F. Curtis Barry & Company Blog

As ecommerce, retail, and wholesale companies continue to grow, so do the challenges they face in terms of fulfilling orders. These challenges include investing in warehouse systems, automating processes, managing warehouse space requirements, and staying competitive. 

Fortunately, third-party logistics (3PL) distribution can help address these challenges by outsourcing product fulfillment. We will explore the benefits and advantages of 3PL distribution and how it can help businesses scale.

As inventories pile up, warehousing and inventory management continue to be a significant challenge for businesses.  This environment is continuing to drive up costs and hurting profitability.  We explore the impact of excess inventory on companies and discuss strategies to address this issue. 

For context, according to a recent CNBC Supply Chain Survey, many companies are struggling to manage their warehouse inventories, which are putting pressure on their bottom line. The survey, conducted between March 3-21, involved 90 logistics managers.   Respondents provided insights on current inventory levels, inflationary pressures, and strategies for managing excess inventory.

Current State of Freight and Inventory Positions

Freight companies are experiencing a decrease in demand for their services, and they are dialing back their expectations for a strong recovery in the second half of the year. Economic uncertainty and signs of caution from retailers are contributing to this trend.

The volume of goods moving through supply chains has not met expectations for the beginning of the year, and retail sales figures are causing concern about the direction of the economy. As a result, freight companies are feeling less optimistic than their customers.

Economically, we are certainly in some grey areas, where even the most intelligent economic minds are unsure of what will happen. Most recently, MarketWatch published an opinion piece on the feds ability to execute a soft landing with the economy, and the chances of stagflation. To understand the potential impacts of stagflation on retailers and supply chain models, we first need to understand what stagflation means.

Peak season brings unique supply chain and operational challenges that are not experienced at other times of the year. The need to improve warehouse operations during non-peak times is critical. It can be very difficult to improve order fulfillment during the peak season. However, just because you can’t make changes, it doesn’t mean you shouldn’t be looking for changes to make.

Labor is typically one of the largest distribution expense items, along with freight costs, for most companies. According to Indeed.com, the job employment website, the average base pay for warehouse workers is $16.78 in the U.S. However, when you factor in benefits such as healthcare, training and more – the fully loaded cost balloons to $28.86 per hour. Companies typically have the following costs over and above the base pay:

• Benefits and healthcare: 35% of payroll costs
• Workers comp and unemployment: 8% of payroll costs
• Training: 4% of payroll costs
• Recruitment, hiring and HR: 25% of payroll costs

In today's challenging and competitive world, your success can hinge on whether your warehouse operations are productive and effective enough to meet customer expectations. 

One way to gauge how effectively your warehouse operations meet those expectations is to conduct a warehouse operations assessment. 

A warehouse operations assessment, also known as a fulfillment center audit, is a systematic review of all warehouse functions and possible efficiency and service improvements. Keep in mind, that if you cannot measure something, it is difficult - if not impossible - to improve it. 

One of the most important pieces to managing your operations is to understand how your workers are performing, how costs are trending, and what to do based on what the data is saying. For companies that are just beginning to implement metrics and KPIs, the task can seem daunting. For companies that have utilized benchmarking for quite some time, they might have benchmarking that needs to be reviewed and evaluated. Consider these 10 aspects to improve your internal benchmarking programs.

Many retail and ecommerce companies are feeling more pressure to reduce time in transit to the end customer, pushing the operations to provide options for supporting this. Being closer to the customer in general is a good thing, but for many companies, this can lead to disaster. Because of the complexity, it’s easy to under-estimate the order processing, WMS, and process changes required; recruiting and hiring costs; additional inventory investment and the financial implications.  

It’s not uncommon for businesses to commit to multi-DC, only to have disastrous results which can cost the business significant cash and erode the customer base, or worse, put them out of business. Our objective isn’t to dissuade companies from going multi-DC, but to identify the risks, costs and where companies fail to properly plan and execute.

Operations are under a lot of pressure to continually meet customer demands, as well as to support marketing and merchandising initiatives which often means adding many products, providing value added services to customers, and increasing order volumes. From a warehousing and distribution consultant perspective, we are often asked what the tasks are that the warehouse operations can undertake, that can have the largest impact.