Optimizing your Warehouse in 2020

 

I’ve got some good news and some bad news. 

The bad news is 2020 is less than half way over….

The good news is that you still have time to make things better in your warehouse.

We might be in the middle of a global pandemic, but that doesn’t mean you can’t improve your business. Here are some stats about warehouses during the COVID-19 Pandemic to prove my point: 

  • 13% increase in the number of parcels shipped overall
  • Rise of B2C ecommerce shipments of 17%
  • 9% increase in parcels shipped domestically
  • 2% decrease in parcels shipped across borders
  • Retail parcel volume down 8% compared to expected volumes.

For distribution businesses, 2020 could be a huge opportunity, but only if you do the right things. So that’s what this post is about; how to optimize your warehouse processes in 2020.

Why?

One simple reason: life is better once you optimize your warehouse processes. In practice, this might mean: 

  • fewer returns
  • more sales
  • less turnover
  • happier employees
  • no headaches

Hit all these and your life will be drastically better!  

These processes we’re going to talk about aren’t just how you do things. For some of them, it’s how you think about things, or what tools you use. We’re going to walk you through some of the most important changes you can make to optimize your warehouse. 

The best part though, is that you can start using any of these warehouse optimization techniques immediately. Start now! The faster you do, the faster you start to make 2020 a year to remember (rather than a year you’d rather forget)!

 

1) Inventory Management

Business is simple. 

People buy goods from you. You sell to other businesses, and  maybe you sell directly to consumers. Either way, you still sell goods to people. 

Things get a lot more complicated when you don’t have the right amount of goods to sell, and they get costly if you have too many.

This is where “inventory management” comes in. You’ve heard of it, but likely, you avoid it.

In fact, 43% of retailers rank inventory management as their number one problem.

That’s good news for you. Once you’ve solved this, you’ve probably solved your number one problem. Once solved, it also becomes a competitive advantage vs. the other 43% of your competitors that have not solved it yet.

 

1A) Data & Automation

The secret sauce with inventory management is data and automation. 

As you order more inventory, the likelihood of unused inventory grows.  Yet, if you buy too little, you are leaving money on the table and losing valuable customers. Neither option is a good one.

Data allows you to see where and how to make adjustments. Automation helps you actually follow through.

To get the greatest  benefits from your data and automation, you’ll want an effective inventory management system like Zangerine.

 

1B) How to Start

For those with revenues under $500,000 a year, here are a couple things you can do to start:

  1. Start collecting data about all important aspects of your business. (Digital formats work better in the long run).
  2. Look at overall trends month over month.
  3. Compare year to year data for seasonal trends.
  4. Make small tweaks to get a better “cake” (experiment to find the best solutions).

If your revenue is over $500,000 a year (or if it’s less and you’re growing at a good clip) then an inventory management system like Zangerine will save you far more than it costs. Without an inventory management system you’re  literally working harder and earning less. 

No matter what, you need to gather and take advantage of your data. 

Getting the full data picture will help you as you work on your  warehouse inventory processes. You’ll understand the choke points and where there’s excess bandwidth.

From there you turn your warehouse into a sports car.

 

2) Warehouse Layout

“I am speed.

I am precision.

I am a well-tuned machine.

I am a warehouse.”

Not exactly what you were thinking, was it?

But it can be true. Warehouses have to be quick, accurate and fine-tuned, much like a beautiful sports car. Your business depends on that. How do you tune your warehouse in 2020 to run well? One essential part is the layout. You probably know this deep down. You’ve complained about choke points in your processes and now it’s time to figure out how to get rid of them.

First, bring out all the data you’ve gathered. Let it tell you where the problems are. If you have a Warehouse management system that includes a barcode tracking system (as Zangerine does) then that will make it much faster and more accurate.

Second, ask your employees for their opinion. They work with the warehouse processes day in and day out. Ask them together and individually. Before you make any big changes though, get the buy-in of all your employees. If they don’t agree with it, they probably won’t implement it effectively. That spells disaster for warehouse process optimization. Let them know you want to make their work environment safer and easier to manage. They’ll get on board with that.

Next, map the warehouse. Make it clear and easy to understand. Overlay the warehouse flow onto it. Once you are satisfied with a specific warehouse organization layout, execute it.

Finally, evaluate, rinse, and repeat. Do more of what worked and less of what didn’t. Doing this can change your warehouse, but combine this with all the other ideas in this article and you’ll change your business.

 

2A) Warehouse Layout Best Practices

There are a few warehouse layout best practices that, if you haven’t, you need to implement.

First, you need to determine  your  top  business objectives and let your employees know how to track them. How can your team win the game if they don’t know what the goal is or how to check the score?. Tell your team the objective, and make it easy for them to know the score.

Next you designate defined workspaces. The more defined they are, the easier they are to put on the warehouse map. Everyone should know who does what where.

For example, you can’t engage in the proper receiving process in a warehouse that doesn’t have a designated receiving area. You can’t pack and ship in a warehouse that doesn’t have a designated packing area. All you end up with is confusion.

Clear up the confusion. Institute defined workspaces. After that’s all done, you define the warehouse process flow. 

 

2B) Warehouse Flow. 

Psychologist Mihaly Csikszentmihalyi popularized the concept of flow in personal life, defined as being completely immersed in a task for the sake of the task itself. You make few errors, and stress and fatigue are at a minimum. It’s as if you have reached performance perfection.

Warehouse employees can reach  a similar state if your warehouse is optimized correctly.

Here are a couple pointers to get you started:

  1. Eliminate frequent errors. Every error creates wasted time. 
  2. Ensure widespread comprehension of the flow. Every employee must know how to keep the flow moving.
  3. Automate where possible.

 

3) Warehouse Management Processes

The single common denominator across all the different jobs in your warehouse is the manager.

As a manager you’re responsible for taking advantage of future trends, avoiding any possible disasters and moving day to day processes along. 

It’s a difficult job.

Here are a few things that managers need to do in 2020 to stay competitive and to fully optimize their warehouse management processes.

 

3A) Kaizen

We talked about this briefly on episode 7 of our podcast, but it’s important to mention it here. Kaizen is the idea of continuous change. Rather than one huge change in any one process, Kaizen recommends making continuous, methodical, minor changes along the way. 

Imagine each change only saves half a second per task. If that same task is done 30 times in one day, you’ve saved 15 seconds. That becomes around 75 minutes over the year. You saved an entire hour by changing one process. Now scale that to hundreds of changes throughout the year.

Notice I said, “you and your team.”

To get the most benefit out of Kaizen, allow your team some leeway in making and recommending changes on their own. You won’t always know when a process needs to be improved. Let your team experiment to find the best changes.

 

3B) Employee Training

Having an effective warehouse means having effective warehouse employees. You can’t have one without the other. 

But, what should you train your employees on?

Well for starters, safety. Interestingly, one way to maintain safety at the workplace is to focus on employee development, as employee engagement leads to a safer work environment. Employees who feel connected to their work make better decisions on the job. Luckily, a safer work environment also leads to more employee engagement. You can create a virtuous cycle just by training your employees.

So help your employees move up in their career. Ask what training they’d like and find a way to help them get it. You’ll find employees will become even more valuable to the company. Your employees are your biggest asset after all. Treat them that way.

 

3C) Communication

In a recent survey conducted by Business News Daily, people identified 5 attributes of good bosses. All of those attributes had to do with communication. Employees love when managers communicate openly, and forthrightly. In an environment with as many moving parts as a warehouse has, over-communication should be the norm.

2020 has seen the first truly global pandemic. With that, a large burden has been placed on companies that ship products. Of course, you can’t mention COVID-19 and not mention the fear and uncertainty that accompanies it.

In a work environment like that, employees need to hear direct, honest, and open communication from their manager. Implementing Kaizen, effective employee training and better communication will lead to a better 2020 for you as a manager, and for your warehouse as a whole.

 

4) Modern Warehouse Tech

In the modern warehouse, technology speeds up your processes making your life easier.

I know that sounded like a 1950’s cheese grater commercial.. but it’s true. Tech makes your business stronger. Here’s some essential tech for a strong distribution business:

  • Full eCommerce Platform: Take your business online completely. Allow customers to shop through your warehouse like they would Amazon. These tools allow you to change product listings easily. You want all your online orders to flow automatically into your order fulfillment processes. The right eCommerce System will do it instantly (like Zangerine). The wrong one will make you do it manually. Trust me, you don’t want to do it manually!
  • Inventory  Management Software: The biggest benefit of inventory management software is clarity! Imagine knowing exactly how much you have in stock. These systems alert you when you have too little stock, or too much and it will warn you when you need to purchase more.  It can even create the purchase order for you. It should integrate purchases, returns, and resting inventory so you have accurate numbers. All of this gives you sweet clarity.
  • B2B eCommerce with tiered pricing: More and more, businesses engage in B2B eCommerce. That only works if your purchasing portal adapts to each individual user. Some of your customers might buy at a higher quantity and therefore get a better rate. You may even have a retail website that sells under a different brand. Tiered pricing becomes a tool for growth. Getting the right order processing platform allows you to set up your warehouse online, eliminating much of the friction in the buying process.
  • Purchasing management: You can be alerted when you have low stock as well as compile all your vendors in one platform. Oh, did I mention that often, you can re-purchase with one click. Say goodbye to thousands of spreadsheets!
  • Financial management: Automating inventory management is vital, but you still need to see how it all affects your bottom line. Use financial management systems to create reports that measure the financial health of your warehouse. With this, you’ll always know how warehouse decisions affect your profit.
  • Business intelligence software: This tool puts all the metrics of your business in one place. You see how you’re doing, and where you need to improve. This kind of data power pushes you to make more data-driven decisions. In 2020, that will make the difference between a good business and a great business.

 

The Case for Zangerine

You might be wondering, “Where can I find all these different software tools?”

That’s easy. Zangerine.

Being the #1 software for wholesale distributors isn’t something we take lightly. In fact, to back up our software, we even have a Guaranteed Successful Implementation. That means you are guaranteed to feel the benefits. You won’t be found as “implementation road kill”.  Zangerine automates the key aspects of warehouse management to make your business better, and we offer a guarantee on that to boot.

 

Warehouse Management Tips for 2020

From using data to changing your warehouse layout, you now know how to get started on your path to an  optimized warehouse. By implementing these tips, you’ll  see amazing changes in your warehouse, resulting in more business and less headaches for you. These tips only work if you implement them though. Don’t waste any time. Start changing your business with these 2020 Warehouse optimization tips.

Want more insights to grow your distribution, warehouse or dropshipping business? Subscribe to our podcast, Man Vs. Warehouse to get all your questions answered and make 2020 a great year.

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