — even during periods of high-volume traffic.

Leverage goods-to-person technology

Reducing the number of people and steps it takes to execute a process reduces the number of errors, and this is particularly true in order fulfillment. Errors during picking leads to unsatisfied customers and returns. Or if detected before orders are packaged and shipped, wasted time and resources in packing and repacking orders.

Goods to person technology (such as AS/RS, carousels and flow racking) reduces the need for human involvement in the picking process. It also cuts down overall travel time, human fatigue and the number of steps required to pick orders, thus speeding up the order fulfillment process. Most importantly, it removes the need for personal interaction during picking activities, a significant benefit as warehouses are implementing social distancing measures to keep employees safe in the midst of the COVID-19 pandemic.

Zone fast-moving SKUs together

Savvy warehouse managers leverage the 80/20 rule to speed up order fulfillment. Essentially, this rule stipulates that 20% of products account for 80% of customers’ orders. As such, zoning high-volume SKUs (i.e., creating a warehouse within a warehouse) is a great way to optimize order picking activities. For one, it reduces travel times because pickers no longer have to travel through the warehouse to pick frequently ordered items.

Ensure that the zone is properly designed and situated to facilitate high-volume traffic and activity. It’s a good idea to position zones containing high-velocity SKUs closer to shipping and receiving areas.

This idea can also be extended to include SKUs that are frequently ordered together, such as shampoo and conditioner, staples and staplers, etc. Placing such items together helps reduce travel time and speeds up picking activities.

Ensure the safety of pickers

Picking and packing require associates to handle items that have been handled by other employees and may still be handled by others within your warehouse.

Automating order picking activities, deploying goods-to-picker technology, redesigning pick zones and leveraging collaborative robots are best practices for simultaneously optimizing productivity and staying operational during the COVID-19 pandemic.

The CDC stipulates that people should maintain a distance of at least 6 feet at all times. While you can reduce the number of pickers operating in close proximity (to meet the CDC’s social distancing requirement), this will slow down high-volume operations and reduce overall productivity.

With the right technology and management strategy, you can ensure the safety of your warehouse employees and still rapidly process orders to meet consumer demands.

Other best practices include:

• Use well-labeled dividers, totes and bins to subdivide inventory for easier and faster picking. It’s ideal for storing and sorting through large quantities of tiny items.
• Prioritize replenishment of fast-moving, frequently picked items.
• Place picked items directly into shipping cartons.

Wrapping up

There’s no “one-size-fits-all” picking strategy or best practice given the variety of products, workforce capabilities, facility sizes and geographical locations of warehouses across the globe. Nonetheless, the above best practices have been proven to improve order fulfillment activities, irrespective of the unique conditions in your facility.

These best practices support greater throughput, increase productivity and drive higher accuracy and faster cycle times, thus boosting customer satisfaction and maximizing overall efficiency. Interested in more? Let’s discuss the solution that’s right for you. Contact us today.

More resources on warehouse order picking

For the latest information on the warehouse order picking process, best practices, methods, equipment and hiring techniques, visit the following resources:

• What Are the Different Types of Order Picking in the Warehouse?
• 5 Ways to Improve Order Picking Productivity
• Order-Picking Methods and Technologies for Greener Warehousing
• Tips for Boosting Picking Speed
• Warehouse Basics: Picking Fundamentals
• Warehouse Picking Best Practices: Top 50 Articles
• Order Pickers Should Be Like Fast Food Workers
• Improve Your Order Picking Procedures
• How Will Covid-19 Change Distribution?
• How Covid-19 redesigned the warehouse layout

Related Posts:

1. How to Manage (and Improve) Warehouse Operations

2. 7 Steps to Improve Your E-Commerce Order-Fulfillment Process

3. What is a Pick-to-Light System?

4. Learn How Autonomous Robots Move in Warehouses

5. Zone Picking vs Wave Picking: Which is Best?

The post The ultimate guide to warehouse order picking appeared first on 6 River Systems.

Ask any pick-and-pack warehouse operator: there are pros and cons for each of the picking methodologies they choose for their fulfillment operations. Zone picking is ideal for very large operations where pickers must travel long distances to complete an order or for smaller sites with very high order volume where congestion is an issue. However, a common challenge associated with zone picking is predicting where your associates will need to be based on inventory slotting and the order pool for the day. Incorrectly predicting zones results in overworking some associates while others wait around with nothing to do.

Armed with knowledge of this challenge, we tackled the question: what if you could reap the benefits of zone picking without the challenge of analyzing inventory slotting, consumer demand and labor availability? Our solution: dynamic zoning.

First, let’s understand the methodology we consider behind using static zones within a warehouse.

Why are zones used?

In order to meet SLAs and maintain profitability, there is a constant pressure to keep a fulfillment operation running efficiently. Enabling associates to spend more time picking products and less time walking from one place to another is an area ripe for optimization. Although collaborative mobile robots eliminate long, unnecessary walks to deliver and receive work, they do not remove walking between picks. One technique to alleviate unnecessary walking is to break the picking area into zones and assign associates to stay within them. This can be especially effective if there are sparse picks over a large area.

What are the challenges of using zones?

There are two interrelated problems that often cause zones to be less effective than operators hope: defining zone areas and labor balancing.

Zone areas are set with the intent to evenly distribute work and ideally put common clusters of work in one area. The problem is that it is extraordinarily difficult to predict commonly clustered SKUs. Order profiles are constantly changing over time – from season to season and even over the course of the day. We often see warehouses that have been broken into zones based on physical size and then never adjusted again.

The second related problem is labor balancing. Over the course of a shift, an operator wants their associates to spend as much time as possible actively picking rather than traveling from one pick to the next or, even worse, idle. So, when utilizing a zone picking method, it’s best when the orders are evenly distributed across all zones so each associate is engaged. Unfortunately, this rarely happens – there are often drastically different work loads across zones. To mitigate this, managers need to constantly monitor order volumes and make adjustments to zone assignments on the fly. Although we have some operations that want to use zones, most of our operations decided that there were too many inefficiencies and overhead managing them to make them beneficial.

The Solution: Dynamic Zones

Analyzing our customers’ needs, we have devised an innovative solution that reaps all of the benefits of traditional zones with none of the drawbacks. We call this dynamic zoning; here’s how it works:

When an associate completes a pick and is preparing to travel to the next, 6 River Systems’ intelligent allocation system calculates how much time it will take for the associate to get to the new pick. It also calculates how long it will take the current associate to meet another robot and a new associate to meet the current robot. If it ever takes less time to do this handoff, it is performed and time is saved. It has exactly the same benefit as if a perfect zone was created for this batch of orders.

Figuring out ideal zone boundaries is no longer a problem; there are no fixed zone boundaries! The 6RS software effectively determines the perfect zone for each robot without any operator intervention.

There is no need for labor balancing – we do that automatically. With dynamic zones, there are never associates waiting for work. As soon as an associate completes work with a robot, it leaves for the new “zone” and the associate can meet the next waiting robot. We have already determined there is one that is available for them.

Summary

Traditional static zones can be an effective technique to increase productivity and it is a methodology that 6 River Systems has supported for years. However, it does have its shortcomings so we designed a superior solution: dynamic zoning, which is just one of many innovations that we offer to our customers.

The post How 6 River Systems is Solving the Challenges of Traditional Zoning Methods appeared first on 6 River Systems.

Statista found that 73 percent of buyers and users of freight transportation and logistics services say the COVID-19 pandemic had an impact on their logistics and supply chain operations. What’s more, PwC’s Global Crisis Survey found that 69 percent of business leaders said their companies experienced at least one corporate crisis within the past five years. Whether it’s a corporate crisis limited to your organization or a global pandemic with worldwide effects, companies with logistics strategies that include contingency plans and adaptability are best-equipped to weather these storms.

With an effective logistics strategy, companies can deliver the right products to the right customers at the right time, at the highest quality and the lowest possible cost. However, variables such as customer demand and transportation costs can differ based on market conditions, so companies may develop distinct logistics strategies for specific customer segments, geographic regions or product lines. For instance, expanding to a new geographic market may require a unique logistics strategy to account for higher transportation costs or regional customer demands.

There are many factors to consider when developing a logistics strategy, such as:

• Contingency plans for adapting to unexpected supply chain changes, such as supplier shortages or delays
• Automation solutions, such as collaborative mobile robots and autonomous vehicles
• Software, such as warehouse management software and data analytics solutions
• Transportation systems, including planning efficient delivery routes, cost-effective packaging and modal options (air, rail, etc.)
• Performance measurement and improvements, including identifying key performance indicators (KPIs), goals and implementing measurement systems (tools and software)

To learn more about the essential ingredients for an effective logistics strategy, we reached out to a panel of logistics professionals and asked them to answer this question:

“What’s the single most important ingredient in developing an effective logistics strategy?”

Meet Our Panel of Logistics Experts:

Keep reading to learn what our experts had to say about the must-have ingredients for an effective logistics strategy.

James Ford

@autobead

James Ford is the Co-founder of AutoBead premium car care and in charge of their day-to-day logistical operations. James has served as the Head of Logistics for two charities which emerged to relocate surplus PPE into the hands of frontline NHS staff.

“The secret to a good logistics strategy is maintaining a continuous search for systemization…”

Every business is unique, whether it is the product, its location, its suppliers, its customers or its people. The objective is always to assemble goods to meet the customer’s request and get it to them in the most efficient and safest way possible. Once you’re able to systemize the process, which means each component is well-defined and could be transported to new locations without causing disruption, then you have implemented a great logistics strategy that won’t cause any business continuity issues.

One of our founders faced a recent challenge when placed in charge of logistics for the newfound charities National Equipment Appeal Database and SHIELD, which were purposed to find PPE that could be donated and relocate them to frontline staff in the National Health Service. The charities began by offering a peer-to-peer service, allowing donors to deliver or recipient requesters to collect the goods. However, this logistics model meant that many donations went unused as there was not a suitable local match for the goods, so the charities moved to a more structured logistics model. Donations would be collected by a logistics partner, DHL, and delivered to a central stocking center, which organized the goods into stockpiles of each product type (FFP1, FFP2 and FFP3 masks; small, medium and large gloves, etc.), providing a stock count to a “Requests team.” The requests team would speak to those making requests for PPE and deliver the goods via our service provider, Parcel Force.

Each component of the logistics process was structured, and new team members could be trained on it easily. The model enabled the charities to move millions of items of PPE for generous donors who did not require it at the time and get it into the hands of those that needed it most, our frontline NHS staff.

Jason Akatiff

@smaxor

Jason Akatiff is the Co-Founder of Boundery.

“The most important ingredient in developing an effective logistics strategy is…”

Having a good logistics architect that understands all the possibilities and opportunities that are available for the specific industry. From personal experience, I have learned that my knowledge can be limited to only one strategy because my experience is limited to my own companies. Hiring someone that has developed logistics strategies for 100-plus companies and knows all the ins and outs will save you a lot of time and money. Consult with someone with experience and knowledge of all the possibilities that are out there and will take into account what will make the most sense for the individual business and will be most cost-effective.

Jake Rheude

@RedStagFulfill

Jake Rheude is the VP of Marketing for Red Stag Fulfillment. He is passionate about tech solutions that take their work to the next level, especially in regards to marketing.

“New technology is impacting every aspect of the business world, and that includes the world of logistics…”

New technology is the fastest and most effective way to create an effective logistics strategy in today’s world. If you can use new technology to enhance communication with suppliers, manufacturers and more, you will have a tighter grasp on everything that is happening around your company.

Technology can also help you track trucks and packages and even plan in the long-term, compared to only planning for what is happening now.

The latest tech will help companies get a leg up on competitors that fail to adapt to the benefits it can provide. If you find you are being left behind by a competitor in a certain area, then find a tech solution that will push your operations to the next level.

Alex Azoury

@Homegroundsco

Alex Azoury is the Founder and CEO of Home Grounds.

“In my experience, the most important ingredient in logistics strategy is making use of automated technology…”

Be willing to take the time to update systems and processes. Spending just a few days or a couple of weeks integrating automation that will improve your process efficiency for years to come is worth the investment.

Train your employees on how to utilize that automation, and your logistics will become reliable and efficient. Spending time investing in your team will give you a return even the best automation can’t match.

A second important ingredient of successful logistics is planning for failure. There will always be slip-ups and mistakes, missing products or lost paperwork. Create a system to cover those inevitable pieces of your ideal logistics plan, so you can remain successful and efficient.

Antti Alatalo

@AnttiAlatalo1

Antti Alatalo is the CEO and Founder of Smart Watches 4 U.

“The most important piece in making logistics effective is to ensure you are prepared with a fall-back plan…”

A key strategy in the logistics field is that a plan B, and often a plan C, will allow you to flex with the inevitable failures that come with the territory in logistics.

There will always be failures, mistakes, missing products, etc. in the logistics industry. And your ability — as a business owner or operations director — to pivot and solve those problems with a backup system you’ve already designed will set you apart as a top dependable logistics operator.

Another important strategy to integrate into your business logistics is to have exact costs calculated. This strategy particularly applies to international shipping, where rates vary wildly. Establishing relationships with reliable shipping companies will allow you the freedom to count on them to charge you the correct rate for the country you’re delivering to.

Peter Christian

Peter is the founding partner and president of espi, a business consulting firm in NE PA. He has worked with 300+ clients in manufacturing, IS selection and implementation and project management. He authored the Amazon bestselling business book, What About the Vermin Problem, and is published in various professional magazines, including Consulting, Inc. and Design 2 Part.

“The most important first step in developing an effective logistics strategy is to establish what your overall product demand will be…”

Establishing product demand is done by identifying what the current and future needs (3 to 5 years) of your customers are. You can do this by taking the top 20% who probably account for 80% of the overall volume and extrapolating to get totals. Or, you can take the current volume and assign growth percentages (by product) for each of the years to arrive at volumes for each year.

You must also determine what new products and/or product lines will be introduced and which of the current products will be eliminated, including quantities for each year. The quantities for the spaces of time will dictate how your logistics will need to be structured.

Once you have established these parameters, you can now plan for things such as:

• Suppliers for types of materials, how many are required when and what the specific delivery needs are.
• Inventory requirements for all raw, WIP and finished goods.
• Storage needs for all raw, WIP and finished goods. These include types of storage such as racking, shelving and bulk and climate control if required.
• Establishment of production capabilities to make goods as close to delivery as feasible.
• The number and locations of required warehouses, distributors, etc.
• Distribution means covering daily, weekly and monthly receipts and deliveries.

Without having a solid initial foundation, you are throwing darts at an unknown and unseen target. There are many models that can then be used to develop the remainder of the strategy, but it starts with knowing what will be needed and when it will be required.

Jonathan Bass

@whomhome

Jonathan Bass is the CEO and Founder of Whom Home.

“Successful businesses today hinge only on logistics…”

The cost of logistics is such a large part of delivering goods and services to your consumer that it actually needs to be the first problem you solve in supply chain management. Your product could cost less than the logistics cost to get it to the consumer or customer. The benefit today is there are many options in logistics to analyze.

James Lewin

@bringmedrink1

James Lewin is the E-Commerce and Operations Manager at Bring Me Drink.

“The most important step in developing an effective logistics strategy is ensuring that you’re able to effectively pivot to and use the latest technology available…”

This is often where companies fall behind. They get stuck in their ways and don’t invest in the technology that could put them ahead of their competitors. Whether it’s a piece of hardware or a software package, being able to pivot easily into using a new process and tool could mean that you’re way ahead of the curve and overtaking your competitors.

If you’re able to utilize a better software that integrates nicely with your website and app at the same time, you could cut times between order placement and receiving the order. It might only cut minutes off the process, but if each order now takes 3 minutes rather than 5 to send from your site to your fulfillment software, for example, and you have 500 orders in the day, you’ll be removing around 16 hours of waiting in total:

500 orders x 3 mins waiting time = 1,500 mins waiting time total

500 orders x 5 mins waiting time = 2,500 mins waiting time total

2500 – 1500 = 1,000 mins difference

1000 min / 60 = 16.66 hours

Small changes like this can mean the difference between running efficiently and losing out on revenue. Even though it seems like shaving 2 minutes off of an automatic process is a minimal change, it can add up to a huge benefit as time goes on. This goes for most companies, whether you’re in logistics or you’re an e-commerce site.

The bottom line is, don’t be afraid to try new software and test different processes. At one point, the technology that you use today was brand new, and now it is the norm. Don’t let the fear of technology moving on hold you back.

Alex Deutsch

Alex Deutsch is the CEO at OasisTile, an online store for tiles.

“The most important element in an effective logistics strategy is connection…”

Whether it’s a small business or a big company, it is necessary to have a reliable channel to connect with manufacturers, suppliers and distributors, irrespective of their location. There must be a consistent technical solution to get connected with all the people and entities in the network. The connection ensures transparency in business and ensures that all individuals in the supply chain are on the same page to achieve objectives.

Stacey O’Neill

@NationWCS

Stacey is the Director of Nationwide Courier Service Ltd.

“Something that any good logistics strategy needs to have is an easy way to make it scalable…”

By making your logistics strategy an easily scalable process, you’re much more likely to succeed as time goes on and you get busier. As the orders come flooding in, you might find that you have to quickly expand your operations to make sure that you’re able to deal with the upswing rather than struggling, resulting in bad reviews and unfulfilled orders.

To make sure that your operation is scalable, you could do a number of things. For starters, begin building your company on good foundations. These foundations might include the company’s values, the ethos or even the first few people that you hire. The strength of a company’s foundations are going to decide where it will go and how far. So if they’re good, you can be sure that you’re going to build something successful.

You may also want to automate as much as you can. By using the right automation in the right areas of your business, it’s much more likely to become a scalable asset due to the fact that you’re more likely to run a lean operation and stay efficient. What’s more, you won’t necessarily have to hire additional staff; you may be able to simply run a few more orders through your automation or add capacity to the automation as needed.

Michael D. Brown

@TheMichaelBrown

Michael D. Brown is the Director of Fresh Results Institute. He is a Senior Global Management expert known for driving results through (and with) companies, organizations and academia. He has been responsible for the transformation of many businesses, from amateurs to top performers in their space.

“Automation is the single most important ingredient in developing effective logistics in a contemporary business space…”

Automation has never been this important to maximizing the efficiency of a logistics strategy. An increasingly IT-focused world is aggressively installing automation as the most crucial stakeholder in business process optimization. The good news is that today, there are admirable swathes of software that make the logistics process unprecedentedly seamless. To give you a more vivid picture, you can readily leverage software to provide you with real-time tracking of goods on transit, lavishing you with dynamic updates. This way, the client and the operator are completely on the same page (even up to being on the same line of the page) regarding crucial details like goods being dispatched, warehouse goods procurement and delivery at arranged destinations. It builds critical resilience into the logistics process, eradicating manual interference. Indeed, this will prove to be a lifesaver regarding the bulk of time it saves you, amplifying the efficiency of your process management. Undoubtedly, this will push up productivity.

A close sibling of automation that I see rampantly playing a more critical role in the logistics system is smart manufacturing. Today, we are seeing more players adopting smart factories — and with good reason. With smart manufacturing, stakeholders in a logistic system can maximize data and super-intelligent sensors. This latest smart manufacturing wave sees an encompassing integration of GPS technology that allows for the fluid and accurate reportage (or tracking) of employees, assets, inventory and vehicles. Therefore, it is unsurprising that more manufacturers today are leveraging intelligent sensor data to extract more critical information on the status of fleet trucks and shipping locations, as well as logistic flow to retail stores, distribution spots and warehouses.

Alisa Osipovich

@MilestimeInc

Alisa Osipovich is the CEO of Milestime Inc.

“The most important ingredient in developing an effective logistics strategy is cost to serve…”

As a business owner, it is crucial to understand the cost to serve of every single product, which will help effectively build the whole logistics strategy around this point.

It is a large problem if a business does not properly analyze the cost to serve of every single product. A lot of times, the price of the product does not even cover the cost to serve, which highlights the importance of knowing the cost to serve for each product.

On one hand, you might think that it is easy to calculate. On the other hand, from my 10 years of experience analyzing our customers’ results, at least 15% of products are not profitable due to incorrect supply chain calculations.

So, if you have not gotten to this stage of analysis in your company, if you have not calculated the cost to serve of each product, then it’s likely that at least 15% of your products are unprofitable.

David Bakke

David Bakke is a Logistics Expert at National Air Warehouse.

“The most important ingredient in any effective logistics strategy is to analyze warehouse operations…”

Are they set up to lower costs and maximize employee productivity? Is your staging process as effective as it can be? Ask yourself any other questions you can think of which will improve capability. It’s as simple as that.

Ryan Roller

@Bead_The_Change

Ryan is the Founder of Bead the Change. Bead the Change creates handmade bracelets that benefit the environmental issues affecting our world today. A portion of the sales for each bracelet goes towards supporting an organization that tackles issues that affect our world today.

“Logistics strategy is about finding that perfect balance of customer satisfaction and business profitability…”

You should be on top of each of the aspects that comprise warehousing and inventory control. Order processing, delivery scheduling, cost analyses and contingency allowances should be part of the standard operating procedure when it comes to logistics strategy.

Manny Hernandez

@MannyWisdom

Co-Founder and CEO of Omni, Inc. Manny is the consummate marketing and information technology professional with over ten years of experience in the fast-evolving arena of direct response marketing. Early on his career, Manny quickly became the master marketer mind behind the most successful lead generation campaigns for some of the top fortune 500 companies in the insurance, finance and education spaces. Manny loves to travel all over the world and write about his experiences on his personal blog, Embarky.io.

“The key ingredient in developing an effective logistics strategy is to adopt the latest technology and innovative approaches such as…”

Cloud technology, track and trace technology, use of truck scales and voice technology in your logistics processes. Keep an eye out for new developments, such as 3D printing, that have the potential to be a game-changer in the future. While doing that, you need to also focus on connectivity. You should design a logistics strategy in a manner that connects you to the suppliers, corporations and manufacturers that are situated in various parts of the world. You should have the technology to link all the entities in a way that offers consistency, enhances visibility and streamlines processes so that you can meet challenges in real-time. Make sure that you use solutions that can deliver to everyone in the supply chain, regardless of their location. The aim of effective logistics management is to improve the efficiency of the operations, ensure customer satisfaction and increase productivity.

Bryce Bowman

Bryce Bowman is the Founder of People First Planning. Bryce has held numerous leadership roles, including finance director of a multinational supply chain and division CFO of a $150 million business. With this experience, Bryce founded People First Planning with the goal of helping mid-sized businesses reduce waste through improved planning.

“A robust and accurate forecasting process is critical to maintaining logistics costs…”

Specifically, last-mile freight and warehouse utilization are directly tied to an organization’s ability to predict future sales.

Imagine the efficiencies you could achieve if you could predict customer orders with 100% accuracy. Your last-mile freight costs would drop precipitously, as you could now consolidate orders with near perfect efficiency. Similarly, warehouse usage would decline, as your need for safety stock would drop to near zero.

While it’s not realistic to predict customer orders with 100% accuracy, even modest increases in forecast accuracy can yield material reductions in inventory. Each increase of 10% forecast accuracy yields an average reduction of 5 days of safety stock. For instance, an increase from 50% to 70% accuracy would yield a reduction of 10 days of inventory.

70% is often cited as a reasonable standard for demand forecasting accuracy. At this level, most businesses are able to shrink safety stock to about 30 days of inventory, and they can free up valuable warehouse space and virtually eliminate excess and obsolete stock. For this reason, a robust forecasting process should be considered an essential ingredient to any logistics strategy. Solid forecasting allows the business to make the most efficient use of physical resources and prevents the business from having to make ever-increasing investments in warehouse space.

Arnold Chapman

@eldfocus

Arnold Chapman is the Managing Editor of ELD Focus.

“The number one priority for any logistics strategy has to be your KPIs (key performance indicators)…”

How can you ensure that your efforts are coming to fruition if you have no defined measurement framework? It’s easy to overlook such a simple aspect that can be easy to ignore day-to-day, but the truth of the matter is that it’s the core underpinning of any strategy.

Rorie Devine

@orrdee

Rorie is a high impact Interim Tech Leader, part of the GRO.TEAM, Founding Team and the author of The CTO ¦ CIO Bible and How To Be A Hero CIO | CTO course.

“The following are the important ingredients in developing an effective logistics strategy…”

Watch out for your competitors and do something the others are not doing. Avoid things that everyone is doing. Position yourself as an exclusive handicraft courier service.

Find areas and regions that are not served or underserved. You don’t have competition or volume there, but entering is easy. The solution here is to find areas that are not compelling enough for the biggies. Regions like Sikkim do not have any international couriers operating, but their handicrafts have a global market. You may even want to promote these local products, building your own volume.

How will you serve these regions? Leverage the local service providers like corner grocers and create a franchise network of collection centers. Do some local marketing by distributing pamphlets, putting up flex banners, etc. for low-cost visibility. Once you have set it up, have them collected, shipped and delivered. The operational strategy must also be cost-effective.

Justin Honaman

@jhonaman

Justin is the President and Chief Commercial Officer of Contender Brands, LLC based in Atlanta, Georgia. Contender Brands is a consumer products manufacturer whose mission is to develop and cultivate ideas that bring simplicity, joy and laughter to life. Justin is a thought leader and subject matter expert in the data, analytics and supply chain space with a focus on the consumer products and retail industries.

“The top priority should and must be a solid data strategy (and related analytics strategy)…”

Here are details as to why data is so critical to a logistics strategy:

• Data and Logistics: The process elements of logistics yield large volumes of data, rely on many different data inputs and with new methods for collecting and utilizing data, the overall logistics (and related supply chain processes) can be more efficient, optimized and actually yield a better end-consumer experience due to visibility.
• Data in Logistics: Logistics processes leverage back-office ERP or operational data, weather data, route-planning data, traffic data, vehicle sensor data, order data and much more. These many different types of data are all in different formats and are challenging to make sense of without a strong data strategy, a plan for accessing and leveraging the data and even forward-leaning into artificial intelligence and machine learning (as well as automation).
• Data and Route Optimization: One strong use case for data in logistics is around route planning. Never has more data been available (free) than today, from traffic, road, construction and weather data to truck fleet maintenance, performance, speed and availability data. Integrating these data sets in a solution that enables effective route planning — globally — is key to a strong logistics strategy.
• Data and Transparency: With mobile devices, sensors and low-cost scanning equipment and devices, access to shipment location, forecast delivery and shipper performance data readily available, shipment transparency and visibility is better than ever. It still has a long way to go as many solution providers work to make sense of the many different types and variations of data.
• Master Data Strategy: One space that is still not as clear is a master data strategy that allows for elements coming together from various sources and systems.

Bottom line: A logistics data and analytics strategy is a critical enabler to logistics strategy.

Ian Kelly

@NuLeafNaturals

Ian Kelly is the VP of Operations for NuLeaf Naturals. He’s helped launch two major cannabis brands in both Colorado and Massachusetts and has consulted for many firms across the country. NuLeaf was ranked #11 overall, #4 for Health companies and #1 for Hemp companies, as the fastest-growing in America in the Inc. 5000.

“The most important ingredient in developing an effective logistics strategy is fine-tuning warehouse processes…”

Most companies lose too much time, energy and effort in warehousing. Ironically, this is an aspect over which a company can have complete control. An ideal step is to work out the entire warehousing strategy first and then move onto other aspects of logistics.

Thomas Jepsen

@JepsenThomas

Thomas is the CEO of Check4Lead. He is a serial company founder who moved to the US in 2016 and raised money from a venture capital fund for his first business, followed by raising money from an angel investor for his next business. He is also the recipient of a National Interest Waiver green card, getting help from a congressman and senator in the process.

“The single most important ingredient in developing effective logistics systems is to…”

Set up correct incentive systems at different logistics steps that reward people for not just doing their part but also working with the person before and after them. ‘You can’t improve what you don’t measure’ also applies within logistics systems, so if your goal is to cut down on a metric, offer incentives for that metric diminishing.

Implementing smart automation solutions, such as collaborative mobile robots, is one of the most important factors in an effective logistics strategy. Learn more about how collaborative robots can transform your fulfillment operations with the flexibility to meet increased demand and reduce costs by downloading our white paper, The Business Case for Collaborative Mobile Robotics.

The post 21 logistics experts share the most important ingredients in developing an effective logistics strategy appeared first on 6 River Systems.

Shipping costs are such an influential factor in buying decisions that 65% of consumers look up an online retailer’s free shipping thresholds before adding a single item to their shopping carts. Thirty-nine percent (39%) of consumers expect two-day shipping to be free, and 29% of consumers say they’ve backed out of making an online purchase when two-day shipping wasn’t free.

One of the best ways to reduce shipping costs and ensure fast delivery is by optimizing warehouse logistics.

What is warehouse logistics?

Warehouse logistics is the process of planning, operating and controlling the flow of goods in your warehouse to optimize costs and time and meet other business objectives. Warehouses are a significant component of the supply chain and should be aligned with both broader organizational goals as well as the supply chain overall. Planning and organizing inventory is a vital facet of warehouse logistics. Maintaining adequate manpower and machinery for operations is also essential, as well as the process for picking and shipping orders.

It takes considerable effort and resources — including financial resources, infrastructure resources and human capital — to operate a warehouse like a well-oiled machine. In this guide, we’ll discuss essential steps and key strategies for optimizing your operations across four essential stages in the warehouse logistics cycle (plan, operate, measure and optimize), including:

• Plan: Developing a warehouse logistics plan
• Operate: Warehouse logistics operations
• Measure: Measuring warehouse logistics performance
• Optimize: Optimizing warehouse logistics

These four sections cover everything you need to know about warehouse logistics from the initial phase to regular operations.

Plan: Developing a warehouse logistics plan

It is always advisable to have a viable plan in place before you hit the ground running. Without a plan that includes clear business objectives and a roadmap for achieving them, it’s impossible to know whether you hit your targets.

Gathering requirements

First, you need to ascertain the company’s warehouse needs. Some questions need to be answered to determine the warehouse requirements, including:

• Who are your customers?
• Where are they located?
• What is the order volume?
• What is the current solution employed?
• What is the cost of the current solution?
• What are the delivery times with the current solution?
• Will there be cost savings with the new warehouse?
• What is the timeframe for implementation?
• What operational efficiency are you looking for with a new warehouse?

These are some of the questions that need to be answered before making the final decision on moving forward with a new warehouse. Depending on your company’s unique business requirements, there may be other questions and considerations to weigh.

This step helps you clearly define the needs, requirements, benefits and timeline for implementation. You need to estimate the cost of operations including all the elements of running the warehouse, the cost or time savings obtained by investing in a new warehouse and the break-even point for the project.

It is possible that this analysis may not justify a dedicated warehouse. In that case, working with a reliable third-party logistics operator may better serve your needs. The top third-party logistics providers have spent years perfecting their operations, allowing companies to tap into their expertise and get optimal performance at a minimized cost compared to maintaining in-house warehousing and logistics operations. Alternatively, you may be able to extend the lifespan of your warehouse by implementing flexible automation solutions.

Identifying a location

Once you have determined the need for a warehouse, you need to identify a suitable location. The questions you have answered during the requirements gathering phase will come in handy here. Once you know where your customers are, it is easy to identify the best warehouse location to serve your customers. Keep in mind that it’s often more profitable to serve some customers than others, so you may want to prioritize the needs of the customers who create the most revenue for your business. For example, you may choose a location based on proximity to your best or longest-term customers, allowing you to deliver goods to those customers faster than short-term or occasional customers. Tools based on Geographic Information Systems (GIS) are available to identify the best location for your warehouse.

Another factor to consider is whether you are building a warehouse from the ground up, using an existing warehouse or repurposing another facility to function as a warehouse. All of this comes down to your warehousing requirements and cost concerns. You should also collaborate with your company’s finance department to identify the best possible solution from a financial perspective. Purchasing, renting and leasing have different implications on the balance sheet, and the finance department is better poised to identify what is best for the company’s long-term financial health. At the same time, your warehousing requirements should not be compromised. Meeting both financial and logistical objectives at the same time is a delicate balancing act, making transparency and open communication between various departments necessary.

Mapping your warehouse

Mapping a warehouse is an essential exercise for determining what goes where and how operations are handled. Order picking activities are considered the most labor-intensive activity in a warehouse, comprising as much as 55% of warehouse operating costs, and mapping your warehouse can help to streamline this essential business function. The warehouse mapping process includes:

• Assessing the space
• Labeling the space (including aisles, racks, shelves, containers or bins, etc.)
• Estimating traffic
• Implementing the right racking system
• Choosing the best order picking carts to meet the warehouse’s requirements
• Implementing inventory management software

Mapping your warehouse is a crucial step that should not be missed. Without a well-mapped warehouse, your logistics operation is bound to be chaotic as there is no blueprint to operate on.

Operate: Warehouse logistics operations

After developing a robust plan, you have to back it up with action. You have to hire employees, establish a management structure, integrate the warehouse with the rest of the supply chain and ramp up operations to the full potential. If you are switching from an existing solution with a third-party logistics provider to a dedicated warehouse, you need to decouple from the existing service provider in a slow and staggered manner.

However robust the warehousing plan is, you should not discount the possibility of disruptions. Should disruptions occur shortly after beginning operations, the current service provider can act as a backup plan. Below, we’ll take a look at the key elements in ensuring smooth warehouse logistics operations.

Competent warehouse manager

It may sound like a no-brainer, but some bottlenecks in supply chains can be traced back to incompetent warehouse management. A demonstrated ability in a candidate’s previous role is perhaps the most important consideration when evaluating warehouse management candidates, although years of experience shouldn’t be discounted. The warehouse manager should know all the ins and outs of the facility and location. They also should have adequate knowledge of the specialized equipment and procedures that support streamlined and efficient warehouse operations. Because a not-insignificant number of problems that arise in a warehouse are people-related, exceptional interpersonal skills are also a must for highly qualified warehouse managers.

Clear targets and future

Everyone in the warehouse must be aware of the operational goals. Employees should not feel as though they are performing routine tasks in return for a salary, but that they’re making valuable contributions to a larger strategy to improve the business. Employees should feel that they are valued and essential elements in achieving the aims of the organization.

Technology and growth

Adopting the newest technologies without determining whether they support your processes can cost money and hinder operational efficiency. When technology is utilized in alignment with the business’s needs and requirements, it can bolster productivity and even boost employee morale by making your warehouse associates’ jobs easier. Today it is impossible to operate a warehouse with what can be held in the brains of warehouse managers or even spreadsheets. Specialized software solutions are available for every need in the market. Taking the time to research and evaluate technology solutions to find the right solutions to meet the company’s requirements is time well-spent.

Employee satisfaction

Warehouse operations are heavily dependent on employees. Labor comprises nearly 65% of warehouse operating costs, so it is crucial that your employees are performing to the best of their abilities. Your employees should wholeheartedly accept the vision of your company and strive towards the future, but your company’s mission and vision must be something your employees can get behind.

The manager you hire becomes vital in this respect. Employees do not want to work with a phantom managerial department but want to interact with a manager who can empathize with them. So, it is important to hire a manager who is up to the task of managing people and their expectations.

Measure: Measuring warehouse logistics performance

Simply having a warehouse up and running isn’t enough to compete in today’s competitive landscape; measuring performance and striving for continuous improvement is a must. If you do not measure, everything might seem to be running smoothly until the breaking point is reached, bringing your warehouse logistics operations to a halt. Because you have no way of knowing if you’re meeting your objectives, it’s difficult to set targets for the future.

There are many indicators that can be measured to monitor the performance of warehouse logistics, including:

• Inventory metrics
• Receiving metrics
• Put away metrics
• Fulfillment metrics
• Warehouse safety metrics

What you need to measure most are key performance indicators (KPI), which are essential metrics that measure the most significant data that can provide insights into the overall health of your warehouse logistics operations. Here are some of the most valuable KPIs for warehouse operations.

Shrinkage

Shrinkage refers to the percentage of inventory that is recorded but not physically present. This indicator reveals whether you have a problem with inventory damage, theft, miscounting or supplier fraud. Here’s how to calculate it:

Shrinkage = (Cost of recorded inventory – Cost of physical inventory)/ Cost of recorded inventory

Inventory turnover ratio

This indicator shows how many times inventory was sold and replaced in a given period. The inventory turnover ratio tells you how fast you sell your inventory. It can be tested against the industry averages to check the performance and measured during specific periods to provide insight into seasonal demand and other fluctuations. Here’s how to calculate it:

Inventory turnover ratio = Sales /Average cost of goods sold/Average inventory

Cost of carrying inventory

The cost of carrying inventory indicates the percentage of overall inventory costs spent on inventory overhead every year. The aim is to reduce this number as much as possible, which can be done by eliminating obsolete or slow-moving inventory. Calculate the cost of carrying inventory with this equation:

Cost of carrying inventory = Carrying cost/Overall inventory cost

Cost per line

This metric is the cost to receive a line item on a purchase order. When this number is high, it indicates the warehouse receiving process is less efficient and needs improvement. Here’s how to calculate the cost per line:

Cost per line = Total cost of receiving/Total line items

Receiving efficiency

This KPI represents the inventory received per man-hour worked. It is a measure of the productivity of employees in the receiving area. Sometimes, low receiving efficiency can be rectified with the use of specialized tools or equipment. Calculate receiving efficiency by using this equation:

Receiving efficiency = Volume/number of man-hours

Receiving cycle time

Receiving cycle time is a KPI that indicates the time taken to process delivery at the receiving end. To rectify a high number on this indicator or a long time to process, the number of deliveries can be reduced or rescheduled. Here’s how to calculate it:

Receiving cycle time = Total time for delivery/Number of deliveries

Put away accuracy rate

Put away accuracy rate is measured when the received items are put away. It is the percentage of items put away accurately the first time. Calculate put away accuracy rate using this equation:

Put away accuracy rate = Inventory put away correctly/Total inventory put away

Put away cycle time

Put away cycle time is the average time taken to put away an item after receiving it. There are several ways to improve this number, such as rearranging the warehouse, training employees to complete put away tasks more efficiently and implementing automation solutions such as collaborative mobile robots. Here’s how to calculate put away cycle time:

Put away cycle time = Total time for put away/Total time

Picking accuracy

This metric determines the accuracy during order picking. To improve this indicator, you can train employees, introduce a better process or introduce automation. Calculate picking accuracy using this equation:

Picking accuracy = ((Total number of orders – Incorrect item returns)/total number of orders) x 100

Rate of customer returns

The rate of customer returns is the ratio of products returned to the number of items sold. Ideally, this number should be zero, but it’s nearly impossible to achieve a zero rate of customer returns. When this number is high, you need to investigate the reasons for returns and identify if there is a larger theme for returns that could be rectified. Here’s how to calculate the rate of customer returns:

Rate of customer returns = Items returned/Items sold

In addition to these KPIs, you should measure safety indicators like time since the last accident, time lost due to injury and accidents per year. Warehouse operators should identify which of these indicators are the most significant in meeting business objectives and measure those that make the biggest impact.

Optimize: Optimizing warehouse logistics

Measuring warehouse logistics KPIs is the first step in optimizing your operations. Measurement is used to formulate objectives for optimization. For instance, if your rate of customer returns is desirable but picking accuracy is too low, your objectives should focus on strategies for improving order picking accuracy rather than reducing returns.

The four key areas for optimizing warehouse logistics include receiving, put away, order picking and safety. Training employees to perform tasks with greater accuracy and efficiency always contributes to better results. Sometimes, flawed processes can be the reason for sub-optimal performance. In such cases, the process should be streamlined with continued monitoring of the corresponding KPI to track the impact of process improvements. Implementing the right technologies also adds to warehouse logistics efficiency. Automated warehouse picking, for instance, can dramatically improve warehouse order picking efficiency.

Warehouse logistics optimization is an ongoing process. There will always be something that can be improved for better results. Choosing the functions and processes to optimize should be based on the potential impact on overall warehouse logistics operations. If you achieve optimal performance for one KPI, move on to the next and seek other areas to improve. Perfection is always elusive, so set clear objectives and targets that indicate when those goals are achieved. Otherwise, you may end up spending time on marginal improvements that don’t significantly contribute to overall operational efficiency.

Learn more about how investing in smart, flexible automation solutions like collaborative robots can help transform your fulfillment operations while providing the flexibility you need to meet increased demand and reduce costs by downloading our white paper, The Business Case for Collaborative Mobile Robotics.

The post Ultimate guide to warehouse logistics: Enhance organization, movement, and management appeared first on 6 River Systems.

Order picking carts are used to move inventory from the warehouse shelves to sorting or packing stations. They make it easier for warehouse associates to carry multiple items at a time or to carry large, unwieldy items. When it is possible to carry multiple items on a trip, it drastically reduces the distance traveled by associates on foot. It also helps to reduce physical fatigue and improves efficiency dramatically.

Though order picking carts tend to reduce cost and improve efficiency, the wrong order picking carts can also cost your warehouse money. There are several considerations to weigh when selecting order picking carts for your warehouse operation, from picking cart features to the inventory and systems employed in your warehouse.

1. Suitability with inventory

Warehouses carry different types of inventory on their shelves. A company might have large individual orders from customers by pallets, so it makes sense for them to store the inventory on pallets. Picking carts aren’t ideal for this scenario, as they’re not designed for transporting pallets. A forklift or pallet truck makes more sense in such a warehouse.

In a similar fashion, the type of inventory carried by the warehouse determines what type of order picking cart to use. The inventory could be large, small, heavy, light or dense, and the order picking cart needs to be suitable for moving these items. There is a wide variety of carts to choose from, including security carts, stock carts, service carts, utility carts, smart carts, platform carts, pack mule (electric towable carts), forklifts, pallet trucks, etc.

2. Order picking system compatibility

In most cases, order picking carts are used to support the single order picking system that requires a lot of time and physical effort from warehouse associates. Still, there are multiple order picking systems that handle multiple products and orders at the same time. Some of the order picking systems commonly employed by warehouses today are batch picking, multi-batch order picking, cluster picking, wave picking, zone picking, pick-to-light, voice picking, mobile-scanner based picking, etc.

Some order picking carts are designed to suit specific types of order picking methods. It is best to select one or more order picking systems for your warehouse, optimized according to the inventory, order pool and traffic, and then select the order picking carts that support your order picking methods and accommodate your needs.

3. Sturdiness and longevity

Order picking carts cost anywhere between a couple of hundred dollars to thousands of dollars per cart. It stands to reason that the carts endure significant wear and tear over the course of their usable life. Selecting the right warehouse order picking cart comes down to the materials, use, fit and finish of the carts.

In a warehouse that experiences a very high level of humidity, warehouse order picking carts made completely of non-corrosion-resistant metals are not ideal. A predominantly plastic build would be much more suitable in such conditions. However, metal carts are a good choice for a warehouse that uses carts to transport heavy items that plastic carts can’t handle. Again, the most suitable order picking cart depends on your operating requirements.

4. Collaborative picking capabilities

Collaborative mobile robots are rising to prominence in the warehouse industry due to their flexibility and ability to improve warehouse productivity. They travel autonomously throughout the warehouse, so warehouse associates don’t have to push or pull the cart. As a result, warehouse associates experience less physical strain and fatigue, which can hinder productivity, compared to operating manual picking carts.

Collaborative robots like Chuck by 6 River Systems leverage artificial intelligence and machine learning to prioritize work in real-time based on the current conditions on the warehouse floor. Chuck guides associates to each pick location and through each picking task, enhancing the work of your associates to improve accuracy in ways that manual picking carts can’t and makes use of the advanced guidance technology to traverse through the warehouse floor without requiring any modifications to your existing warehouse infrastructure. Visit this post to learn about our simple, three-step process to determine if Chuck is right for your operation.

Download our white paper, The Business Case for Collaborative Mobile Robotics, to learn more about how collaborative robots can help you increase labor productivity and operational flexibility.

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1. Requiring regular repairs
2. Problems arising during inspections such as deterioration, dents or other damages
3. Beam deflection that may occur due to insufficient arm support or heavy loads
4. No room for expansion with the current racking system
5. Relocation to a new facility

A warehouse racking system provides the framework for the complete operations of the warehouse. The limits of the racking system determine the warehouse’s capacity limit. The general convention is to conduct biannual checks to ensure the health of the racks and shelving. This is extremely important as racks in poor condition can pose safety risks to both the safety of employees and the integrity of the products stored on the racks. Fragile items that fall to the ground after a racking system or shelf fails can be damaged, and these losses impact the company’s bottom line. Warehouse racks must be upgraded in a timely fashion with future traffic and other requirements of the warehouse in mind.

Warehouse layout optimization

For finding the best possible configuration for a warehouse and the optimal use of space, you need to optimize your warehouse layout. For maximum space utilization and improved efficiency, you need to have constant and complete visibility into storage locations with the ability to pinpoint where specific products are stored within the warehouse at any time. Designing an efficient warehouse layout will increase picking efficiency, reduce picking errors and reduce the time required to fulfill orders. Warehouse layout optimization also helps to identify the best suitable racking solution for the warehouse space.

Inventory retrieval system

When upgrading the racking system, consider the products stored in different areas and racking systems and how products are retrieved from pick locations. Some inventory management processes follow LIFO (Last In, First Out) or FIFO (First In, First Out) systems. In general, when perishable goods are stored in a warehouse’s inventory, the FIFO inventory system is employed. Regardless of the inventory management method your company utilizes, the racking system must support the retrieval system.

If any machinery is used to retrieve products from the rack, it also must be considered while selecting a racking system. Racks from which products are picked by a human and those from which products are picked using machinery like forklifts need to have different access considerations. Picking methods and any equipment used in the picking process should be accounted for when selecting a racking system. If warehouse automation is implemented or will be in the future, the new racking system must be compatible with the automation system. Flexible automation solutions like collaborative mobile robots integrate with your existing infrastructure, making them an ideal automation solution for many warehouses.

Warehouse environment and structure

While it is ideal to build a warehouse tailored for the requirements, it is not always cost-efficient to do so. Most often you have to work within the constraints of the available space. The temperature conditions, humidity and available HVAC systems play a role in determining the most suitable racks to implement. Other structural considerations include column spacing, ceiling height, location of loading ramps, total space available and required space. Specialized warehouses, such as cold storage warehouses, will have their own set of specifications that must be considered when selecting a racking system.

Update ancillary equipment

Along with updating the racking system, you need to update other warehouse infrastructure. The existing lighting conditions might be disrupted with a different racking system, so lighting updates may be necessary to accommodate the changes. Compared to incandescent lighting, LED lighting uses as much as 75% less energy and lasts up to 25 times longer, according to the U.S. Department of Energy. A new lighting system will improve safety and decrease accident rates. Improved lighting can also help reduce picking errors.

With new racks, there may also be a need for new scanning equipment. With increased rack heights, aisles, and other space considerations for operators and equipment, the warehouse’s existing technology may not meet the new scanning requirements. Modern scanning technology can scan up to 40 feet and can be operated from a forklift or other equipment. Long-range scanning solutions that don’t require equipment operators to stop and exit their vehicles means they’ll spend less time finding the correct storage locations.

Plan for expansion

The demand for warehousing solutions is expected to grow in the coming years with the continued growth of the e-commerce industry. According to the North America Warehousing and Storage Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2019-2024 report from Research and Markets, the warehousing market is expected to grow at a CAGR of 3% through 2024, reaching a value of $86.41 billion.

Current plans to upgrade should also account for potential future expansion of physical space, the introduction of new technology, diversification of products handled, automation roadmap, etc. Potential upgrades should be considered with discussions with other departments of the company and industry experts.

Budget considerations

Warehouses are a support structure for the sale of products, and in the end, storage and fulfillment costs must be low enough for the company to make a profit when products are sold. So, updates to the warehouse racking system and other upgrades need to be within a justifiable budget. Warehousing and storage costs, like product pricing, are a function of supply and demand. Such cost considerations must be accounted for while upgrading the racking system, so it’s necessary to bring the finance department on board for discussions related to infrastructure investments like updating the warehouse racking system.

Following these best practices for upgrading your warehouse racking system will ensure that you choose the best racking system to meet your specifications. The right racking system helps to improve safety and efficiency while also minimizing costs.

When upgrading your warehouse racking system and ancillary equipment, consider a flexible automation solution like collaborative mobile robots. Download our white paper, The Business Case for Collaborative Mobile Robotics, to learn more about how collaborative robots can transform your fulfillment operations with the flexibility to meet demand and reduce costs.

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