Is the third-party logistics provider handling your e-commerce fulfillment doing all it can to operate as efficiently and cost effectively as possible? Warehouse optimization and continual improvement are key elements in streamlining operations and reducing/eliminating waste over time. No matter how well a business is run there is always room for improvement.
When efficiency lags in e-commerce fulfillment, like any distribution channel, customers may not receive the products they purchased on time, inventory levels may drop to critical levels causing stockouts, some orders may be filled incorrectly and other orders may get lost along the way. Ultimately, these types of issues impact a companies bottom line and their customer satisfaction ratings.
Consider these operational areas that can have a major impact on the efficiency of a warehouse distribution center for e-commerce fulfillment and third-party logistics in general:
- Utilization of Dock Doors – How a 3PL partner optimizes the use of the dock doors in its facility directly impacts how effectively it can turn a product.
- Space Utilization – An organization wants the 3PL to match your product to the best possible storage option available. The more efficiently a product can be stored, the smaller the footprint and that lowers storage cost.
- Layout and Flow – The proper organization and alignment of the processes necessary for the management of an account, including the use of all necessary material handling techniques and equipment based on the attributes of the product.
- Picking Areas – Are products being effectively slotted and is there on-going maintenance to keep the pick areas for accounts neat, orderly and well stocked? Is there a logical sequence to where SKUs are stored?
- Returned Goods Areas – The space designated for the storage and processing of returned goods should be clean, well-organized and as compact as possible. The more valuable floor area an account occupies, the more a company will end up paying.
- Automation to Minimize the Number of Touches – What are 3PLs doing to automate as much of the put away, picking, packing and shipping functions? Limiting the number of times humans touch a products and orders increases the speed of movement through the distribution center and limits the possible introduction of human errors.
- WMS Utilization – Is a 3PL using the full capacities of its warehouse management system to maximize productivity and inventory accuracy? Does an organization have the real-time visibility needed?
- Effective Management – Is the 3PL using engineered labor standards? Is there well-trained supervision throughout all departments? How effective is their load management/order release processes? Are there incentive programs in place to reward frontline workers for surpassing performance goals?
The more a business knows about its e-commerce fulfillment provider’s operations, the better. Use metrics to monitor their performance over time. In addition, a company and its 3PL partner should have an agreed upon action plan to address and correct situations when KPIs fall outside of the normally expected ranges. A program of in-person audits throughout the year and an annual account review are also important.
FW Warehousing is headquartered in St. Louis, Missouri with Midwest warehouse distribution centers in Kansas City, Indianapolis and St. Louis totaling more than four million square feet. Founded in 1949 with a focus on food-grade storage, FW later broadened its services to include contract warehousing, dry storage, hazardous material and chemical storage, temperature-controlled storage, product distribution and B2B and B2C fulfillment.
FW Warehousing has more than 50 years of experience in third-party 3PL logistics and has been ranked in the top 100 Third Party Logistic Companies in the country by Inbound Logistics magazine.
For more information about e-commerce fulfillment capabilities and other 3PL services, visit the FW Warehousing website.