Spurred by rising consumer expectations and ecommerce giants like Amazon reimagining order fulfillment, retail warehouse managers are under pressure to achieve more than ever before.
And with less resources.
To keep up with shifts in retail, warehouse managers are taking a hard look at smarter ways to run their operations. The side of logistics that has historically been powered by antiquated pen and paper processes is slowly turning to data and technologies such as the Internet of Things and automation, for example, to turn the corner.
While these innovations can positively transform a warehouse, at the end of the day it’s the way in which they are used and how they carry out key processes that make them impactful. Strategic processes married with new technologies is at the core of smart warehouses. Here are a few tips to help you leverage both to wise up your warehouse.
Look at People Processes First
Efficient warehouse operations don’t just happen overnight. Some homework must be done so you can truly understand where your problem areas are and make the best decisions when it comes to process reorchestration and technology investments to improve them.
However, determining change is dependent on data. And for most retail warehouse managers, data is handwritten on paper or manually typed into spreadsheets. This restricts access to detailed and up-to-date facts.
To start laying the groundwork for change, look at an area of the warehouse where you should have information accessible: labor. Implementing a smart labor management strategy means ensuring you have just enough of the right people on hand at the right time to meet order demand while minimizing downtime.
Ask yourself: How many full-time employees do I have working in the warehouse? How many additional people do I employ in the warehouse during peak season? What are the hourly labor costs per employee?
This can give you a high-level assessment of where you’re at from a cost standpoint and allow you to begin identifying areas to consolidate. Of course, introducing technology–such as a cloud-based warehouse management system–can give you faster access to this information and has a higher probability of accuracy.
Warehouse management system (WMS) software can be used help identify areas of your labor management processes that can be streamlined through automation. Eliminating manual processes in favor of automation can increase order velocity, reduce head-count and overtime costs and make staff more accurate and efficient. The best warehouse management software can not only provide data about what and when to automate but offer core functionality to enable these automated processes.
Coupling this technology with labor management can help you make smarter decisions around labor forecasting. It arms you with information to plan and prepare for peak order loads and avoid understaffing or employee downtime.
Gather Inventory Intelligence
Like labor, unwieldy inventory management processes can cost you. That’s why it’s so critical for retail warehouse managers to evaluate the systems they have in place and use data and advanced technology to help drive improvements.
A WMS can help here again. If integrated with your ecommerce platform, for example, you can use the technology to get a better understanding of things like:
Sales and transaction data
Order volume and makeup
Order processing time
This type of information allows you to strike the right balance between supply and demand saving money and warehouse space. While effective use of warehouse space may not sound very impactful to a retailer’s bottom line, it can actually reduce employee travel within the warehouse, saving time and cost from these expensive resources. It also offers the ability to address unplanned spikes in order volume that require more inventory or a temporary change in the slotting approach.
Ultimately, smart warehouses approach their operations as a system that can be tuned; they are lean, but only in the sense that each operation contains only as much effort as needed to accomplish its intent; they are enabled by tools that promote execution, and informed by those same tools to a degree that allows their stewards to drive improvement.
Becoming a Champion for Change
One of the biggest stumbling blocks toward building an operationally smart warehouse is culture. Changing the culture and mentality of your warehouse requires someone to become the champion for change, and warehouse managers are in the perfect position to play that role.
The champion should use data to articulate what the warehouse can achieve if allowed to take the risk, and how implementing technology-driven processes can ultimately mitigate risk. They also should advocate to the c-suite the need to invest in process improvements and technology. And convincing people outside of the warehouse that an investment needs to be made can be challenging. A lot of time and money is put in on the front-end of a retail operation and the back-end can be neglected.
To make the case for improvements in the warehouse, warehouse managers need to understand the total cost of ownership and return on investment, and justify the change. They also should get comfortable selling the “to be” state–advising on what the warehouse could transform into and how that can improve the entire retail operation.
The Bottom Line
Smart warehouses approach their operations as a series of interconnected processes and resources, each deserving attention and critical examination to promote efficiency, with the goal of lowering time and cost to perform. Smart warehouses don’t just “continuously improve,” they continuously reflect and adjust and examine and tinker. Smart warehouses examine not just their processes but understand that transition between each process provides opportunities and challenges; their approach values speed, accuracy and efficiency.
All in all, a smart warehouse–where the management and staff pair process with technology–will run less expensively. Labor and inventory will be tightly controlled, informed and efficient.
What’s holding your warehouse back from moving forward? Time to get smart.
Don White is vice president of Enterprise Solutions at Snapfulfil, a Tier 1 Software as a Service (SaaS) cloud warehouse management system. Learn more at Snapfulfil.com.