In February, we’ll devote most of the month’s posts (six of ’em) to a key topic for our manufacturing and distribution customers and partners: Warehouse Management, and in particular, how to attain excellence in order fulfillment. Let’s begin…
In this series of six consecutive posts we detail key findings from Aberdeen Research’s surveys of over 130 firms that employ warehousing. What are their challenges, what actions are they taking to improve, where are they investing, and ultimately, what does it take to be nearly “perfect” when it comes to warehouse order fulfillment? Read on…
Even under the best of circumstances, warehouse management requires a careful balancing of competing objectives… space vs. resource utilization… picking speed vs. accuracy… throughput vs. labor costs… and so on.
Add to that today’s increased competitive pressures brought on by same-day web ordering and direct-to-consumer models, which now affect a majority of companies, not to mention today’s economic realities, and you have all the makings of a complex challenge.
In this and our next five posts we’ll take a look at how some of today’s best warehouse managers are utilizing technology to manage competitive pressures.
According to a recent survey by Aberdeen Research, executives from over 130 firms engaged in warehouse management cited four key pressures in warehousing and fulfillment. These were:
- Need to manage multiple channels or locations
- Proliferation of sizes and packaging
- Need for better utilization of resources
- Customer demand for value-added services
They note that whether a company is deemed “Best in Class” (top 20%) or “Average” (middle 50%) or “Laggard” (bottom 30%) these were all key issues.
More precisely, the first 3 issues most affected the “best” warehouse managers. The other 80% were most challenged by the last item, customer demand for value-added services. These could include special repackaging requirements, special pack or lot sizes, private labeling, and so on.
The challenge for all, and especially the latter, was enabling warehouse management systems to perform these tasks, or help the enterprise to perform better overall by making these challenges manageable.
For reference sake, the “best” companies delivered “perfectly” nearly 98% of the time. They used WMS (Warehouse Management Systems) and related technologies to decrease labor costs per unit by nearly 4%, and were good enough to be the only group to actually decrease their warehousing costs (vs. budget).
At the opposite end of the scale, companies that failed to adequately perform, or who did not or could not fully utilize WMS to improve their performance, had “perfect” delivery rates below 92%, decreased their labor costs by much less, and actually saw warehouse costs overall increase.
And by the way, “92% perfect” just means that 8 out of very 100 orders shipped were NOT perfect (“average” companies ran about 95%). 8% imperfection, even 5%, is not sustainable.
So, what are these companies doing to improve performance? We’ll delve deeper in our next post and look at some actions and enablers that Aberdeen uncovered.