When Amazon began operations, all orders were filled using paper-based picking methods. Order pickers were simply handed a list of items to pick, and off they went. Of course, it was easier because Amazon’s only SKUs were books.
These days, however, Amazon fills orders for hundreds of thousands of SKUs and ships out millions of items every day from its 110 distribution centers in the country and a total of 185 across the world – as at the time of writing.
How is it possible for an eCommerce retailer with super-sized warehouses averaging 1 million square feet, with the largest being 3.6 million square feet, to fill these orders and do so very quickly – while offering same-day or next-day delivery?
The answer is simple: Amazon uses highly efficient proprietary warehouse optimization and supply chain systems.
Of course, not all retailers can operate on the same level as Amazon, or other big-box retailers like Walmart, Home Depot, and Target. However, that should not limit your capabilities. Your retail operation can be quite efficient if you tweak and enhance your warehouse management and retail supply chain systems.
Regardless of size, high-performing retail distribution centers typically prioritize the following warehouse optimization elements:
Minimize and Eliminate Errors, Disruptions, and Delays
The goal here is to do everything humanly and technologically possible to reduce or completely eliminate system-based and human errors from distribution center operations using automation and proven warehouse management practices.
Recent studies showed that miss picks costs businesses an average of $22 per order - misships costing as much as $42 per order. The cost of errors is one thing, but if it’s coming at the cost of speed, your customers will likely choose another vendor where they can get their items now.
One solution for this might be implementing hands-free technology, which has proven to help drive efficiency, accuracy, and speed so your customers don’t have to wait.
Increase Warehouse Productivity
The bulk of activities like picking, sorting, stacking and inventory collection are typically carried out by warehouse staff. An optimized warehouse will create an efficient picking path, and provide for workers’ comforts.
So how do you boost productivity? As mentioned above, hands-free solutions can boost productivity, but it can also reduce training time so your associates ramp up faster - a game-changer during peak season.
Leveraging machine learning to automatically generate optimized pickwalks is another good way to increase warehouse productivity. What’s an optimized pickwalk? It basically ensures that your associates aren’t wasting time going up and down. back-and-forth the aisles grabbing and double backing for items across multiple orders.
Many warehouses are spending hours a week having their warehouse managers manually manipulate and generate these optimized routes in a spreadsheet. Stop. There are warehouse automation tools - like Ox - that can save you thousands of hours a year.
Supply Chain Visibility (SCV)
Managing inventory across multiple channels has been a longtime challenge for many retailers way before COVID introduced increased complexity BOPIS and curbside.
Smooth warehouse operations often depend on how visible your warehouse’s supply chain is to privileged users within a company or approved partners like vendors, suppliers, and logistics partners.
This makes it easy for all stakeholders to easily track products throughout the travel trajectory –supplier to manufacturer to warehouse to consumer, and helps provide more relevant data to retailers who have outsourced part of their supply chains.
Retailers with good supply chain visibility are often able to increase customer satisfaction, enjoy enhanced efficiency, lower their risk, and boost their profits
An agile distribution center is one that quickly adapts to customer needs and spikes in product demand.
Your warehouse management system must be able to accurately and quickly determine demand signals, assess supplier inventory quantities and provide you with information necessary for you to either redirect the supply of a particular SKU, reassess the demand, and nimbly pivot in response to these signals.
This way, your distribution center will be able to continue to meet customer demands, prevent “out of stock” notices, ensure the appropriate inventory levels and avoid inventory overstocking or bloat where necessary.
Streamline Key Warehouse Processes
The fundamental processes in a warehouse include receiving, packing, sorting, putaway, shipping, and storage.
All these processes are key to a retail warehouse’s functioning. It is important to streamline these processes in a way that forces the warehouse to function efficiently. The more streamlined these processes are, the easier it will be to optimize the supply chain for maximum efficiency.