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each day's progress against it, but in a business climate that can change direction in a moment, it's a quick path outdated practices.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?
You've invested in great people, great shelving and a great location, so why aren't your warehousing layout / KPI (key performance indicators) strategies working? Omni-channel has disrupted the comfort and familiarity of the “one true way” style of warehouse management. Innovators like Amazon are shaking the very foundations of tried-and-true workflows to uncover hidden caches of efficiency and cost savings. Automation and connectivity is strapping the equivalent of seven-league boots to your staff, allowing them to work harder and smarter without wearing themselves down. While these advancements require some decision-making and resource allocation to function, the best possible environment is one that allows them to properly flourish: an intelligently-designed warehouse.
Here are three “outside the box” strategies that will guide your “inside the box” product picking and packing to a successful outcome.
Just as a farmer knows the lay of the land and a surgeon knows the body's inner workings, a warehousing manager needs to know the state of his or her warehouse at all times. This includes not only operational warehouse management data, but warehousing KPIs that speak to the day's work — not merely the materials involved in it. These trends are important, not only for internal improvements, but for reporting and collaborating with supply chain partners as well. If pushing to achieve X goal requires Y products and Z service, for example, the latter two must be consulted in order for the first to manifest. What metrics does your warehouse need to read to succeed?
Here are a few questions to ask yourself as you try to zero in on these elements.
Have you ever looked at the operational data coming out of your warehouse and felt you could do better? Are you puzzled by the low efficiency scores, bad fill rates or sluggish speeds that keep showing up within your workflow? Is the C-Suite leaning on you to improve your turnaround time or output? Getting the results you need out of your warehousing and distribution requires knowledge and proactive examination at every step, but the effort only demands five simple steps in all.
It's time for your fulfillment center to set up a framework that gathers data and runs like a well-oiled engine of commerce, but where do you start?
The measure of success for a warehouse is typically determined by results: the number of goods successfully received and sent out, minimal stock damages, no injury incidents. If target numbers for categories like these are achieved, warehousing strategies might not venture beyond maintaining the status quo — the adage of "don't fix what isn't broken" at work. What fulfillment center managers often fail to realize, however, is that assessing and improving warehousing layout can move a business from treading water to real change, the lasting kind that bolsters the all-important bottom line.
Is your warehouse working as hard for you as it should be?
Achieving excellence in the supply chain is a goal that's become something of a moving target in the wake of the omnichannel movement, forcing operational managers to learn and use new skills on the fly. Even with confidence and years of experience to their name, managers often long for the simpler days before the digital revolution added a hundred extra moving parts to logistics and warehouse planning. Thankfully, new trends can be a transformative experience that eliminates many frustrations — provided the right solutions for a given workflow are used.
Automation and forecasting are the two best strategies for a logistics-weary professional trying to optimize their warehouse, and, thankfully, there are a number of innovations available that cater to both.
We live in an always-on, digital world where people have come to expect instant satisfaction. As a result, operations directors face increasing pressure to streamline processes to keep their warehouses functioning at the highest level of efficiency. But it’s not always about working faster or harder. After all, if an airline pilot gets on the intercom and says, “We’re lost, but we’re making good time,” you wouldn’t be impressed with his efficiency. So, how can you develop the warehousing processes that will lead to true efficiency?
The management of warehousing expenses has always been tricky for COOs and supply chain managers to deal with. Space doesn't come cheap, and it can't easily be expanded in small increments. When a company builds new warehouse space, it typically has to build more than it presently needs. In the near-term, much of that expensive new capacity will probably sit empty. On the other hand, if space limitations have begun to cap off your company's potential revenue, or if they are creating safety issues for your associates, something must be done.