Many business people don’t understand the impact of warehouse efficiencies on their bottom line through both cost and revenue. An inefficient warehouse results in higher costs through wasted efforts, the need for larger warehouse spaces, and, often, higher shipping costs incurred when businesses must choose more expensive shipping options to meet demands or when they ship multiple orders rather than combining them into lower-cost single shipments.
Warehouse efficiencies also impact your customer experience, as customer expectations of delivery speed increase every year. Delayed delivery or out-of-stock items in retail businesses, whether online or off, reduce customer satisfaction and may result in poor market performance as customers turn to alternate stores.
If you’re one of the business owners who think marketing is synonymous with advertising, you’re missing opportunities to improve the customer experience of those who shop your business and that costs you money. Customers expect the right product at the right time and they expect products in whatever places they look for them. All you have to do is remember back to the toilet paper shortage experienced almost everywhere at the beginning of the coronavirus pandemic to see the negative publicity earned when customers can’t find what they want.
How warehouse efficiencies impact performance
Imagine going to a grocery store and they’re out of your favorite brand of orange juice, Tropicana. Likely you don’t visit multiple stores looking for your favorite. Instead, you buy another brand and Tropicana just lost a sale and those lost sales become a serious problem when this happens frequently. Now, imagine you actually like the other brand better than Tropicana. Tropicana lost a customer for life and, given the cumulative sales you represent, that’s serious money.
Of course, the retailer who didn’t meet your desire for Tropicana doesn’t suffer the same fate as the brand itself. But, consistent out-of-stocks for multiple brands or failure to carry stock in your favorite brands convince shoppers to choose a different retailer. And, the same goes for online retailers.
Now, A growing number of modern retail businesses, including all e-commerce businesses, rely on great delivery systems, ensuring that products get to customers on time and in good condition. However, your delivery processes aren’t just about how your products get from A to B on the road, they start with a great warehouse that makes it easy to store, find, and pack those same products. Here are some ways to make your warehouse a much better part of a better delivery process.
How to achieve warehouse efficiencies
One of the best ways to make sure that your products don’t get lost in the warehouse is to adopt lean inventory whenever possible. This means doing your best to only stock what you need and nothing more. Of course, this involves a balancing act between having too much and having too little product to meet demand.
Taking the time to forecast item sales helps ensure you don’t stock too many items or too few items to meet demand. Hence, inventory management software plays an important role in stocking the right amount of product.
Picking product efficiently
Picking involves choosing the right products from your warehouse to meet a customer’s order, whether that’s pallet loads for a retail customer or a box for an end-user. And, picking is an inefficient manual process fraught with huge potential for errors and waste. Anyone who ever searched endlessly for an item from among those crowded into a packed garage or basement knows the frustration and waste encountered through that search. Now, imagine you have an entire warehouse like that.
Warehouse efficiencies arise when you don’t store products like in your garage; haphazardly. Instead, you plan for storage with the knowledge you’ll need to find everything again fast. Storing products in a given space, called dedicated storage, is wasteful as you almost always have space not being used. Instead, companies record where they store products within the warehouse using barcodes so they know where to find anything at a moment’s notice.
Alternatively, companies use RFID chips embedded within containers to identify products using a handheld device and a code to cause a box containing desired products to identify themselves visually, via a strobe light, or sound, such as beeping. Hence, workers quickly and accurately find any product in the warehouse.
Reducing storage is your primary goal in warehouse efficiencies. Hence, cross-dock facilities where the product never stays in the warehouse but moves directly from incoming bays to outgoing bays is the best option, although not always possible.
Here, the key is to reduce wasted movement that results in higher labor costs and the increased risk of injury. Think about your trip to a grocery store. As you move down the aisle, you pick up items from your list, skipping aisles where you don’t need anything. If you forget something, you backtrack to find the item. Now, multiply that by hundreds of workers filling thousands of orders and you see the wasted effort involved. And, since you pay your workers for waste at the same rate you pay for efficient picking, the costs pile up.
Instead, computers produce a picking list for multiple customers so an employee moves efficiently through the warehouse once, picking everything ordered for multiple customers in a single pass without requiring them to backtrack.
Packing goods efficiently
Packing serves multiple roles. Packing:
- gathers ordered items into one place
- protects items from damage in shipping
- ensures products reach the intended customer
- reduces shipping costs by choosing the right size container
A good physical station is a must to meet the multiple goals involved in packing. You don’t want workers turning left and right too often to access the goods and materials they need. Shelves that make packing materials readily accessible and a gravity conveyor that helps workers move items along easily saves them a lot of time and helps them pack much more efficiently, thus saving labor.
Electronic systems that double-check customer addresses on labels with the customer’s details on the system greatly help in reducing inaccuracies. By adding a weight station, you reduce the chances items were forgotten from the order or unordered items included since either situation involves a difference in weight from that expected given the items ordered, in most cases.
Managing your team for warehouse efficiencies
Your warehouse is only as efficient as the team you have operating the facility. As such, ensuring you train your managers to understand the functions of the warehouse dictating productivity is crucial. Regular training with warehouse technologies and opening up a feedback loop to allow workers to offer advice on efficiency improvements significantly impacts warehouse efficiency. For the workers, implementing an incentive program that aligns worker actions to KPI targets helps keep them motivated to achieve the goals of the firm. Of course, the best way to motivate employees is to meet as many of their needs as possible through employee benefits.
With the tips above, hopefully, you can spot the major ways you can improve the efficiency of your warehouse, thus reducing costs while improving customer satisfaction. Keep an eye out for the little sources of lost time that can add up in the warehouse, and keep introducing systems to reduce these time sinks.
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