Here’s a figure you can relate to: labor is typically about 65% of the operating costs of the average warehouse according to this article in the May 2008 issue of Inbound Logistics. On top of that, 20% of your warehouse workers describe themselves as “disengaged” from the process. Sobering enough to think about, if your business depends on storing, stocking, shipping and receiving to please customers.

The first thing I think of when I see those kinds of numbers is that the cost of labor in a warehouse isn’t something that must stay at 65%. Sure, we all understand that the cost of people in any operation will be at or near the top of your cost lists. Warehouses aren’t special in that regard. The problem is one of productivity per worker. Due to computerization, offices have seen excellent per-employee productivity gains the last twenty years. Some of that has translated to the warehouse or plant floor, but certainly the revolution that has swept the office hasn’t translated entirely to, say, a picking and shipping department. WMS has come for some, sortation systems for others, and those things have made a difference in companies like Robroy who have deployed them correctly.

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Walk into any order fulfillment operation, and you’re probably going to see gravity flow rack.

The reason is obvious–it’s one of the best ways to pick orders utilizing first-in, first-out principles. It used to be that there was one kind of the stuff, the plastic-wheel tracks, but these days the choices are more diverse than ever. For the most part, these flow rack types act the same; they decline toward the picker and boxes or totes or even larger components flow toward him. They’re restocked from the rear and picked from the front onto a takeaway conveyor line, a cart, workstation, or another step in the process.

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This is the fourth in a series of briefs on cross docking

A recent project for a large retailer in the Southwest provided a good example of how an element of cross-docking might be deployed to reduce the footprint of distribution space required, reduce order fulfillment touchpoints, and shorten the logical pathway for fulfilling orders.

Incoming shipments are anticipated through the use of advanced shipping notices (ASN’s). Stretch-wrapped pallet loads arrive via truck throughout the day. They arrive at doors designated for cross-docking. These doors were selected based upon proximity to the material handling system which takes advantage of the facility layout. Pallets are unloaded by fork truck, the stretch wrap removed, and cases manually inducted into one of several conveyor staging lanes. Each lane represents a “wave” of orders which will be processed either that day, or a specific day later in the week. When a wave is released, it moves downstream, and the individual cases are sorted to a specific shipping lane whose products are destined for a particular store. Other products from static storage positions and non-conveyables destined for the same store are consolidated at this point. (more…)

This is the third in a series of articles on cross docking

If you started from scratch, many might simply build a cross dock facility with a much shallower depth than most warehouses. A depth of a hundred feet or so, with incoming product on one side that can be easily moved a short distance and loaded on the other side to an outbound truck. Most of us however, must deal with an existing facility, many times a large square box which is not generally the preferred layout. However, as long as the existing facility has a sufficient quantity of dock doors, yard space, and an adequate footprint, you may be fine…

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This article is the second in a series of articles on cross docking

In concept and on paper cross docking looks great, but, what about actual implementation? What kind of return do we get on this investment? The short answer is the implementation can be challenging. However, with planning, a committed team of upstream and downstream participants, and possibly even a pilot program, it can pay significant benefits.

Cross docking does not have to be complicated. Some, even today, execute cross-docking using human-readable paper documentation as the driver. As mentioned in the original brief, cross docking can cover a wide range of distribution activities. In one door and directly out the other is one approach. Many cross dockers also add value in the brief (hopefully) interval between receiving and shipping. Others send product to a temporary buffer in the interval, in many of these cases an automated system (mini-load, AS/RS, etc.) serves as the buffer.

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WERC (the Warehousing Education and Research Council) does some great work.The group offers a terrific online research library with tons of links to web pages and PDF’s on everything from case studies to equipment analysis to facilities issues, people, processes, metrics and tons more. Another excellent resource is always WERC’s annual conference (May 2009 in Chicago) as well as local conferences like the ones we have attended in Dallas the last couple of years. The national event has Stephen Covey, author of The Speed of Trust this year.

Its self-study guides are good, and inexpensive at $14.95 for members and just $29 for nonmembers, with detailed information on personnel, processes, and more.

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It’s more immediate of course, when the cost at the pump jumps, but rising fuel costs are a reality in your shipping operations whether you are pushing product to customers or bringing it into your facility. We’ve all seen the fuel surcharges and continually-rising freight rates.

According to Operations & Fulfillment, labor developments may have just as much impact over the next few years. Over the next 5 years, the latest UPS contract amounts to a $9 per hour labor cost increase, which will certainly make its way downstream to shipping charges. Developments in other companies such as FedEx and labor negotiations across the shipping and freight world mean that even if fuel prices stabilize, it’ll cost you more to ship and receive products.

Curt Barry’s article at Operations & Fulfillment recommends some of the steps you can take…

1. Look at transportation in the context of the total supply chain efficiency. (see Curt’s article for tips).
2. Institute vendor compliance policies, include routing guides for inbound carriers. Do not permit vendor-controlled freight..
3. For high returns businesses, use return services.
4. Join an inbound freight consortium with contracted carriers and negotiated best rates.
5. Do your homework. You have to understand your volume and shipping characteristics, etc.
6. Consider a freight consultant, which can reduce costs 15% to 25%.