The most labor intensive and costly responsibility 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. Recognizing the stress this puts on your bottom line can lead to making some new investments and changes to relieve the costs that go into this key element. Here are three areas on which to focus:
1.) Decrease Wasted Motion: As stated above, labor costs associated with automotive part picking activities can be tremendous. Implementing new resources and technologies can reduce these costs. For example, an automated carousel can create a “goods to person” situation in which time spent traveling between packing stations and pallets or pick fronts is diminished. Automated technology and equipment can increase productivity, and in turn, lower labor costs.
2.) Increase Floor Space: Being efficient with floor space can create a number of new opportunities. Storage space can be enhanced by utilizing a building’s height. Decreasing the footprint within the warehouse can open up room for additional inventory, as well as lead to increased productivity.
3.) Reduce Errors: Picking mistakes and reverse logistics are very costly. An estimated 35% of facilities report a mispick rate of at least 1%, according to Modern Materials Handling. The cost of these errors can quickly add up when you account for the additional labor to not only being the incorrect product back into inventory, but also resend the correct item. With technology such as pick-to-light indicators and inventory tracking systems, you can dramatically increase accuracy, which leads to more money on your bottom line.
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.