Five Red (Warehousing and Fulfillment) Flags You Can’t Afford To Ignore

June 12, 2018 by Scott Guilmette

As I write this, we’re approaching another patriotic holiday.  And no I’m not talking about July 4th.

I’m talking about Flag Day on June 14 – and I’m wondering how you’re planning to celebrate.

Red Flags for warehousing and fulfillment problemsActually, I think I probably already know, because although this official holiday has been around since 1916, it’s typically overlooked by almost everyone.        

It’s a fitting parallel for what often takes place in the world of warehousing and fulfillment. 

In short, the typical Ecommerce DC is full of red flags that indicate when companies might be paying too much for their fulfillment.  But regrettably for their bottom lines, these warning signs often wind up being ignored or downplayed.    

Here are just a few notable examples: 

 

Flag One: 

When Your Facility Handles Significant Peaks and Valleys in Order Volume with About the Same Size Staff

 Most Etailers have peak volume periods and slower seasons. If you’re able to handle the peaks without overtime or temp hiring and then manage the slower period with the same headcount, that’s a sign that you may not managing labor costs as effectively as you should be.

Flag Two: 

When Your Warehouse Has Too Many Inactive SKUs 

There’s a big difference between a product that’s a slow mover and one that’s an albatross.  Although your warehousing and fulfillment provider may not charge you extra to house product that’s been in its DC  for longer than six months (unless your provider is Fulfillment By Amazon!), that doesn’t mean these inactive SKUs are not costing you money. Even small storage and related costs can really add up.   Make sure you have a firm understanding of exactly what your inventory carrying costs are for each of the products you sell – and that you know when it makes good financial sense to cut bait and purge your fulfillment center inventory of poor performers. 

Flag Three: 

When a Box is Your Default Packaging Method  

If your product isn’t fragile or your customers don’t require an elaborate unboxing experience, it pays to at least consider the use of alternative forms of packaging such as polybags.  They usually allow your company to reduce the weight of each package while still accommodating and protecting your products – and that could help you significantly reduce shipping costs for programs like the USPS’s Lightweight Parcel Select.  Polybags are also effective for reducing labor and related costs, because bagging machines can easily perform activities like label printing, label application, and package sealing.

Flag Four:   

When You See Many Freight Bills That Say “We Calculated Charges Based On A Dim Weight Of . . .  .”

Depending on how heavy your shipments are, dimensional weight pricing – AKA dim weight pricing – can be a serious profit killer, because it means your company is getting charged for what your carriers think your packages should weigh rather than what they actually weigh – an arrangement that usually benefits parcel carriers.  To combat dim weight pricing, make sure your boxes are right-sized and work with a warehousing and fulfillment specialist that can advise you on how to reduce parcel costs

Flag Five: 

When Vendors Control Your Inbound Shipments

It’s easy to understand why so many eTailers allow their suppliers to handle the particulars of getting goods shipped to their warehousing and fulfillment centers.  After all, it’s just one less thing to worry about – and inbound transportation costs aren’t really that significant in the grand scheme of things, right?  Wrong. Unless you’re vigilant, your suppliers are probably going to pack your items in a way that makes sense for them, not for your company – and that can often create unnecessary work and additional expense.

That was definitely the case with a marketer of liquid products, whose suppliers routinely shipped to the company’s fulfillment centers in plastic bags.  Because those bags leaked, personnel at the fulfillment centers spent countless extra hours opening up each bag, wiping the products down and screwing the caps back on each item, which added significant labor costs.  Today, on the advice of its fulfillment provider, that company has circled back with its suppliers and insisted they deliver product in watertight boxes instead, which has resulted in a much more streamlined and cost-effective receiving process. 

Why Not Consider Flagging Us Down?

One last quick thought:  If your company is ready to take a holiday from these and other potentially unnecessary expenses, it may be time to introduce some analytical tools, consultants or third-party warehousing and fulfillment providers that can help.

Along those lines, I invite you to contact Amware.  We’d be happy to discuss some ways we can improve your fulfillment performance while reducing your fulfillment spend.

Meanwhile, here’s hoping none of us forgets to celebrate Flag Day this year.

Filed Under: eCommerce Fulfillment