Between storage, tracking, billing and hiring, warehouse managers face myriad challenges. Although most warehouse managers strive to reduce costs for customers, 60 percent were unable to accomplish this goal between 2004 and 2006. The following are some actions you can take to be in the other 40 percent.

The median cost of warehousing is 4 percent of sales annually, according to Aberdeen Group’s recent Warehouse Productivity Benchmark Report. This in mind, warehouses and distribution centers require careful management to keep cost as low as possible. Some typical challenges for warehouse managers include the following:

• Offloading shipments and storing them in an organized way or starting cross docking;

• Keeping track of where specific items are located and when they arrived;

• Assembling groups of products for specific customer locations quickly and accurately;

• Preventing missed deliveries;

• Preventing damage to company products;

• Managing a work force (training, hiring);

• Studying the economics and features of new technologies and choosing those that will return the greatest benefit for customers;

• Billing for storage and paying personnel and suppliers as well as taxes;

• Maintaining equipment and infrastructure.

Let warehouses cross dock as much as possible, suggests engineer Maida Napolitano in a Logistics Management article entitled “Warehouse Management: How to Be a Lean, Mean Cross-Docking Machine”.

“Because product is not sent into inventory, companies that cross dock reduce their storage requirements and consequently eliminate storage-related labor and inventory costs,” according to Napolitano. If you think in terms of your customer, the manufacturer, you want to help them get their return on investment in development, raw materials, labor, overhead and transportation as soon as possible, so cross docking makes a warehouse manager a hero in the eyes of the manufacturers.

Logistics Management adds that startup costs for cross docking are insignificant.

“We saved 20 to 30 percent in total warehouse costs by not sending product into storage,” Timothy Egan, director of warehousing, McCain Foods USA Inc.,” told Napolitano.

The following are some tips for successful cross docking:

• Set up labor differently to make it happen.

• Assess your current facility’s capabilities.

• Ensure trucks get to the right doors at the right times.

• Move large volumes in a short time.

• Designate a good core of receiving/shipping supervisors and logistical planners.

• Consider using a third-party labor provider.

• Prefer a real-time, paperless information flow even though a hard copy paper system could be used; (RFID tags and equipment improve dock productivity; with this technology, “a customer can adjust, communicate and fill discrepancies in 15 minutes.” See Forbes’ “RFID And The Search For Perfect Logistics”)

• Consider starting the change to cross docking with a pilot program.

• Be prepared for contingencies.

• Look for ways to improve the processing.

Although many warehouse managers strive to reduce costs for customers, 60 percent of them were not able to do so between 2004 and 2006, according to analyst firm Aberdeen Group (via Logistics Management).

The Aberdeen Group report includes a list of actions taken by the 25 percent of companies that had been able to lower costs by more than 10 percent from 2004 to 2006. Such actions include the following:

• Create an agile warehouse environment to support customer-specific demands.

• Capture warehouse metrics and activities, and share them in real time.

• Update current warehouse management systems to take advantage of new-generation service-oriented technology.

• Use warehouse dashboards and analytics technology.

• Formally cross-train employees on several tasks/technologies.

• Invest in more material handling automation, especially carousels.

As for automation technologies, TurningPoint Systems, Inc., a warehouse and distribution solutions provider, partnered with technology provider Warehouse Innovations, Inc., to develop a system that connects warehouse management systems with material handling systems. The WIPP-LINK electronic connector enables Warehouse Innovations’ customers to receive orders and instructions electronically, thus driving their material handling systems more effectively. The system re-sequences orders to optimize truck loading and accelerate order processing.

Sometimes simple changes can make all the difference. By incorporating voice-directed picking, Golden State Foods boosted worker efficiency, Modern Material Handling reports. The technology also provides an ergonomic benefit for the employees.

Another technology that warehouse managers may want to keep an eye on is lift trucks with hydrogen fuel cells. IndustryWeek recently suggested that “fuel cell-powered lift trucks could enter the market within two to five years.”

However, this likely makes the most sense initially in very large warehouses, as the current cost to install hydrogen fueling stations hinders the reality of the technology.

Resources

Warehouse Management: How to Be a Lean, Mean Cross-Docking Machine
by Maida Napolitano
Logistics Management, Jan. 1, 2007

Automation is proving critical in increasing warehouse productivity, says Aberdeen Group report
by Sarah Bowling
Logistics Management, Dec. 6, 2007

The Warehouse Productivity Benchmark Report
by Beth Enslow and Jeff O’Neill
Aberdeen Group, October 2006

Productivity, one Bite at a Time
by Corinne Kator
Modern Materials Handling, April 1, 2007

Fuel Cells In The Warehouse
by David Blanchard
IndustryWeek, Feb. 1, 2007

RFID And The Search For Perfect Logistics
by John Fontanella
Forbes, April 4, 2007