Now Is The Right Time For Your Warehouse Operations Assessment
With e-commerce booming, a strained manufacturing sector, the labor shortage in full swing, and customer expectations changing daily, companies are understanding the urgency to assess their warehouse operations and find new ways to work smarter, better, and faster.
As e-commerce continues to soar, demand for warehouse and fulfillment center space is expanding right along with it. With each additional $1 billion in online sales equaling 1 million new square feet of physical space, and with e-commerce sales on track to grow by 14% in 2021, the US is going to need an additional 330 million additional square feet of distribution space by 2025.
Once viewed as nothing more than storage facilities, where goods were received, stored and then shipped back out, today’s warehouses and distribution facilities are playing leading roles in the supply chain space. Driven in part by the e-commerce boom and by the persistent labor shortage and pandemic-related supply chain disruptions, more companies are assessing their fulfillment operations and searching for ways to improve performance, minimize risk and hold down costs.
Achieving those goals isn’t always easy when warehouse general managers have their heads down and focused on day-to-day responsibilities—not to mention the extinguishing of daily fires. With e-commerce order volumes, labor shortages, and supply disruptions all taking their toll on supply chains across the board, simply getting through a full work shift unscathed can be a major accomplishment. In many cases, there’s simply no time or energy left to take a step back, assess the current state of operations and begin planning for the future.
Warehouse leaders must meet new expectations and requirements
Customer expectations are also changing right now and leaving very little (if any) room for error. They expect the perfect delivery every time, which means shipments have to be fulfilled correctly, handled promptly and delivered to their door steps within the specific time frame. Companies that can’t meet these expectations can easily be replaced by the next competitor, which is always lurking just one mouse click or screen tap away.
Warehouses and distribution facilities serve as vital conduits in keeping customers happy. “If you're not advancing your warehouse,” says James Flora, solutions consultant, Warehouse & Distribution at Canon Business Process Services (Canon), “you’re probably already falling behind and losing market share.”
The same operations are likely experiencing high employee turnover in a market where finding and keeping workers has become extremely difficult. “There’s so much competition for the same employee right now that companies really have to be smart about how they hire, train and incentivize their associates,” says Joe Tague, Canon’s director, Warehouse & Distribution Services.
“The people component is crucial for fulfillment centers; it just can’t be overlooked like it may have been years ago when all they needed were some certified forklift drivers to move pallets around,” Tague continues. Operations have become more complex, infused with technology and automated. They are also focused on a much higher volume of smaller order sizes—something that requires more human intervention than, say, a pallet- or case-based operation.
Without the right processes and technology in place, an employee’s work becomes more difficult than it has to be. And when warehouses thoroughly assess and advance their processes and technology, they can also improve their inventory management, enhance supply chain visibility (i.e., knowing exactly when a customer will get a shipment) and increase their overall efficiencies. By putting automated equipment in place, companies can effectively take the pressure off of their valuable human labor, which no longer has to lift heavy boxes or spend hours searching for inventory on the shelves.
“With everything accurately placed in your facility,” says Flora, “employees will have fewer headaches, be more satisfied with their jobs and be more likely to stick with your company.”
Partnering with outside expertise to create a finely tuned warehouse operation
To be effective, a warehouse assessment must involve people, processes, technology, and analytics. By taking a holistic view of their operations, companies can more readily pinpoint the gaps than if they were to look solely at technology, automation, labor, equipment or another area. “From labor to technology to specific processes, it all has to be reviewed because these integral components are all connected to one another on the warehouse floor,” says Flora.
“A finely tuned warehouse incorporates all of those areas working together and in unison with one another,” he continues. “That’s why it’s so important to assess every one of those areas to ensure that they work cohesively together throughout the whole start-to-finish fulfillment process.”
In theory, completing a comprehensive warehouse or distribution facility assessment sounds like an exercise best handled by the people overseeing the operations on a daily basis. In reality, it takes a second set of eyes—preferably those associated with an outside/third party—to provide a thorough and honest appraisal. Once the assessment is completed, that outside partner should also be able to make recommendations across all pillars—people, processes, technology and analytics—and then support any changes made for both the short- and long-term.
“Anytime you bring in an outside partner it's going to be helpful, and especially if that partner has worked with hundreds of different warehouses; it allows you to benchmark processes,” Flora explains, noting that benchmarking against yourself is a difficult task. A company operating out of the same facility for 10 years, for instance, only knows its own business and operations. The world has advanced significantly in terms of warehousing standards over the last 10 years, making an outside perspective that much more valuable.
“When we do a holistic assessment of an operation, it’s not unusual to hear the warehouse manager say, ‘Oh, I can't believe I didn't notice that,’” Flora says. “In other cases, we’re introducing managers to technology, processes and/or systems that they’ve never even heard of.”
During the assessment process, Canon emphasizes labor optimization, technology enhancements and integrated materials and logistics management (IMLM) as the key foundational elements for implementing modern warehouse operations. Through integrated materials and logistics management, the company addresses all aspects of material movement—and not just the traditional warehouse functions of shipping and receiving.
Take automation, for example. Before investing in it, companies should ensure that they’re ready for automation. Make sure the time is right, says Flora, and that processes are standardized to the point where the automation itself can be optimized. Look for ways to structure the cost of automation so that it’s not front-end loaded (i.e., by acquiring it on an as-a-service platform) and to speed up return on investment, versus waiting a year or more for those returns.
“Make sure you’ve done your prerequisites for automation,” he advises. “Then, you can begin selecting the right type of automation and the right equipment to minimize implementation errors and ensure you don’t miss the mark on your automation selection, which unfortunately does happen.”
Jeremy Wisdom, senior solutions consultant, warehouse and distribution at Canon, says companies also need to be realistic about their expectations from automation, knowing that they can’t just “flick a switch” to automate an entire warehouse or distribution facility. Based on your company’s current stage, there are financial and operational considerations to factor in and phases to establish.
“It's all about what works best for you, your timeline and your demand,” says Wisdom, who adds that Canon possesses the experience and expertise to be able to help and assist in an optimal fashion. “We help companies attack some of the low-hanging automation fruit in ways that make most sense for them.”
Adding up the impacts
To the average person, a warehouse is a building full of inventory. A straightforward operation, it serves as a conduit for moving inventory from one place to the next. Peel back the layers, however, and you’ll see the hidden impacts of a warehouse operation on the company that owns it. These impacts affect the customer’s image of the brand itself (based on the timing and accuracy of shipments); the legal and insurance risks associated with warehouse work; and how the operation supports overhead (e.g., IT and HR). Added up, these impacts may actually be costing a company more than it even realizes.
“Warehouses face constant challenges, unexpected changes and issues that require strong teams, management and technology to effectively tackle,” says Flora. “Ultimately, the warehouse team's ability to pivot directly impacts the customer's image of the brand.” For instance, if a company has to process twice as many orders as anticipated in one day, it needs to find a way to get that job done. If half of the customers get their shipments late, those buyers may have a negative perception of the company’s brand. The same impacts apply on the receiving side of the operation, where a late truck or mislabeled shipment requires quick thinking on the part of the warehouse team.
Don’t just leave it to chance
The pandemic exposed the fragility of many global supply chains and now companies are picking up the pieces and working to make sure that never happens again. Concurrently, they’re juggling a surge in online orders, a labor shortage, changing customer demands and the rush to fill every available inch of distribution space in the US. With little time left over for reflection and assessment, many organizations may be ill-prepared for the next potential disruption.
As a partner, Canon serves as the second set of eyes that all companies need right now. Operating within the four walls of a facility, it doesn’t ask companies to give up control or relinquish the reins to a third party. Instead, Canon manages the operation and integrates directly with facilities to help infuse best practices, benchmark against other organizations, implement automation and build out strong workforces.
With supply chain playing an increasingly important role in all companies’ operations, Wisdom says there’s no time like the present to undergo a thorough warehouse or distribution facility assessment and to make the changes needed to future-proof your organization. “It’s such a valuable component of your operation,” says Wisdom. “Why would you leave it to chance?”
Achieve Best-in-Class Warehouse Performance with Canon
Canon is an integrated materials and logistics services provider that offers a groundbreaking approach to optimizing your warehouse performance. Our expertise in acquiring and retaining warehouse associates, optimizing technology, and managing a tailored, onsite a solution to improve efficiency is unparalleled. This approach sets us apart from staffing agencies and 3PLs and enables us to deliver warehouse performance excellence. It all starts with an onsite business assessment and then advances to a comprehensive roadmap to take your warehouse operation to a higher level. Call us at 888-623-2668 to set up an onsite assessment today.