Making The Case For An Integrated Warehousing and Distribution Solution

Managing the high-velocity, demanding distribution environment

Facing pressure from every direction, companies that ship products are confronting challenges that range from higher shipment volumes to smaller orders to constantly-changing customer demands. Driven by the booming e-commerce sector and the omni-channel distribution trend, these and other obstacles are pushing companies to find the right combination of capabilities, speed, accountability and accuracy in their warehouse and distribution operations.

Knowing that this perfect combination can be hard to establish and orchestrate internally, more companies are turning to third-party experts to manage the labor, logistics and technology that make their warehouse and distribution operations tick. Doing so leaves the manufacturer, distributor, or retailer to focus on what it does best: run and grow its core business without the burden, expense, and risk associated with today’s high-pressure distribution environment.

Consider this: the company that decides to operate its own warehouse, distribution, and logistics environment—and then staff it up and equip it with technology—winds up robbing its core business of resources. The time required to run a warehouse, scale up distribution operations, leverage the right technology, and manage the end-to-end supply chain operations would be much better spent running, growing, and scaling up the business.

According to Joe Tague, senior manager of business applications for Canon Business Process Services, the tight labor market is making it especially difficult for companies to scale up their warehouse and distribution operations. “Finding the skilled warehouse worker who will stay in place, and not move jobs for 25 cents more per-hour, is getting more and more difficult,” says Tague.

That level of labor instability can impact the entire distribution operation, particularly when companies put time and effort into recruiting, hiring, and training those individuals— only to see them walk out the door within a few weeks (or less). “It’s just a revolving door of people right now,” says Tague, “and that’s taking a toll on companies’ resources, assets, and bottom lines.”

Thinking beyond labor, Sr. Solutions Consultant Jeremy Wisdom, says the way supply chain, warehousing, and distribution have been historically “back-burnered” in favor of other services makes it difficult for companies to get their fulfillment operations up to speed quickly and efficiently. “It’s not, nor has it ever been, the typical manufacturer’s core service,” Wisdom points out. “They’re focused on making, marketing and selling products, and basically just figure out how to store and ship them later.”

As a result, supply chain as a whole hasn’t been given the same level of importance as, say, manufacturing or customer service. That’s changing, says Wisdom, who for the last 10 years has seen more companies investing in supply chain management and optimization tools.

But even with those tools at their avail, logistics managers have had to sharpen their pencils and come up with new ways to manage inventory (i.e., figuring out what needs to be manufactured in order to meet customer demand), optimize their physical operations, and get products out the door faster (and in smaller quantities).

“Ensuring that you have the adequate amount of inventory and safety stock on hand that mirrors your production schedule is a huge challenge for warehouse managers right now,” says Wisdom, “along with keeping up with the sales commitment to get the product distributed after it’s manufactured—getting that product out when it needs to get out.”

Factoring in the entire supply chain cycle, Wisdom says the many different elements that come into play during the fulfillment and distribution process aren’t getting any easier to manage internally. “There are so many different key components to manage from a warehousing perspective,” says Wisdom, who points to inventory management, optimized order picking, and transportation selection—while adhering to expected service levels—as just some of the key demands. “Handling all of this in-house has become a real burden for companies across all industries.”

In this Making the Case report, we’ll explore the key issues that companies are dealing with in this e-commerce/digital fulfillment environment; explain how companies can relieve themselves of this burden with an integrated warehousing and distribution solution; and spotlight how outsourcing these non-core activities pays off in many different ways for a variety of stakeholders.

The Perfect Combination

Jeremy Wisdom says that by combining people, processes, and technology, the company is helping companies better understand, orchestrate, and measure their warehouse operations.

“We take a deep dive approach and really figure out what the customer’s wants and needs are,” says Wisdom. “From there, we employ a long-term vision on how to grow along with that company while providing it with the best people, processes, and technology available.”

During that “deep dive” the Canon team goes beyond the basics and scours the company’s data for clues about its operations, potential areas of inefficiency, and opportunities for improvement. “We look at how the facility is operated, how it’s structured, what the flow is like, and any telltale signs of an operation that’s not optimized or otherwise not living up to its potential,” says Wisdom. In some cases, the main focus of that exercise might be picking, packing, and material flow. In other instances, it’s on reverse logistics, safety, and the transactional structure.

“Being a Six Sigma professional, I like to take all of the data and processes and then just map it all out—bottlenecks, missing pieces, and all,” says Wisdom. “Then, we take those missing links like inventory optimization and labor utilization to come up with a game plan based on where the company is headed and how it will get there.”

Canon’s holistic approach to warehouse services includes focusing on three key aspects of good warehouse management: a highly-trained staff, proven processes, and best-in-class technology. This combination, which allows it to enable increased velocity, accountability, and efficiency throughout the supply chain, includes:

• Labor management: Recruit, train, manage and retain a highly-skilled warehouse team.
• Process optimization: Conduct a thorough analysis of current processes to create solutions that minimize costs and maximize efficiency.
• Technology: Identify today’s challenges and craft the solution that delivers meaningful results.
• Safety and compliance: Establish and cultivate a culture of safety by implementing safety programs, policies, and procedures that help minimize risk.
• Facility design: Maximize facility design and layout to enable an effective production process as well as smooth the flow of work, material, and information.
• Materials management and inventory control: Efficiently manage inventory and order fulfillment to ensure accurate safety-stock levels.
• Performance management: Provide actionable data using business intelligence tools and predetermined key performance indicators to ensure sound decision making.
• Onsite assessment: Position a designated subject matter expert onsite to understand and assess the company’s current challenges and maximize process enhancement opportunities.

By providing safety-trained, full-time warehouse employees, Canon removes the burden of recruiting, managing, training, and developing staff. By identifying a company’s key challenges, it effectively leverages its own teams (not temporary employees) in operations, human resources, safety, IT, and procurement to identify the right talent to drive performance and results.

When they outsource all or part of their warehouse and distribution operations to Canon, companies gain from:

• Enhanced flexibility to grow and adapt to a constantly changing business climate
• Greater ability to focus on customers and higher value supply chain needs
• Improved performance guided by mutually-defined Service Level Agreements
• Process efficiencies that drive lower operating costs
• Peak season flexibility (to expand or contract)
• Supplementation of resources, capabilities, and skills not available internally
• Comprehensive workforce management that spans recruiting, training, retaining, and providing employees with career opportunities
• Access to new technologies and systems
• Expertise in regulatory requirements and compliance
• Established customized safety training programs
• Access to safety experts and Lean Six Sigma process improvement specialists

Joe Tague, Canon’s senior manager of business applications, says the company’s integrated offering is different than any other offering that’s on the market right now. For example, a third-party logistics (3PL) service helps companies orchestrate their shipping operations while a temporary employment agency offers semi-skilled workers to fill open positions. Neither of these solutions offers a holistic approach that aligns perfectly with the company’s internal processes and people.

“3PLs have their own operational mindsets,” explains Tague. “It’s their warehouse their way, and using software that might not align with the company’s own platforms. At Canon, we operate onsite at an existing client’s warehouse, often optimizing their current software and infrastructure or recommending new solutions, depending on the situation. This flexibility allows us to continually update processes and provide labor stabilization. We’re an onsite service provider that comes with a high level of expertise that helps companies meet their own organizational goals.”

Logistics MANAGEMENT_^®
April 2019