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Top 5 Distribution Center Management Tips

Posted: May 22, 2019 by Ly Phan

Top 5 Distribution Center Management Tips

Driven by the growth of a multi-trillion dollar e-commerce industry, the number of distribution centers and warehouses around the world has climbed steadily over the past decade. In the United States alone, there were more than 17,000 warehouses in 2017. To serve the ever competitive world of online retail, distribution center management has emerged as a critical factor between success and failure.

The number of warehouses and distribution centers in North America have enjoyed steady growth on the back of the online retail boom.

The small margins in retail means every saving counts, and distribution centers can serve as a critical cog in the e-commerce machine. Amazon, for example, has more than 100 warehouses across North America to support its extensive logistics network. Additionally, between 25-30% of the total warehouse space on the continent is dedicated to online retail. Whether your market is online retail fulfillment or wholesale distribution, efficient management of the processes involved is essential.

With this in mind, we’ve put together the top tips for distribution center management:

 

1. Be Organized

The first step in setting up a warehouse distribution center is to be organized. The idea is to ensure all the items can flow through seamlessly, with operators being able to find particular products quickly and easily. One element to consider, for example, is to have the most requested items close to the packing areas. The categorization of items is another must. For instance, if you are distributing auto engine parts, then it’s essential to send the right part to the right place.

From an e-commerce perspective, you need to consider the high rate of product returns, which stands at around 30% - the rate in traditional retail is under 9%. Planning ahead on how to deal with this will save the headache and additional costs in the long run. Having a special system in place to handle such items will provide reassurance to your retail clients or when you are pitching for new business.

 

2. Embrace Technology

In today’s digital age, there’s a host of solutions that can enable you to run a distribution center more efficiently. The key to managing inventory at any stage in the supply chain is visibility, and being able to access information easily.

Wholesale distribution software provides this solution, automating the various warehouse business processes and giving distributors real-time visibility and inventory control. The software uses a number tracking system to follow products around the warehouse and through the supply chain. The information then feeds back to a dashboard where operators can see all the data they need.

Using technology will lead you to better predict and manage product levels throughout the year, where you can prepare for peak times such as holiday seasons. Taking a proactive approach with the software will help streamline your processes, boost profit margins, and deliver a better service.

As one of SmartTurn’s clients, Frozen Gourmet, discovered:

“With SmartTurn, we have fewer stockouts. I know what I have coming and how to prepare for spikes in demand, such as the big holiday ads.”

As a result of this increased accuracy, the business was able to enjoy double-digit growth because the platform enabled it to deliver a more efficient service for its clients.

 

3. Focus on Key Metrics

Technology is only as useful as the user makes it. With the amount of data increasing year on year, it can prove overwhelming to attempt to process it all. The solution is simple: Focus on the key metrics that a distribution business depends on. They are as followed:

  1. Shipping: This is essentially asking what percentage of deliveries get to the right location, on time.
  2. Order fulfillment: Whether it’s wholesale or retail, you need to track the accuracy of those deliveries. In theory, it should be relatively easy to ensure the order is fulfilled but pressure can lead to human error with too few or too many items being delivered.
  3. Cycle times: This is a measurement of the time it takes for a product to arrive at a center before being shipped out again.
  4. Put away/receiving: Diving deep into the flow of your warehouse, this measures how long it takes for employees to put the items away in the right location and to find it again.
  5. Damaged goods: When you’re handling thousands, or even millions, of items a year, it’s almost inevitable some products will get damaged. Staying on top of the percentage will help you keep it under control.

With each of these performance metrics, the aim is to run a smooth and efficient operation. There should be an unerring focus on accuracy and minimal loss or damage.

 

4. Ensure Staff Buy-In

Warehouse workers are becoming increasingly tech savvy

One of the benefits of using distribution center software from reputable providers is they tend to be relatively easy to use. However, it’s vital to ensure your staff has the appropriate training in order to maximize productivity. The implementation of the software should also be a two-way process.

Your employees are the ones who work on the warehouse floor day in, day out. So it’s likely they will have a good idea of how to improve efficiency and identify areas where software can prove useful. Taking this collaborative approach will lead to operators embracing technology and generate results.

 

5. Enable Visibility and Transparency

The value of real-time visibility is the ability for operators and other stakeholders to know exactly how many products there are and where they are located. Having this level of transparency not only reassures clients but also pushes your team to improve. By continually monitoring the different processes, you can quickly identify any issues or areas of weakness in the management of the distribution center.

Finding those weaknesses and fixing them can make a huge difference to your business. It can lead to greater accuracy, improved cost control, and better profit margins. By improving the level of performance, you will be creating the conditions for business growth.

 

Conclusion

The future is bright for the distribution industry, with experts from PWC identifying warehouses and fulfillment centers as the two best investments you can make in the property. The key is to embrace technology and organize your distribution strategy.

The overall aim to distribution center management is to come up with a streamlined set of processes that your warehouse operators can easily follow. One of the best ways of achieving this is by using software to facilitate and support your team.

The important aspect of wholesale distribution management software is real-time visibility. Making information easily accessible to stakeholders leads to quicker processes and improved accuracy. With a fully trained team, you can utilize technology to work smarter and more efficiently.

In order to fully tap into the potential a software-based solution, the warehouse needs to be well organized with a carefully designed layout. The layout should be set with the products and clients in mind. Consider the peak periods and whether you have the inventory to match demand.

With a distribution management system in place, you will have the opportunity to access an unprecedented amount of data. Therefore, it’s essential to focus on the metrics that show the underlying performance, like accuracy and delivery times. By taking the proactive approach, the opportunity to boost profits and grow your business is within reach.

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