The most labor and cost intensive action in your distribution center is order fulfillment, specifically manual fulfillment. According to Martin Murray’s “Order Picking in the warehouse”, the cost of order picking can be as much as 55% of a warehouse’s total operating cost. Furthermore, manual fulfillment can consume 65% of an employee’s time. Understanding the impact this has on your bottom line can lead to making some new investments and changes to relieve the costs that go into these tasks. Here are three areas on which to focus:
Decrease Automotive Fulfillment Labor Costs
The labor costs associated with automotive part picking activities can be tremendous. Implementing upgraded technology can help to reduce these costs. An automated carousel creates a “goods to person” scenario that reduces the time spent traveling between pick stations and pallets. Robotics are another technological option that increases productivity while lowering labor costs.
Reduce Errors and Increase Accuracy in Automotive Part Picking
Picking mistakes and reverse logistics are the most costly occurrences that impact profitability. In fact an estimated 35% of facilities report a mispick rate of at least 1%, according to Insight Works. While 1% sounds low, it adds up quickly and creates additional labor costs by reducing productivity. Features like light-directed indicators and inventory tracking technology can increase the accuracy of your supply chain.
Increase Distribution Center Floor Space
Using the floor space in your distribution center efficiently can create a variety of cost saving opportunities. Leveraging your building’s height decreases the footprint within the warehouse that would be occupied by pallet racks and shelving. This new space can be used for additional inventory or new initiatives that positively impact your revenue stream.
While considering an investment into a sector of the supply chain that already costs so much can be difficult, there are ways to make this essential element less of a financial burden. There are also options that can provide the same benefits without the investment into new infrastructure. Leveraging the skills and resources of a 3PL can help you realize the advantages without making a substantial financial commitment. At Barrett Distribution Centers, with a focus on technology and the experience of helping automotive part manufacturers and retailers with their supply chain, we design and implement customized solutions.