Third-party logistics (3PL) warehouses are at the center of today’s rise in omnichannel fulfillment. More than ever, warehouses are looking to process inventory with less – less time, less labor, less error. In this pursuit, warehouses look to implement industry proven technology backed by benchmarks to accelerate efficiency.
In making the business, process, or financial decisions to grow your warehouse, backing your decisions based on data is essential. In doing so, identify KPIs that you can directly impact with each warehouse productivity improvement.
Most considerations for warehouse process improvement put a magnifying glass on two processes: the way inventory gets received into the warehouse and the manner in which it ships out. We’ve looked how to drive efficiency on the outbound, so let’s look at your inbound process.
Build a Solid Foundation
To begin evaluating receiving processes, start with understanding the foundational elements that should exist in every warehouse program or process. Consider things like:
- Never Compromise Safety: Accidents in the warehouse carry personal, financial, and business risk. Safety measures should be considered as a priority with escalation plans outlined for all personal.
- Employee Training: Processes and systems like Warehouse Management Systems (WMS) are only as good as their adoption. Identifying trainers or Subject Matter Experts (SMEs) that understand the technology used in the warehouse and understand the larger business implications of the different steps in a process is important. Periodic trainings such as Lunch and Learns to refresh on processes can be useful.
- Identify Your Key Performance Indicators (KPIs): For order processing, pick speed and accuracy rate are important. For warehouse inbound flows, dock utilization and dock-to-stock time is essential in identifying bottlenecks. Remember the first step is creating benchmarks based on the KPIs you want to track.
- Warehouse Flow: With the rise of omnichannel warehouses, and with the goal to handle diverse workflows under one roof, warehouses should look at implementing FAST principles. These four main themes include Flow, Accessibility, Space, and Throughput which can greatly increase the efficiency of any warehouse when paired with the right technology.
Once a 3PL warehouse has outlined its foundational elements, operations can begin evaluating the specific warehouse receiving best practices functional elements they wish to improve. Optimizing receiving processes happen as much before inventory arrives at the warehouse dock as when the receipt occurs.
Pre-arrival Optimization Checklist
To begin identifying areas to optimize in the pre-arrival of inventory, management should consider the following questions:
- Does your warehouse have a receive against advanced shipping notice (ASN) process?
Protip: Warehouses that have receive an ASN from their customers can plan their labor and space for inventory arrival as well as can communicate in real time with customers to reconcile overages, shortages, damages, etc.
- Are you using a dock scheduler to gain real time visibility on bookings across your business?
- Are your deliveries arriving at designated and scheduled dock doors?
Protip: Warehouses spend on average 20 minutes scheduling an inbound delivery or an outbound pickup appointment. Utilizing a dock scheduler will eliminate this overhead.
- Is your warehouse load-leveling to spread out shipments to reduce labor shortages and downstream bottlenecks?
- Can your customers or their carriers book dock door appointments to on their own based on your availability?
- Can your warehouse provide your customers real time notifications when inventory arrives?
- Do you have visibility on space capacity in the warehouse?
Once inventory arrives in the warehouse, consider the following processes to help manage receiving and put away processes:
- Does your warehouse measure your dock-to-stock time?
- Is your WMS using automation to suggest or direct the placement of inventory?
- Are pallet racks, floor locations, and replenishment areas properly labeled and barcoded?
- Are replenishment areas established as spaces for fast moving inventory?
- Are items being stored based on fulfillment type pick units in bins, cases on racks, pallets in overstock areas?
- Are items barcoded clearly with either Pallet License Plates or retail ready UPC codes?
- Has your warehouse migrated to a paperless process for 100% scan-based item validation and putaway?
- Does your warehouse team have access to receiving status in real time?
- Does your warehouse have automatic notifications setup with your customers notifying them of inventory changes?
- Are you capturing activities your 3PL needs to track and bill for, including: pallet handling, container unloading, consolidation, first month storage in real time?
By completing this pre-arrival and post-arrival inventory receiving process review, 3PL warehouses can optimize operational efficiency, increase visibility for customers, and automate activity capture to improve billing process. There are a lot of boxes to check, however leveraging your internal process experts, implementing WMS technology, and building relationships with thought leaders will drive real change for your team and your business.
To leverage these handy checklists, get a downloadable checklist here.
-Written by Alnoor Bhamani
Written by Alnoor Bhamani
Alnoor is the Director of Solutions Engineering at 3PL Central, who works with 3PL warehouses all around the country to help them find software and solutions to fit their individual needs. He believes there's no single 'one size fits all' to warehouse management, and works to understand their business while also providing best practice insights from the successful 3PLs he's worked with in his career.