Inside your warehouse, there is a story unfolding every hour of every day…
all the way down to minutes and seconds. If your story is to be a successful one, certain elements must be managed with precision and accuracy. Within any fulfillment operation, careful consideration should be given to what we like to call the 4 Assessments of Warehousing.
With proper focus on the 4 Assessments, your team is much more likely to become the success story that you desire.
#1 Labor
Cost of Labor: There’s a reason Labor is listed #1 on this list, and it all boils down to the almighty dollar. Furthermore, the fact is Labor overlaps into the other 3 Assessments as well. Understanding your true cost of labor begins with dividing your team into “Direct” labor and “Indirect” labor. Direct labor can easily be categorized as whoever is involved in physical labor itself. The Direct labor category should always account for half or more of fulfillment costs. Indirect labor (i.e. managers, supervisors, administrative, clerical, and security personnel) should account for no more than 20% of your labor costs.
Training and Turnover: Within the majority of warehouse operations, costs associated with training, and turnover are on the rise. The result is millions of dollars in lost revenues, which could be better tracked and mitigated with an ongoing focus on the training process – the time it takes to get employees up to speed, the associated costs of training, and annual attrition rates, which can shine a better light on how productive your onboarding process is, and how loyal your employees are to the operation.
#2 Facilities
Inside your warehouse, no matter how large or small, you have a finite amount of square footage to utilize for the efforts of your operation. The question here is, are you using the space cost-effectively? Some considerations pertaining to the utilization of your warehouse space:
- Seasonality: Though your work may fluctuate depending on the season, are you equipped to properly utilize the space throughout the year?
- Maintenance: Maintenance can help keep your warehouse running at optimal levels, but only if the correct amount of funds is dedicated to that purpose.
- Cost: Understanding that occupancy costs should be less than 22% of the total fulfillment dollar, where can your warehouse whittle down costs and improve upon ROI?
#3 Procedures
Even small procedural adjustments can be made to improve workflow elements and make significant strides. Think of this assessment as a true house-keeping tactic to ensure the warehouse can meet the demands of the workload.
- Packaging Materials: Though working lean is always desirable, but here if standard materials are not readily available, productivity will suffer and costs will rise.
- QC: A knowledgeable Quality Control team can save hundreds and thousands of dollars on a daily basis simply by measuring the data and breaking down the process step by step with relevant expectations at each step.
- Flow Charts: These charts are beneficial for both direct and indirect labor as the proper course of action is established and adhered to. By training employees on best practices and understanding that flow charts should evolve if being utilized correctly, they will raise the bar of productivity inside the warehouse.
#4 Software
Warehouse Management Systems (WMS) continue to evolve at a frantic pace. The goal of any WMS system should focus on slotting, replenishment, and location control. Other functionalities imperative to increase transparency, freedom, and control are in the below categories:
- Bar Coding
- Pack Verification
- Pick Ticket Selection
- Replenishment
- Returns
- Tracking
- …and more
As you already know, common data must be utilized regularly and properly to enable success as you manage your warehouse operation. Sequoia Group offers best-in-class WMS software which can empower your operation like never before.
In Conclusion
After you’ve made the 4 Assessments within your warehouse operation, the key for meaningful change will be to track your progress on a regular basis. Monthly, quarterly and annual goals based on the present-day findings within the 4 Assessments will continue to serve a significant purpose as you optimize your warehouse. Remember, clear action steps with proper timelines will drive your success story.
