For most businesses, from start-ups to the most well-established corporations, their choice of outsourcing fulfillment services is a secondary concern to making sure that products are flying off the shelves and into shopping carts—both literal and digital.
And once you hit the point where you’re overwhelmed with trying to fulfill your orders, you have a limited number of options:
It's the nature of skilled supply chain professionals to feel a need to have contingency plans for their contingency plans. Designing and implementing a "tight ship" is more than a matter of pre-planning, however: Eventually, something unexpected will happen and even the best supply chain risk mitigation framework will bend in the wake of questions and uncertainty.
In short, good mitigation practice isn't necessarily about building a ship that's entirely waterproof, it's about knowing what to do and how quickly to do it when it springs a leak. Here's a few of the ways you can add more efficiency into your backup plans:
Reduce, reuse and recycle - the mantra of the eco-friendly movement, these three little words are more than an edict. They've grown, evolved and become a tagline for the "green" revolution, and they're ripe for the plucking by savvy business decision-makers.
With fulfillment centers facing down a proverbial tide of year-end business, productivity and efficiency soar to the top of managers' wish lists. Eager to receive these must-have gifts for your company? Here are five ways to prepare for the winter storm of orders without breaking a sweat or investing in expensive new warehouse technology:
Measurements — determining them, changing them, inferring from them — are a backbone of every industry. Whether the measure of success is something as simple as profit, or as complex as reducing the amount of time a product spends during its travels in the supply chain, having the right "ruler" is absolutely crucial. If you're using the wrong logistics KPIs, or endlessly tracking them for a future purpose that never manifests, you're not only wasting company resources — you're paying out an opportunity cost that could actually make a difference in your goal progression. In only three steps, you can clean up your approach to KPIs and maximize the value obtained from each one.
The flowchart is a time-honored tool of decision making, a simplified blueprint for what to do if a situation matches certain parameters. It's also a vastly underutilized technique in logistics and supply chain performance decisions, likely due to the complexities of the chain falling short of the simplicity needed for such a chart. The quick decisions and experience-fueled moves that run a fulfillment center can't be codified as A or B choices — or can they?
Think, for a moment, of your supply chain as you would a balanced diet. Even if you’re carefully measuring your caloric intake, it doesn't necessarily mean that you’re eating well! The same can be said for operational measurement and supply chain analytics. They're helpful, but only as part of a broader approach that considers every angle, not just those derived from data. With much industry emphasis placed on supply chain KPIs, it's easy to hone in on them and miss the supply chain forest for the trees.
When outsourcing a vital operational task like fulfillment, the hiring company should always provide clear guidelines and KPIs to ensure things run smoothly even without direct, real-time supervision. Typically, 3PF and 3PL partnerships are initially created due to constraints — desired results that the original business lacks the time, effort or intrinsic resources to provide — which means that relative autonomy is an important facet. If service providers need to constantly stay in contact to verify and course-correct, any resource savings are whittled away. KPIs act as silent sentinels, giving outsourced teams an "instruction manual" in the form of concrete supply chain metrics and goals.
So, what should you include in these crucial guidelines? Start with these.
Is your supply chain risk management strategy end-goal focused, or is it centered on performance in the moment? It can be tempting to set a static goal and measure each day's progress against it, but in a business climate that can change direction in a moment, it's a quick path outdated practices. KPIs are the best tools you can have to guide actionable measures in the fulfillment center, as they reflect the state of your efficiency on multiple, living levels.
Not sure you have the best supply chain KPIs for the job? Start with these practices to drive success in real time.
A solid strategy may be the roadmap to success, but unless those roads are well-defined, you're heading nowhere in a hurry. If your supply chain performance hinges on following a set strategy, logistics analytics are a non-negotiable part of reaching your goals. Not only do they help inform your plan as it's being created, the corresponding performance metrics produced throughout various phases are the only true method for accurate course-correction and maximizing benefits. Trusting one's "gut" and the historical performance of past initiatives — yours or a rival's — is helpful, but the uncertainty of these methods is simply too high for comfortable risk-reward ratios.
Businesses grow. Brands grow. Workforces grow. What about fulfillment centers? With the day-to-day focus resting heavily on supply chain performance metrics, sometimes growth isn't even on the radar for management teams — who often pour all of their effort into maintaining the status quo. However, just like the non-fulfillment aspects of business, the greater goal should always be expansion. For some companies, that means geography, for others, sku volume. However your fulfillment center defines growth, you'll need a strategy to hit your milestones, and it needs to incorporate three strong pillars for the best results: visibility, agility and connections — both internal and external to your company.
As the most nimble of moving targets in the warehouse, your supply chain performance measurements may fundamentally differ from day to day, depending on which facets need work. Factors — both inside and outside — the warehouse walls play a professional tug of war with your goals and intentions, requiring constant adjustment just to maintain the status quo. Few logistics professionals have time — from scratch, anyway — for that constant recalibration, which is why KPIs are so important.
Imagine if every decision that needed to be made at a fulfillment center had a barometer: if the number was too high, one action was taken; if it was too low, another action was called for. Can complex business drivers really be simplified to chart-checking like this? If you're following the right KPIs, they absolutely can. Beyond the numbers, however, the attitudes and practices in your workplace determine how useful those KPIs can be.
There are a few techniques you and your team should be actively employing.
The origin of the term "benchmarking" comes from surveying practices. It refers to a mark made on a stone wall that helped surveyors reposition measurement equipment in the same place from visit to visit. When applied to supply chain metrics, proper benchmark measurements help fulfillment center professionals gauge their growth or the scope of a problem and precisely determine the efforts and resources required for problem-solving applications. In a busy company, however, the process of determining and adhering to benchmark standards can be tricky as they require true-to-life and in-the-moment glances at a stream of industry that doesn't always have the luxury of pausing. Where, then, should a fulfillment center team start?
What makes a warehousing and distribution center a standout among its industry peers? Is it great geographical positioning, superior IoT-enabled technology, or perhaps it’s beneficial contracts with carriers? The truth is, without the individuals who keep a given warehouse stocked, organized and able to pack and ship at a moment’s notice, it's little more than a very large concrete or metal box, filled with disorganized products. A trustworthy, intelligent employee is worth more, over time, than just about any product or component you could possibly stock.
From learned industry behaviors to innovative thinking, the humans between your shelves are the "brain cells" that keep your warehouse running. Lose too many of those cells, and you lose industry standing and reputation right along with them. Just as tasks like 3PL contract negotiations or making space for new product lines are integral parts of a logistics managers' job, so is the responsibility of attracting and retaining employees. Having too many new employees means a heavy burden of training and newcomer mistakes to contend with — so make sure you get it right the first time, and keep your talent in place.
Data storage and movement, especially in the age of the Internet of Things, is an intrinsic part of efficient warehousing and distribution. Properly compiled, updated and leveraged, data points such as items-on-hand, overall stock volume and sales trends can help your warehouse team meet challenges head-on, with little to no downtime needed to fully assess operational needs. Fed into your system through a combination of warehouse technology connections and periodic updates through inventory checks, it's a true treasure trove of actionable insights within your company. Unfortunately, like most treasure troves, it has a tendency to attract worrisome interest from outsiders as well.
The key to using data responsibly is to maximize access for the right individuals while minimizing risk from the wrong ones. Here are a few guidelines to help you build your secure warehousing data plan:
Deciding on a location for your new warehousing space often requires a strategy that relies heavily on company resources. This, in turn means that a disproportional amount of thought is given to immediate and short-term cost over long-term customer satisfaction. Granted, certain considerations — overall cost of operations, proximity to major suppliers, ease of access to 3PL partners — are necessary components of a smart warehouse location, but your search may highlight a need to step back and reanalyze your decision making process.
If moving shop causes your delivery targets to slip and your customer satisfaction scores to wane, here are a few tools to pivot back to success.
Assessing the health of a human being generally involves a specific set of tests that each have a certain set of guiding numbers, with a hearty pulse accepted as the first signal of overall health. In contrast, though a warehouse may have a metaphorical "heart" in its management, there is no universal pulse to examine, nor one-size-fits-all readings to compare against. Each business and warehouse is a self-contained environment, created through a mix of industry, niche, volume, staff and dozens of other variables that defy casual categorization. So how do you determine which warehousing metrics you should gather and follow?
The very concept of optimizing warehousing and logistics has completely changed shape and boundaries since the emergence of the omni-channel movement. Rather than a single, clear road to success, keeping fulfillment capabilities on par with business growth has become more like several concepts simultaneously navigating a maze that changes from moment to moment. It can be dizzying for a strong, slow-moving portion of a company like traditional warehousing to keep up with the fast pace of change. But for a business to remain wholly competitive, it must develop a warehousing strategy that mimics or surpasses the ambitions of sales and marketing efforts — otherwise the latter will quickly outpace the former. But how can an evolving company effectively transfer and apply techniques designed for another department to the heart of their fulfillment center?
One of the biggest mistakes that a company can make is believing there's no way to improve, especially when it comes to warehouse processes. With the unique demands of omni-channel in play in nearly every industry, there's no such thing as a "set and forget" approach that will hold together for very long. It's not a stretch to say that continuous improvement is the only surefire way to remain competitive, that standing still essentially means falling behind in the current business arena. Even if your team and facility work amazingly well together, chances are there's at least a few of these seven warehousing and logistics tips you can leverage towards fine-tuning.