Efficiency is a crucial element for success in the warehouse or distribution center. Previously, we focused on ways to utilize warehouse space more efficiently. In this blog post, we'll go over 3 fundamental tips for more efficient fulfillment operations and inventory management processes.
A laissez-faire approach to slotting is detrimental to overall throughput and efficient space utilization. You've probably heard of the 80/20 rule: 20% of your SKUs usually account for 80% of your sales. Those top-performing SKUs should be slotted in a layout that 1) reduces the frequency and urgency of replenishment trips by providing sufficient space for extra stock, and 2) allows pickers to quickly and easily access them. Be sure to periodically review your slotting assignments to account for changes in customer demand (especially for seasonal items).
Faster intra-warehouse transit
Aside from changing the layout and slotting assignments, consider investing in equipment that will minimize the travel time for stock and staff within the warehouse. For example, conveyor systems can improve efficiency by reducing product handling and walking distance.
In kit assembly, or "kitting," you take individual items from your inventory and bundle them together as a unique SKU. The kits are then ready-to-ship when orders are placed – saving more time compared to picking each of the products at the time of order.
SKU replenishment is a major component in the efficiency of warehouse picking and packing. If a picker goes to a designated pick slot, but finds it empty, multiple people and processes are affected. The picker gets stuck on the current order trying to track down the necessary product. Staffers in charge of replenishing the pick slots stop what they're currently doing to address the problem. Order filling is delayed until the right item is found and the order completed – or worse, the order ships incomplete and a second shipment is required with shipping costs paid by you.
In combination with optimal inventory locations, well-timed SKU replenishment can greatly improve fulfillment efficiencies. Below are a few methods you can use to control SKU replenishment rates:
This method establishes the maximum number of products a slot can hold and the minimum quantity it should have at all times. The minimum quantity threshold provides a "safety net" of products in stock that gives you time to replenish the slot before it runs out completely.
This method measures the demand for a SKU within a batch of orders and compares it to the current quantity in the pick slot. The demand exceeds the current quantity, the slot is marked for replenishment. In combination with the min-max method, on-demand SKU replenishment is especially useful for keeping pick slots full during peak season or sudden increases in order volume.
Also known lean time or downtime SKU replenishment, the top-off strategy refills pick slots when the warehouse isn't busy - regardless of the slot's quantity. This ensures that pickers will have all the product they need when orders start pouring in.
In every task for every industry, automation makes life easier. But in ecommerce fulfillment, incorporating automation equipment into your warehouse can be a lengthy and expensive process. It requires considerable expertise to know which types of equipment you need and how it should be laid out for maximum efficiency. Plus, if you want to make changes in the future, it can become very expensive to move, reinstall, or upgrade. Before you invest in warehouse automation, consider the following:
Your current capabilities
As your ecommerce business grows by entering new regional markets, adding new SKUs, and fulfilling more complex orders, manual warehouse operations become strained. Automation is only one possible solution to this challenge. It may be smarter to look into improving operational efficiencies in staffing, workflows, warehouse layout, or inventory storage.
Can you spare the time?
At the start, automated operations will take a few months to design and plan. Built-to-order automation and conveyance equipment may not be ready for 3-6 months, based on complexity. After installation, you still need time to train staff and fine tune the system. Depending on your needs, it may take 12 or more months to automate your warehouse.
Automation by proxy
With these issues in mind, you may not want to invest the money and time into the research that this type of expansion requires – at least not yet. However, a third-party fulfillment provider may better solution all-around. 3PL providers already have the infrastructure in place to help you improve your warehouse operations – for much less than the cost of investing in automation equipment.
At Fulfillment Works, we have helped ecommerce companies both large and small reach their goals for growth. Contact us today with your specific challenges to learn exactly how we can help.
Expanding your ecommerce business by opening more distribution centers (DCs) can be a beneficial strategy for reducing shipping costs and delivery times. However, more isn't always better. The expenses associated with opening, operating, and integrating additional DCs can easily negate the cost savings and logistical advantages they provide. To figure out if the numbers will work in your favor, you should consider the following variables.
Number of SKUs vs. Order Volume
In general, the more SKUs you have, the more it will cost to coordinate with your suppliers to maintain inventory levels across multiple DCs. However, those costs can be offset if your order volume is high enough. As we previously mentioned, a new DC can reduce shipping costs (assuming it's closer to your customers, of course). The greater your order volume, the greater your savings on shipping. When determining the cost-effectiveness of acquiring a new DC, you'll want those shipping savings to exceed the added inventory and warehousing expenses.
Average Shipping Weight
The average dim weight of your orders should also be included in your cost/benefit analysis. Heavy orders will generate bigger cost savings when shipping from multiple DCs. Conversely, you may see minimal or no cost savings on lightweight orders.
Multiple systems may need to interface in order to properly count and route orders to the right distribution center. Can your order management system incorporate a new distribution center?
Improving your distribution network's size and efficiency by opening new centers can be a solid strategy for maintaining a competitive edge - but only if the pros, cons, and costs have been thoroughly vetted. Alternatively, a third-party fulfillment provider may be a better solution. You can reduce transit times, cut shipping costs, and increase order volume without taking on the risk of opening and operating a whole other distribution center. At Fulfillment Works, we utilize customized solutions to provide clients with full-service fulfillment including logistics management, data solutions, warehouse services (with facilities strategically located in Nevada and Connecticut), and much more. Contact us to learn how we can help with your distribution goals.
If you've played (or still play) the iconic puzzle video game Tetris, you've probably noticed how similar the game is to working in an ecommerce warehouse. The basic goal of the game is to pack a non-stop flow of various geometric pieces into a finite space. Packing the pieces together neatly and efficiently filling empty spaces grants a high score, while the opposite reduces the size of the playing field and limits the options you have for setting new pieces. As the game goes on, the pieces need to be set faster and faster. Once you run out of space, it's game over. Sound familiar?
As ecommerce businesses gain more customers and add more SKUs to their inventories, some begin to struggle with the physical limitations of their warehouse facilities. Of course, growth is certainly a good problem to have. But running out of space can negatively impact in the speed and efficiency of your fulfillment operations – quickly undoing that growth. Unlike Tetris, you have many more options for utilizing your warehouse's "playing field." Before you decide to start a "New Game" by opening another distribution center, try these tips for optimizing your warehouse space.
Vertical stacking is bad in Tetris, but great for warehouses! Look up and check if you’re using all the vertical space available. If you can expand upward, ensure that your pallet racks can handle the extra top-weight. Assessing your vertical space is also a good time to consider installing mezzanines.
Width & depth
Redesign your aisles to be just wide enough to accommodate material handling equipment and personnel. Even a small reduction, multiplied across several aisles, can make a big difference. Similarly, consider “double-depth” racking to increase your depth of storage.
If you store the same product in multiple locations, consider merging the locations to utilize space more efficiently. But before you do, make sure that the merger won’t create a bottleneck of multiple pickers heading back and forth to the same spot.
Cut excess supplies
Reduce the amount of dunnage, boxes, and other packing materials you keep on site. Work with your suppliers to see if it makes more sense to get smaller, but more frequent deliveries of supplies.
Get help from an expert
When you get stuck in a video game, asking for help is the fastest path to progress! Fulfillment Works provides warehousing services out of our FDA-registered, climate-controlled, state-of-the-art managed warehouse facilities in Nevada and Connecticut. Contact us to learn more about the specifications, capabilities, and warehousing services of our East and West coast fulfillment centers.