Warehouse Performance – UNLEASH Productivity

Warehouse Performance – How good are you?  How good can you be?

 

 

What are the key metrics to establish the performance effectiveness of your warehouse operations?  We believe they include:

 

 

Productivity – How many lines per worker are picked in an 8-hour shift?

 

Density – How effectively and efficiently do you use your warehouse space? 

 

Inventory Accuracy – How accurate and timely are your inventory records?

 

Picking Accuracy – How accurately are items picked?

 

Shipping Accuracy – How accurately are items shipped?

 

Availability Speed – How quickly after arrival are inventory items available to be picked?

 

Order Cycle Time – How quickly after order receipt are items shipped?

 

Training – How quickly can you train new employees?  Hours, or days?

 

Safety – What is your safety record?

 

 

Before implementing a new Warehouse Management Software solution (WMS) a serious effort should be made to measure these parameters.    Measurements can be taken with the following data:

 

Productivity – Divide the number of lines picked per day by the number of warehouse personnel, divided by the number of hours.  The objective is to get a number of lines picked per hour.  If possible, measure the lines picked per worker in addition to global averages.

 

Density – Divide the number of SKU’s by the cubic capacity of the warehouse.  Establish the cost per cubic foot of warehouse space and calculate the cost per SKU.  If possible, establish the length of time each SKU is “on the shelf” and compute the cost over time of holding that inventory.

 

Inventory Accuracy – Calculate the percentage of inventory items that are misplaced or mislabeled.  If possible, calculate the personnel cost associated with correcting these inaccuracies. 

 

Picking Accuracy - Calculate the percentage of inventory items that are picked incorrectly.  If possible, calculate the personnel cost associated with correcting these inaccuracies. 

Shipping Accuracy - Calculate the percentage of inventory items that are shipped incorrectly.  If possible, calculate the personnel, shipping and lost sales cost associated with correcting these inaccuracies.

 

Availability Speed – Determine how long it takes from when a delivery of inventory arrives until it is entered into your inventory system and is available to be picked on the warehouse floor.  If possible, determine the “safety stock,” or additional inventory that is held to offset any delay.

 

Order Cycle Time – Accurately calculate the average time from receipt of an order from a customer until that order is shipped.

 

Training – Compute the time required to train a new warehouse employee to be independent and fully functional in your warehouse.  Add to that cost the time and expense of the trainer and the number of hours of labor time that are consumed by having new employees hired too early and the wasting of unnecessary trainer’s time.

 

Safety – Examine your safety records and look for patterns of areas or personnel with frequent or severe injuries.  Are there jobs or locations that could be reconfigured to reduce accidents and injuries?

 

By diligently assessing these factors it will become clear where your savings can be found.  This will help you to choose the correct WMS for your application and prudently calculate a return on investment.  We believe it will also accelerate your search for the best WMS, because you will realize how significant the cost savings will be.

 

Once you have quantified the benefits of implementing a sophisticated WMS, we encourage you to consider the implementation experience of the WMS provider.  The best software in the world will not achieve the optimal savings unless it is implemented by an experienced and sophisticated supplier.  Avectous Integrated Software offers over 20 years of experience implementing sophisticated software solutions for our customers.

Avectous.

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Amazon - It doesn’t have to be the enemy

Amazon is the 800-pound gorilla.  The Buddha said “life is difficult.”  Once we accept the reality of the situation, our efforts ought to be directed at optimizing our success, rather than complaining about any challenges that are presented.

One way to drive sales and visitors to your products is to consider Amazon as a comparison shopping site that can expose your products to lots of potential customers.  The cost of gaining such wide exposure on Amazon is reasonably inexpensive – somewhere around $40 per month.  Your products will be grouped with similar products, and if you can distinguish yours as superior, you can persuade many new customers that you have the product they need.  Of course, if the sale is effected through Amazon, your order may be bundled with other orders, for you to ship your individual products directly to the customer.

Amazon is a very large, complex company and not particularly communication-friendly.  If you have an issue, you may not be very satisfied with their customer service.  This makes it sensible to use a good Channel Management software package to help you load items correctly and simply, especially if you are using your own Amazon store.

Another decision is how to price your product, given that Amazon will determine the shipping price.  Can you squeeze a little increase into your price, to make up for the fact that you won’t likely make any money on shipping?  Remember, you are on the world’s largest comparison shopping site, so you have to be very careful not to be priced higher than your competitors.  Again, using your own Amazon store and taking advantage of a sophisticated Channel Management software will enable you to present your items so that they appear unique and you are not forced to compete with other sellers willing to cut profit to the bone.  It’s hard to understand how some sellers offer prices that must be under cost, but time and time again, you see it happen.  If your items are unique and profitable, Amazon is the place for you.  If you have nothing but “me too” items, Amazon will be a race to the bottom.  $40 per month doesn’t sound like much, but if you’re spending $40 a month to increase the pace at which you lose money, it might not be a very good investment.

Amazon’s pay-per-click ads are another option that can send customers to your store.

Roughly, the cost can be up to $0.50 per click for apparel, up to $1.25 per click for electronics, sports equipment up to $1 per click and toys up to $0.25 per click.  Check with Amazon to see if better rates are available.  The pay-per-click fee can be expensive, but if you can confidently anticipate a high “close” rate, it might be worthwhile.

Avectous Integrated Software

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Repricing Do’s and Don’t’s

Can your repricing system go “both ways?”  Your system should automatically increase prices when your competitors are selling for higher prices than you.  Many repricing options trigger price reductions when competitors have lower prices, but fail to increase your prices when you have the luxury of doing so.  This is an important feature that allows you to be more profitable, while still driving sales increases.

Does your repricing system require that you reprice on all marketplaces simultaneously? An excellent repricing system will allow you the flexibility of repricing according to marketplace competition.

Does your repricing system allow you to set a baseline price on a particular marketplace and broadcast that price to specified marketplaces?  For example, if you set a price on Amazon, does your system allow you to automatically set that as your price on eBay and New Egg?  This will allow you to reduce administrative effort in changing prices and allow you to present a consistent, professional profile to your customers.

Does your system allow you to set prices based on a required margin?  For example, can you set prices as “never below our cost plus 10%?  While any pricing strategy can be overruled by authorized personnel, this feature will ensure that your automated repricing system will never have you selling at a loss.

There are many other aspects of a repricing system that will be critical to allowing you to capture sales without “giving away the store.”  An excellent systems provider will help you navigate that path.

Avectous Integrated Software.

Take Control!

Thanks for reading, don't forget to follow us on Twitter, Facebook, and LinkedIn for more company updates and look out for our next weeks blog!

TEL. (714) 656-2898 | info@avectous.com 

http://avectous.com

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Four Ways to Improve Order Processing

It is Cliche to say that processing orders quickly, accurately and efficiently is the cornerstone upon which a successful business can be built. If your customers don’t get what they order, or don’t get it on time, or it costs too much because your fulfillment costs result in your prices being too high, you won’t build your business. You have to give your customers what they want, when they want it, at a competitive price.

Once your company has received an order from a customer, it must be transmitted to the warehouse to be picked, packed and shipped.  But, before that, your system must be able to verify that the inventory is in stock and ready to be picked.  Your system must also offer the capability of confirming that payment has been received, or that the customer’s credit is acceptable, prior to shipment.  Items must be reordered when inventory is shipped.  This can be done automatically, or manually, but if inventory reorders are made manually, the information must be transmitted automatically and accurately to purchasing personnel.  Transparency and automation is the key to an efficient, accurate system.  An optimal system will allow you to increase accuracy, reduce processing time, ship more efficiently and improve your customer’s experience.

There are many aspects of your order processing system that must be considered.  Your investment isn’t in software, or a system.  Your investment is really in the team that you select to design, customize, implement and integrate your new system.  When you select a software provider they should be able to give you excellent and compelling answers about the following functional areas:

Communication

Orders must be received with as little duplicate data entry as possible and transmitted immediately and accurately to the warehouse.  A sophisticated solution provider will standardize the way that information / orders are received from your customers so that their orders are automatically received by your system.  This does not require that your B-to-B customers conform to an inflexible protocol.  A sophisticated software provider can receive the customer’s information in a variety of formats and transfer the information to a standard format in your order management system.  This information is easy for the customer to input, making their purchase experience simple and fast.  The information is then automatically and completely available to your customer service staff, so that customer inquiries are answered with complete and up-to-date information, including order and shipment status.

Database simplicity

Regardless of whether customers place orders through online marketplaces, your website, via mobile devices, or to your telephone operators, your order management system must be able to receive order information without problems from any source.  Then, all information in your order management system must be immediately available to your entire team – customer service, warehouse, accounting, etc.  It is imperative that your system be fully and functionally integrated – data must be accessible and transferrable seamlessly between all company systems.  Order information must be integrated with your accounting, warehouse activity, purchasing, customer service, shipping, sales, and other systems.  Customers frequently encounter problems with the interface between systems.  These problems can be very challenging for employees, suppliers and customers. When a customer service representative has to scan through a variety of screens, rather than having access to a single, detailed overview of the order, product, picking, shipping and billing information, customers cannot enjoy the excellent customer experience that we want them to enjoy.  The excellence of your order management system and the level of integration with your other systems will make the difference and that difference will translate into improved customer experiences and ultimately increased sales.

Inventory control

One thing you never want to hear is that you are out of stock on a popular item.  An excellent order management system will alert you to item velocity relative to on-hand inventory quantities and reorder / receipt of inventory timelines.  Inventory reorder processes can be automatic, or information can be transmitted to purchasing staff to manually reorder inventory.  A high level of customization will provide your company with the optimal level of inventory control and cost management – while simultaneously ensuring the highest level of customer satisfaction resulting from consistent inventory availability, without holding so much inventory that you risk accumulating non-saleable inventory.

Automation

The maximum level of automation will help you reduce errors, speed order processing and reduce cost.  An excellent order management system will provide the optimal level of automation, combined with the flexibility to allow your customer to place complex orders without frustration.

To accomplish all of these objectives, you need a sophisticated, experienced order management system provider.  There really is only one choice – Avectous Integrated Software.

Take Control!

Thanks for reading, don't forget to follow us on Twitter, Facebook, and LinkedIn for more company updates and look out for our next weeks blog!

TEL. (714) 656-2898 | info@avectous.com 

http://avectous.com

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