How to Optimize Your Warehouse Footprint
For any ecommerce merchant, establishing a strategic warehouse footprint is a vital component of an overall business strategy. Getting this wrong means extraneous expenditures, unproductive employees, and shipping delays. These all reduce the credibility of your operation in the eyes of customers, workers, and investors alike.
But with the right approach, it's possible to eliminate inefficiencies in your fulfillment process and create a network of warehouses for nationwide shipping
Warehouse management is an in-depth and logistically complicated process, but reviewing it is an excellent way of evaluating your capacity for growth.
What is a Warehouse Footprint?
A warehouse footprint refers to the network of warehouses a company has at its disposal to store inventory and fulfill customer orders. The goal of the footprint is to incur the lowest possible distribution and holding cost while meeting your customers' needs. In many cases, this means being able to meet same-day, next-day, or two-day shipping requests.
The warehouse footprint includes myriad aspects of a company's operational profile and inventory management processes. Three broad areas define the shape of a company's distribution profile:
- Operating principles: What services do you offer, and what's your lead time? What's your cost to serve customers in various geographic locations? Understanding this can help you maximize your ROI in the realm of warehousing by allowing you to identify your most valuable customers.
- Distribution network structure: Where are your warehouses located? How many do you have? What operational function does each serve? Who controls the various services required to run your distribution network – from production to distribution (and everything in between)? Do you handle them in-house or outsource to a third-party?
- Capacity utilization and load-leveling: How much flexibility does your operation require? What are the demand patterns for your products? Do you run your distribution fleet?
The Importance of Optimizing a Warehouse Footprint
Warehouse footprint optimization is the process where companies look closely at all of these things in an attempt to reduce warehousing overheads while maintaining necessary service levels.
At the heart of footprint optimization is balancing the competing claims of expenditure and customer service. It can be challenging to minimize warehousing and transportation costs when a company needs to maximize geographic reach and improve customer service levels.
This challenge becomes more complicated when you consider the rising prices of industrial space in the United States. For any high-growth company, eliminating unnecessary expenses and driving operational efficiency is a must.
Improving the logistics of your warehouse profile means considering a range of different changes to the way you distribute.
One thing you should regularly consider is route optimization: finding the most cost-effective way to move inventory around your current network. Re-tendering contracts and considering new shipping services could take a mere matter of months.
Coming up with a comprehensive flow design, outsourcing to a third-party logistics partner, and consolidating warehouses are other possible strategies. However, these will take you closer to a year to complete.
Building a new warehouse or establishing a new distribution center is the most time-consuming option of all — plan for two years.
Caution aside, most companies tend to overestimate the timescale of warehouse optimization. It's good advice not to be too timid when it comes to changing up your warehousing mix.
Lean warehousing and inventory
The most important thing to do as a growing concern is to make sure you keep your warehousing profile as slim as possible.
Scaling a business within an existing distribution footprint is entirely possible with the right practices.
The most crucial aspect of any drive towards footprint optimization is maximizing the efficiency of your warehouse space. Focus on improving your current setup by implementing industry best practices within the following:
- Layout and organization
Companies adopting automation and robotics have benefited from an average 0.35% annual increase in labor productivity.
A small percentage can make a massive margin. And using the latest tech isn't just about improving productivity; it can also lead to significant cost savings by reducing the need for more staff or warehouse space.
By improving the productivity within a warehouse, you can avoid adding another warehouse to your mix. If your current warehouses are optimized to improve performance and meet the demands for fast fulfillment, you can keep your footprint lean.
Quantitative data is one of the most significant advantages of throwing technology into your warehouse mix.
Where productivity is concerned, it's crucial to be able to measure performance in every aspect of operations from picking to loading. Measuring inventory is vital to avoid any mistakes and misinformation.
Tracking picks can help identify where the slack is in the warehouse. Capturing this data provides a system for accountability and shows how your stock is moving.
1. Inventory management software
The most important thing that any warehouse can invest in is their inventory management software.
These systems will provide your company with centralized data, responsive real-time analytics, and cross-channel connectivity. Along with shipping automations and order routing, they have a huge potential of increasing productivity if implemented correctly.
If you do manage multiple warehouses, an inventory management system can serve as the connective tissue between them. Each warehouse can be integrated into the software, providing a full view of inventory and costs across multiple locations.
Inventory management software also offers long-term warehousing data enrichment by logging shipping metrics. Keeping track of inventory errors can provide critical insights into how companies can improve the fulfillment process and avoid adding a warehouse to compensate.
2. On-demand staffing
Employment can be one of the biggest headaches for anyone in warehousing, especially during peak seasons.
Using technology or freelance websites, warehouse managers can access on-demand staffing to automate warehouse staffing substantially.
By writing a quick description of the role (location, hours, pay, etc.), company recruiters can free up valuable time to do other tasks. You can significantly reduce onboarding time this way.
3. Advanced inventory arrival notifications
Setting up advanced shipping notifications and arrival alerts will help your distribution centers get ahead of the game. By tracking the anticipated delivery dates of your purchase orders, your team can prepare for receiving inventory and optimize how quickly units are made available for orders.
As you prepare for incoming inventory, you can allocate staff to the receiving dock, minimizing delay, disruption, and deviation.
Inventory management can help here too. Skubana provides inventory replenishment capabilities. Housing and managing all of your pending purchase orders from one software refines reordering inventory and introduces automation to the process. Using automation in your replenishment can mitigate the chances of overstocking or under ordering.
4. Barcode and RFID tagging
Tracking materials and products in a cost-effective manner are essential to lean warehousing. Barcoding is standard practice across most industries that move inventory down the supply chain.
Radio-frequency identification (RFID) technology can also be a great way of improving the receiving process. RFID helps warehouse workers compare order sheets and invoices for incoming orders. Incorporating RFID makes it easier for companies to evaluate their supplier performance as well.
5. Train employees
What good is all your technology if your employees don't understand how to use it? Conducting regular training sessions is an expense you should always be willing to foot.
Education should be about promoting safety and encouraging innovation throughout the business.
If you are evaluating new tools, it is also essential to make sure your employees feel like they are part of the process. When employees are part of the decision-making process, they will be quicker to adopt new tools.
Adoption and implementation from employees are critical to the success of any new tech used in the warehouse.
Warehouses are built to handle a set volume of inventory with an upper limit on the number of products they can hold. Nonetheless, warehouses should adjust to increasing customer demand with improved efficiency over time.
How can they do this? While one answer is technology, another is streamlining the fulfillment process to improve ecommerce inventory management.
1. Picking the best way to pick
Getting picking right is the key to quick fulfillment. Your picking order is the primary determinant of supply chain productivity, so it's essential to get it right.
Technology can help you here: there are sequencing programs that will analyze which pickers are free and decide on an optimal picking route for them.
Improving the picking process can also be done with simple fixes. For example, Skubana allows users to sort picklists by stock location. Doing this prevents pickers from circling to the same place to get inventory, reducing picking and packing time.
There are also some essential offline decisions to make here. Do you choose single order-, multi order-, batch- or zone-picking? Combining orders into a single pick or optimizing how pickers navigate through locations can be a great way to reduce travel times.
2. Incentivize your staff
Motivating employees is crucial in an operation that is heavily dependent on pure human resources.
Offering payment incentives and a rewards system will create an environment where employees work hard and pick fast.
For example, Amazon turned warehouse work into fun by using gamification to increase productivity. Through the games, they encourage warehouse pickers to stay engaged. Employees can compete against colleagues, different floors, or entirely different departments to get points, virtual badges, and other prizes.
Gamification can be a great way to speed up pick-and-pack areas.
3. Invest in the best equipment you can buy
Providing staff with adequate equipment is crucial when it comes to increasing productivity. Don't be tempted to cut corners.
The actual cost of a tool is not in its price, but in the time it takes to complete the task it was purchased for. Broken equipment costs companies untold time and money every year.
This concept should also extend to the technology you decide to implement within your warehouse. Cheaper software might be more accessible, but you want to make sure the technology will scale with your business.
If it isn't, you might quickly find yourself starting your search again and repeating the implementation process with your staff.
4. Scheduled maintenance
The longer you leave active machines without mechanical intervention, the longer their eventual downtime.
A regular, thorough inspection will enable you to identify any problems before they bring operations to a halt. It's a good idea to schedule maintenance plans to keep your vital machinery running.
Where possible, you should also look to upgrade and install newer equipment to future-proof your warehousing.
5. Improve receiving
Receiving is one area where there's a lot of potential to err from best practice.
It's essential to keep your receiving area clear, tidy away the clutter from any deliveries immediately. You should also investigate industry best practices like cross-docking to increase productivity.
Layout and organization
It's always worth revisiting critical features of your warehouse design and layout to optimize your warehouse footprint.
Poorly utilized space is a surprisingly common feature of most warehouses, with many companies looking to move to new locations even when they haven't maximized their available space.
1. Keep your warehouse clean
At the most basic level, it's essential to keep your warehouse clean. Reducing unnecessary debris around the area will do wonders for your team's efficiency.
Schedule a weekly cleaning operation to make sure you recover missing orders, prevent any product damage, and, most of all, keep a clear floor for employees to pick cleanly and efficiently.
2. Aim high with storage
It's conventional warehousing wisdom to go up rather than out. With warehouse prices high, it pays to store inventory in shelving that reaches into all of the available vertical space.
While you'll need to invest in sound pallet racking systems, ladders, and safety equipment, it also means you're reducing the total surface area of your picking zone.
3. Keep the aisles clear
Remember, when you're shifting products around, you still need room to maneuver. It can be tempting to cram in as much storage as possible, but it's irresponsible to leave too little space between the aisles.
Doing so can result in employees tripping and damaging stock or hurting themselves and bringing lawsuits.
4. Designated spaces
Creating designated picking areas and workstations is an excellent way to drive efficiency. Having designated picking zones means you can group products with similar storage and picking methods together.
Ergonomic workstations will reduce injury risk for repetitive manual tasks and make the process more efficient. It's all about rationalizing the warehouse and making it as easy as possible for your workers to get work done.
5. Custom kitting
Where products are readily purchased together, you can pair them together in storage. This reduces inventory handling time and frees up valuable storage space while rationalizing the warehouse layout.
How to Optimize Your Warehouse Footprint
Optimizing your warehouse footprint starts with a thorough survey of your distribution networks and ends with efforts to maximize its capabilities.
To analyze your footprint, first evaluate your operating principles, capacity utilization, and the shape of your distribution network. There may be significant changes you need to make to this.
It's also so important to take stock of the small things you can change in the here and now. By focusing on technology, productivity, and functional design, you'll go a long way towards optimization.
If you're a company looking to eliminate inefficiencies in the supply chain, you don't have to increase your geographical footprint. There are ways to improve your foothold without adding warehouses.
It's always a good idea to keep one eye on the horizon and plan for future warehouse investments as well as working with what you've got.