With product granularization and assortments continuing to skyrocket, customer choice, expectations and behaviors are constantly changing. A company’s ability to meet or exceed those expectations in a cost effective, proactive manner is critical to long-term success and customer loyalty. End-to-end supply chain strategy combined with efficient distribution and fulfillment tactical operations both play a pivotal role in in that success. It is crucial to adopt a holistic approach to your strategy that encompasses every aspect of the process to stay ahead of the curve, rather than focusing solely on automation.
In this blog, we will delve into the best practices for implementing this comprehensive strategy. We will begin with improved assortment planning, building out a robust demand planning process to improve your demand signal. Then we will discuss creating a strong inventory strategy with the right inventory in the right location to meet the customers delivery and timeliness expectations. Then we will discuss how inventory can be positioned appropriately in the correct quantities to design the appropriate automation strategy given the profile of the products and customers that a distribution center needs to service. We will round out the discussion on achieving real time execution data integration and measuring return on investment (ROI) with key performance indicators (KPIs). Let’s embark on a journey to transform your distribution and fulfillment operations into a well-oiled machine.
Rightsizing Inventory
The consumer landscape has shifted to a “pull from anywhere”, customer-centric model. With this, retailers and distributors are under even more press to consistently have the right product in the right place at the right time. The key to achieving that goal and meeting the new customer expectation is inventory.
Maximizing Inventory Space
Efficiently utilizing your warehouse space is a cornerstone of successful distribution and fulfillment. Start by optimizing your storage layout. Utilize vertical space with high shelves for slower-moving items and keep frequently picked products at waist height for easy access. Implement slotting strategies to organize your inventory based on demand patterns, reducing travel time for pickers.
Ins and Outs of Demand Forecasting
Accurate demand forecasting is like a crystal ball for your inventory management. Invest in robust demand forecasting software that considers historical data, market trends, seasonality and even external factors like economic conditions. Regularly review and adjust your forecasts to stay responsive to changing customer demands.
Inventory Auditing Methods for Accuracy
Inventory accuracy is paramount to prevent stockouts or overstock situations. Conduct regular cycle counts and employ advanced auditing methods like ABC analysis to classify items based on their importance, enabling you to allocate resources effectively. Implement barcode scanning or RFID technology for real-time tracking and traceability.
Fulfillment & Distribution Automation Technologies
Distribution centers can operate much more efficiently when automation tools are implemented. Automation can take the burden off of your labor pool by completing the more dangerous and tedious tasks required in the warehouse and allowing associates to spend more time on quality control and more safe and stimulating tasks.
Demand “Sensing” with Artificial Intelligence
Harness the power of Artificial Intelligence (AI) for demand sensing. AI algorithms can analyze vast amounts of data to predict future demand accurately. By automating this process, you can proactively adjust your inventory levels, ensuring that you’re always prepared to meet customer demands without excess inventory.
Doing More with Warehouse Management Systems
Modern Warehouse Management Systems (WMS) are the backbone of efficient fulfillment operations. They provide real-time visibility into your inventory, streamline order processing and optimize picking routes. Upgrade your WMS to the latest version and integrate it seamlessly with other automation technologies.
Inventory Management Platforms
Consider adopting inventory management platforms that offer features like real-time tracking, demand forecasting and intelligent reorder points. These platforms can centralize your inventory data and help you make informed decisions regarding stocking levels and reorder quantities.
Automated Conveyor Belts, Sorting Systems and Autonomous Warehouse Robots
Investing in automation technologies like conveyor belts, sorting systems and autonomous warehouse robots can significantly boost your operational efficiency. These systems can handle repetitive tasks, such as transporting goods within the warehouse, sorting items and even picking and packing, with incredible speed and precision.
Wearables
Wearable technology is revolutionizing the way warehouse workers operate. Equip your workforce with wearables like barcode scanners on wrists or fingers, smart glasses for augmented reality assistance and exosuits to enhance strength and reduce fatigue. These innovations can lead to faster and more accurate fulfillment processes.
Visibility & Data Integration
Retailers that do not use advanced analytics-driven insights an adopt integrated, intelligence- driven, customer-centric merchandising planning strategy will struggle to retain relevancy in the evolving market. The following tools will enhance data integration in your warehouse.
Data Integration with ERP Platforms, Sales Systems, Carrier Profiles
Achieving complete visibility across your distribution and fulfillment operations requires seamless data integration. Connect your ERP platform, sales systems and carrier profiles to ensure that all stakeholders have real-time access to critical information. This transparency helps you respond swiftly to changing conditions.
Connected Devices for Visibility of Assets
Leverage the Internet of Things (IoT) to gain visibility into your assets, such as product movement, inventory status, performance metrics and process bottlenecks. Sensors and connected devices can provide real-time data, enabling you to identify areas for improvement and make data-driven decisions.
Performance Benchmarks to Increase Accuracy and Efficiencies
Set performance benchmarks to track your progress and drive continuous improvement. Key benchmarks include inventory accuracy rate, out-of-stock rate, carrying cost of inventory, average time to sell and order fulfillment accuracy. Regularly analyze these metrics to identify areas that need attention and optimization.
ROI & KPIs
Good data only goes so far, it also must be correctly leveraged. Make sure you are tracking the right key performance indicators to ensure your operations are operating at their best.
Pick and Pack Metrics
Measuring the efficiency of your pick and pack process is essential for evaluating your distribution and fulfillment operations. Key metrics to monitor include order cycle time, order accuracy and labor productivity. By consistently tracking these metrics, you can fine-tune your processes and reduce operational costs.
Pros and Cons of Investing in High-Tech Robotics vs. WMS vs. Cost-Effective Fulfillment Processes
Before investing in automation technologies, carefully weigh the pros and cons. High-tech robotics can dramatically increase efficiency but may require significant upfront investment. Warehouse management systems offer automation and visibility but may not cover all aspects of your operations. Consider a balanced approach that combines technology with cost-effective fulfillment processes to achieve the best results.
KPIs to Track
Key performance indicators (KPIs) are the compass guiding your distribution and fulfillment automation journey. Focus on KPIs such as inventory accuracy rate (to prevent stockouts and overstock), out-of-stock rate (to minimize lost sales), carrying cost of inventory (to optimize capital allocation) and average time to sell (to improve order processing speed). Regularly review these KPIs and adjust your strategies accordingly.
Conclusion
Implementing a holistic approach to automation in your distribution and fulfillment operations is the key to staying competitive in today’s market. By right-sizing your inventory, leveraging automation technologies, achieving visibility through data integration and measuring ROI with KPIs, you can streamline your processes, reduce costs and enhance customer satisfaction. Embrace these best practices, and watch your distribution and fulfillment operations thrive in the age of automation.
