Warehousing is evolving and performance depends on getting the fundamentals right. In this Supply Chain Byte, Lisa Anderson explains what defines smart warehousing today: optimizing pick velocity; leveraging automation, robotics and advanced technologies; and managing energy and electricity demands.
Distributors must differentiate from their competition by providing superior value at a lower cost. Thus, improving efficiencies and performance are of upmost importance. There are three keys to success:
- Pick velocity: One of the most important metrics to track is pick velocity. The reason it is vital is that it enables the improvement of service and performance. For example, a distributor that sells bike parts wouldn’t track revenue shipped as it wouldn’t be representative of the workload. Shipping two bikes at a high value is far different than shipping 1,000 bike parts of low value. Instead, tracking pick velocity by tracking order line items shipped is a preferred metric.
- Automation, AI & advanced technologies: Since customer and operational performance are the key factors of success, the more that can be automated and digitized, the better. For example, a distributor that has repetitive tasks must automate whatever feasible including the use of robotics, utilize artificial intelligence to add the “smart” into smart warehousing, and leverage advanced technologies to optimize inventory, minimize movements, maximize storage etc.
- Energy & electricity: Distribution and logistics require significant energy and electricity, yet it is in low supply. According to a study by Lee & Associates on the West Coast, only 1 in 5 warehouses are set up to handle basic automation from an energy standpoint, 1 in 25 from an advanced technology standpoint, and 1 in 50 from a leading operator’s standpoint.
What should companies do? Focus on being proactive in distribution and warehousing to roll out smart warehousing strategies. Ensure you have smart picking, organization, automation and use of advanced technologies and better manage energy – secure sufficient supply and optimize your use of energy. These factors are critical to improving efficiency, controlling costs and supporting customer service as volumes grow.
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