Finding Hidden Profits in Your Warehouse or Transport Operations
Sometimes it’s easier than you think to find hidden profits in your warehouse or transportation operations. Many successful companies are doing more with less by simply optimizing their slotting practices, pick paths, truckloads and delivery routes.
Q: Given the volatility and uncertainty in today’s logistics environment, how are logistics providers remaining profitable?
ELLIOTT: Sometimes it’s easier than you think to find hidden profits in your warehouse or transportation operation. Many of the most successful companies are doing more with less by simply optimizing their slotting practices, pick paths, truckloads, and delivery routes.
We have customers using automated warehouse slotting and pick path optimization tools to organize products more effectively based on velocity patterns and streamline pick paths for least travel distance. With simple improvements like these in place, picker travel can be reduced by more than 20 percent and labor effectiveness can be improved by five to seven percent. For a 15-worker warehouse, this represents $45,000 to $65,000 in annual labor improvement. Additionally, the cost and time savings mean significantly improved service levels.
For-hire carriers and private fleets can save considerably by focusing on load and route optimization. Recently, a single distribution center for the Piggly Wiggly grocery chain cut approximately 3,000 miles per week just by creating more intelligent load plans and reordering delivery stops, garnering a 10- to 15-percent reduction in overall transportation costs. ROI was achieved in only two to three months.
Q: How can logistics providers measure the optimizations they’ve performed and determine whether they are creating a true benefit for their business?
ELLIOTT: Every operation is unique and conditions change constantly, so optimizations that worked for you in the past might lose their efficacy as time goes on. You need the means to evaluate the effects of your optimization by staying abreast of critical metrics and continually revising your plan.
Due to the historic high cost of deploying business intelligence solutions, many companies have chosen to stay with hard-copy reports that are often printed, set aside, and left unused. With the latest dashboard technology, companies can get immediate insight into essential key performance indicators, at a much lower cost than in previous years. Especially in today’s economy, it’s crucial to have access to real-time analytics displaying the current state of your business, historically relevant information highlighting important trends, and time-sensitive reports and alerts pointing out key criteria to aid in your decision-making process.
In our recent case study of Hall’s Warehouse, a user of our logistics-tailored business intelligence tool, we found that they have accelerated putaway by 10 percent, improved personnel productivity by 15 percent, reduced replenishments by 13 percent, and can monitor USDA and FDA hold orders. This also enables them to give immediate feedback to their customers and has allowed them to institute improvements that likely wouldn’t have been possible without the ability to monitor real-time activities in the warehouse.