Shippers Guide is the learning page of MMS Plus. Here we answer the five W’s and H of several issues in the maritime and aviation industry. This week we’ll be discussing essential steps and key strategies for optimizing operations across four essential stages in the warehouse logistics cycle (plan, operate, measure and optimize)
Warehouse logistics is the heart of any supply chain operation, assimilating and dispatching goods to ensure availability and timely delivery. With more consumers turning to e-commerce, it’s important for businesses of all sizes to bolster the supply chain to handle the e-commerce business model.
One of the best ways to reduce shipping costs and ensure fast delivery is by optimizing warehouse logistics.
What is warehouse logistics?
Warehouse logistics is the process of planning, operating and controlling the flow of goods in your warehouse to optimize costs and time and meet other business objectives. Warehouses are a significant component of the supply chain and should be aligned with both broader organizational goals as well as the supply chain overall. Planning and organizing inventory is a vital facet of warehouse logistics. Maintaining adequate manpower and machinery for operations is also essential, as well as the process for picking and shipping orders.
It takes considerable effort and resources — including financial resources, infrastructure resources and human capital — to operate a warehouse.
Plan: Developing a warehouse logistics plan ; Operate: Warehouse logistics operations; Measure: Measuring warehouse logistics performance;
Optimize: Optimizing warehouse logistics
These four sections cover everything you need to know about warehouse logistics from the initial phase to regular operations.
Plan: Developing a warehouse logistics plan
It is always advisable to have a viable plan in place before you hit the ground running. Without a plan that includes clear business objectives and a roadmap for achieving them, it’s impossible to know whether you hit your targets.
Gathering requirements
First, you need to ascertain the company’s warehouse needs. Some questions need to be answered to determine the warehouse requirements, including: Who are your customers? Where are they located? What is the order volume? What is the current solution employed? What is the cost of the current solution? What are the delivery times with the current solution? Will there be cost savings with the new warehouse?What is the timeframe for implementation? What operational efficiency are you looking for with a new warehouse?
These are some of the questions that need to be answered before making the final decision on moving forward with a new warehouse. Depending on your company’s unique business requirements, there may be other questions and considerations to weigh.
This step helps you clearly define the needs, requirements, benefits and timeline for implementation. You need to estimate the cost of operations including all the elements of running the warehouse, the cost or time savings obtained by investing in a new warehouse and the break-even point for the project.
Identifying a location
Once you have determined the need for a warehouse, you need to identify a suitable location. The questions you have answered during the requirements gathering phase will come in handy here.
Once you know where your customers are, it is easy to identify the best warehouse location to serve your customers. Keep in mind that it’s often more profitable to serve some customers than others, so you may want to prioritize the needs of the customers who create the most revenue for your business. For example, you may choose a location based on proximity to your best or longest-term customers, allowing you to deliver goods to those customers faster than short-term or occasional customers. Tools based on Geographic Information Systems (GIS) are available to identify the best location for your warehouse.
Mapping your warehouse
Mapping a warehouse is an essential exercise for determining what goes where and how operations are handled. The warehouse mapping process includes:Assessing the space; Labeling the space (including aisles, racks, shelves, containers or bins, etc.);
Estimating traffic; Implementing the right racking system; Choosing the best order picking carts to meet the warehouse’s requirements;
Implementing inventory management software.
Mapping your warehouse is a crucial step that should not be missed. Without a well-mapped warehouse, your logistics operation is bound to be chaotic as there is no blueprint to operate on.
Operate: Warehouse logistics operations
After developing a robust plan, you have to back it up with action. You have to hire employees, establish a management structure, integrate the warehouse with the rest of the supply chain and ramp up operations to the full potential. If you are switching from an existing solution with a third-party logistics provider to a dedicated warehouse, you need to decouple from the existing service provider in a slow and staggered manner.
Measure: Measuring warehouse logistics performance
Simply having a warehouse up and running isn’t enough to compete in today’s competitive landscape; measuring performance and striving for continuous improvement is a must. If you do not measure, everything might seem to be running smoothly until the breaking point is reached, bringing your warehouse logistics operations to a halt. Because you have no way of knowing if you’re meeting your objectives, it’s difficult to set targets for the future.
There are many indicators that can be measured to monitor the performance of warehouse logistics, including: Inventory metrics; Receiving metrics; Put away metrics; Fulfillment metrics; Warehouse safety metrics.
What you need to measure most are key performance indicators (KPI), which are essential metrics that measure the most significant data that can provide insights into the overall health of your warehouse logistics operations.
Optimize: Optimizing warehouse logistics
Measuring warehouse logistics KPIs is the first step in optimizing your operations. Measurement is used to formulate objectives for optimization. For instance, if your rate of customer returns is desirable but picking accuracy is too low, your objectives should focus on strategies for improving order picking accuracy rather than reducing returns.
The four key areas for optimizing warehouse logistics include receiving, put away, order picking and safety.
Training employees to perform tasks with greater accuracy and efficiency always contributes to better results. Sometimes, flawed processes can be the reason for sub-optimal performance. In such cases, the process should be streamlined with continued monitoring of the corresponding KPI to track the impact of process improvements. Implementing the right technologies also adds to warehouse logistics efficiency. Automated warehouse picking, for instance, can dramatically improve warehouse order picking efficiency.
Warehouse logistics optimization is an ongoing process. There will always be something that can be improved for better results. Choosing the functions and processes to optimize should be based on the potential impact on overall warehouse logistics operations. If you achieve optimal performance for one KPI, move on to the next and seek other areas to improve. Perfection is always elusive, so set clear objectives and targets that indicate when those goals are achieved. Otherwise, you may end up spending time on marginal improvements that don’t significantly contribute to overall operational efficiency.
