E-Commerce Warehouse Best Practices
The competition is on the rise – and it is time to catch up! Deliveries are getting faster. Offers are getting louder. All of it in a very volatile market. The industry is more fast paced than ever before. Some may find it to be overwhelming. Others may find its challenges to be fun. The rise of e-commerce is one of the leading causes of such rapid change. However may you look at it, there are two primary ways to meet these goals: being data-driving and becoming more responsive.
Strategy after strategy, built up like bricks on each other to win the game. To succeed in the world of Ecommerce, strategies need to more well-defined and forethought. They need to be proactive, not reactive. But there is one little catch – Ecommerce is just starting out. It may seem like a lot has been done but this digital advent is still fairly new. It is yet to find a lot of room to grow. Being more recent, most people are just not aware of the right strategies. It can be hard to keep up with how fast technology is growing. Identifying the tactics that work or the ideas that will fail can seem impossible. But it is not.
To build the perfect roadmap, you first need to figure out needs and wants. The wants of your customers and the needs of your company.
What Customers Want –
- Fast Delivery
- Cost Control
- A Smooth Service
- Great User Experience
- An Easy Return & Refund Policy
What You Need –
- Better Visibility
- Business Scalability
- Higher Throughput
The quality of your service will be based on whether you can give your customers what they want by strategizing for your needs while still making profits. It can seem like a daunting task for ecommerce sites that have been recently set up and looking to scale. But it is not. All of it relies on the framework you build for yourself. And you are in luck!
While strategies need to custom, there are some sure shot practices for your E-Commerce Supply Chain that can help your company scale in full effect.
Below are 20 best practices that work for a variety of E-Commerce Warehouses. You might find your golden ticket in any of these methods – the exact practice that can flip your business around to success. If not, you can always build upon existing ideas to make something new that works for you.
1. Conducting Regular Assessments
At any point in time, you need to assess the state of your goals and the supply chain to build the right strategy. Not only are strategies meant to be unique across firms, but they also tend to change and evolve with time. Every aspect of every operation calls for checking every once in a while. Regular intervals make sure that you are always on top of your game and none of your practices are out of date.
The best way to test is to break down each process and assess them individually. You can also split the entire process into broad groups like:
- Store and Fulfilment Centre Integration
- Receiving and Inventory Management
- Order Fulfilment
- Returns Processing
After you single out each stage, you also need to look into the overall well-being of the supply chain. Other than processes, another crucial aspect to assess is cost. These reviews should aim to answer key problems such as how to –
- Reduce labour costs.
- Lower delivery time and charges.
- Stamp out back orders.
- Store more goods in the current space efficiently.
To make optimal use of this method, you can also make use of statistical data. The right data can give insight into your best and worst practices or identify areas for change. You can use it to create a list of problems faced by your specific warehouse. Or you can set a goal for the entire team to attain that you can measure and see. These tactics can help establish the right workflow, quality check, and develop guidelines on safety and theft. It can also tell you which workers or what area needs training.
What brings assessments to be on top of the list is its ability to act as an “information filter”. You can come across tons of advice on the right thing to do but being aware of your own situation allows you to filter and choose what is best for your facility. It will help you install the right system, set up the correct equipment and get the right labour, in a world of variety and options. It can also tell you when and what areas of business you need to outsource as the work burden changes with time.
2. Owning Multiple Distribution Centres (DCs)
The ecommerce industry is well aware of the standard Amazon has set. People across the world now expect speed, even from small companies. While Amazon makes use of various methods to keep up with the demand, one of the best practices to learn from the giant is to own multiple DCs. Having many centres spread around in a zone is better than having one larger facility shipping to every place.
While you cannot expand at one go, you can use the right strategy to get max profits. The key is to identify where most of your customers come from and set up your centres nearby. Aim to provide faster delivery options to a higher rate of customers. Multiple DCs are an assured way to reduce both – shipping cost and delivery time.
The key areas to investigate when setting up a network of distribution centres are:
- Geographical location of your customers
- Operational costs such as staffing, facilities, and management
- Methods of responsiveness to communicate orders in time
Despite its many benefits, know that the strategy does not work for all. It is known to work best for those who sell either in high volumes or top-seller, niche items.
3. Maximizing Existing Warehouse Space
Capacity issues are a common problem. Believe it or not, the problem of space in a warehouse does not rise from the actual area of your facility. The layout or design play a greater role in better storage space or more efficiency.
To maximize your space efficiently, you can conduct a space study of your facility first. A space study will take into account:
- Warehouse Layout
- Storage Options or Material Handling Methods
- Product Flow
- Labour Efficiency
You can also assign the task to an expert who can do all the heavy lifting for you and propose changes to areas that have potential in your warehouse.
Common go-to methods to increase space include:
- Making use of vertical space.
- Choosing a more space efficient racking design.
- Opting for seasonal storage.
Another way to expand your space is to reduce the width of your aisles. While doing so, you must also leave enough space for humans and machines to move freely. If not, the rate of accidents and damage can go notable up. Or, you can also extend your racks or add half-pallet locations to save space.
4. Automating Tasks
Manual labour is not cheap. On top of that, humans are prone to error. We can only work so long before we need to rest and reset. After a certain point, to make the supply chain process work faster and at low cost, automation is a non-negotiable aspect. The more tasks you seek to automate, the better it gets.
You will still need people to look after it all. But machines can conduct many long, sluggish, and mundane tasks while your staff can focus on other aspects. Today, you can replace almost every manual machine with an automated on. Some machines can work on their own while others may only assist humans in their tasks. Either way, they can take off a huge burden from the staff and you.
You can automate a number of tasks by introducing:
- Drones, that can help with cycle count, security and locating good.
- Robotic Arms, that can pick, pack and place goods.
- Cleaning Robots, that can clean floors round the clock.
- RFID tags or barcode scanners used to swiftly track each item.
Setting up technology that automates should be a high priority or goal. It will boost the speed multi-fold, make the space safer for workers, and reduce costs at high levels. Above all, most machines with smart software and system can collect data with no effort and more accuracy. In turn, it can also assort and present data in visual form that is easy to assess in one go.
5. Installing New Information Systems
These system help collect data, organize the process, and give you a bird’s eye of view of the entire supply chain. High visibility is an asset of great value to managers while data is the basis of all growth and success. No wonder that these systems are the premise of warehousing success and should be high priority.
New Information Systems can include:
- A Warehouse Management System
- An Enterprise Resource Planner
- An Order Management System
- An Inventory Management System
Each system has its own vital role. They aim to make the most out of each resource. The best part is that you need to put in very little time and money to maintain the system if set up correctly. From accessing real-time data to providing insightful analytics – they offer it all.
With such accurate data comes great strategy. A data-driven plan of action is much more likely to succeed. They fail-proof your process and permits you to take swift action when needed. When you invest in data, you pave the optimal path to grow, avoid delays, note redundant processes, and find errors at any stage of supply chain.
Another great way to make use of data is to track major supply chain KPIs. KPIs offer insight into where each process in your facility stands. They help you identify areas of strength and that of weakness. You can then use these paraments to set practical goals that you can measure to attain through actions.
6. Forecasting Demand
The basis of any supply is demand – both of which define the cost of an item. How well you prepare for the next batch of sales can make or break your business. And yet, most ecommerce stores end up with either too much or too little in their inventory.
In a data-driven world run in real-time while competing with some of the best, it is vital to make the most accurate use of your data. If you miscalculate a demand or have any errors in data input will directly result in poor inventory control. Predicting wrongly too many times can even push your company to shut down. Simply put, how well you forecast co-relates to your profits and success in the long run.
All companies must aim to forecast demand if they do not already. If you have a system in place so far, look if you still have any lack or surplus of stock. Noting a seasonal pattern or having a high gap can imply that you need to invest more in the domain. Putting your time and money in the right data or market research can draw in a massive change for the company’s stature and profits.
Other than helping you stock up in the perfect amount, forecasting has other benefits. Two major benefits are:
a. It helps you price your items in an optimal way.
b. You can promote with potent seasonal offers.
7. Mitigating Risks
Not just sales, but companies need to look far ahead in time to prepare for every hazard on the cards. While you cannot be 100% certain of the future, we can still prepare for all that we can predict or know. With that, risk mitigation is another basic element of any strong and long-lasting company.
Risks are broadly classified into two:
a. Known Risks – such as supplier issues, changes in demand, or material scarcity. You can predict and calculate such risks in advance and plan duly.
b. Unknown Risks – such as theft, natural disasters, trade dispute, or a security breach. While you cannot know when they strike, you can put systems in place to cut down their impact.
Both types of risks pose a massive threat and can disrupt the entire supply chain. The prime method to take the edge off of risks is to make use of advanced predictive analytics. These can help you take action in due to time to avoid any form of turmoil, whether from a known or an unknown risk.
To ease it further, try not to rely on one source or method entirely. Opening up to several suppliers and trade partners can avoid your entire process from falling apart if one draws out.
8. Focussing on Visibility
Modern supply chains follow a complex process. There are too many numbers, people and stages that make it lucrative. Sometimes, this can end up being a little too much for a human mind to keep up with. A simple strategy to keep track of every item and take note of any issues is to enhance visibility. Getting it all under a single view to make sense of each unit can make it much more hassle-free.
To avoid letting problems slip by you, proper end-to-end supply chain visibility is a must. This involves every process, product, and person in the facility. With the smart systems of today, getting to this point is much easier than it seems.
There are various software options in the market that can help you schedule, track, and manage. Each built to cater to a specific need or stage of a warehouse. But for visibility, it is important to centralise or integrate and maintain a cloud.
When you invest in a good digital solution, you can access all data in a few clicks. Not only that, but you can also share it with your staff for every member to have high clarity of their domain. If not, you may struggle with ad-hoc, inconsistency, confusion, and find it hard to manage the process.
Constant contact and timely updates are one of the many others such a platform has to offer. Besides, with the help of IoT services, you can also use it to track your stock at every stage in transit and storage.
9. Sourcing from Manufacturers
Middlemen come with their own pros and cons. As a result, doing away with them is not an easy thing to do. When you do it at the right time, in the right way, you would hit a jackpot. If not, you may incur a heavy loss (and not just monetary).
Most wholesalers have a sales force already set up. But it can be much harder for small ecommerce store to directly source items. Since they sell items in bulk, they try to dabble with larger companies that can bring them huge profits. Many-a-times, this act puts away small companies to the side.
Direct sourcing may seem useful for the control it gives you and its low cost. The catch lies in the risks that come with it. There is a greater disparity in what you expect and what they deliver. It can be much harder to estimate the quality of a supplier’s goods, or you may need to conduct more checks to ensure optimum quality.
Before you decide to partner up, it is better to network and get in touch with the industry. Knowing how to deal and check up on the job from the experienced lot can prepare you ahead of time. You can also to transition slowly as you learn rather than directly switching to direct sourcing of stock.
10. Buying in Bulk
The benefits of buying in bulk remain quite obvious, even in our personal lives. Many businesses leverage the benefits of scale when they stock up. It is a well-known thrift way to source goods.
Other than discounts, it is also helpful in cutting down admin and labour costs. When buying in high volumes, you can either set up:
a. Blanket orders, or
b. Standing orders. Blanket Orders have a set price and quantity, but do not tell you when the stock comes in. Standing Orders, on the other hand, define the quantity of stock and their dates over a given period. The former may be more flexible, but the latter relies less on forecasts.
Buying in bulk is a strategy that relies heavily on how accurately you measure and predict demand. If done wrong, it can leave you with too many products that do not sell. Rather than bringing in profits, it turns into high amounts of losses – and gets even worse for products with expiry dates.
There are many methods or ideas that you can employ. In fact, there are endless ways. There is always something more to do. There is always a tweak or change or a new method with time. Some of these extra practices can look like:
1. Keeping strong relationships – with suppliers, staff, and all others you work with.
2. Diversifying your supplies to avoid delays and disruptions.
3. Drop-shipping, which simply skips sourcing on your part but rather relays it to the manufacturer.
4. Going eco-friendly and adopting sustainable methods.
5. Practising end-to-end security, both digital and physical.
6. Using Dock Scheduling Software.
While the list can go on and on, it must stop at some point. A crucial takeaway is to always follow the philosophy of “Continuous Improvement”, or Kaizen. It allows you to seek the changing needs of your business, involve you team, and adapt the right solutions to all your problems.
In addition to that, being constantly active in the community, industry and actively engaging with information will help you stay updated. Forums, blogs, and networking on the internet are great tools to keep up with an industry as dynamic as that of ecommerce. Keeping up with trends while at the same time, keeping in mid the company’s mission and vision in its supply chain aids growth that is timeless and helps form a stable business.