SUPPLY CHAIN SMARTS: Can’t keep up with e-commerce?

by John O'Kelly
John O’Kelly is the founder and CEO of
Newcastle Systems.

E-commerce is no longer the future, it’s the present. The rise of e-commerce and its front man, Amazon, has revolutionized the way we buy and consume goods. In a recent poll conducted by U.S. public broadcaster NPR almost 66 per cent of Americans admit they’ve bought on Amazon. Who would have thought 10 years ago, we’d be buying our groceries and purchasing (and returning) clothes without leaving our home?

E-commerce may make consumers’ lives easier but puts great strain on DC operations. With the increased demand for consumer goods conveniently delivered in a day or two, consumers might think DCs have increased operations to meet demand.

I mean, we have robots, and high-tech gadgets flying all over the warehouse, don’t we? Well, no. While robotics and futuristic technology are advancing, we’re still a long way from full implementation for most DCs. In 2019, a human workforce will be more important to DC operations to meet consumer demand.

It’s about maximizing the labour force on hand to increase efficiencies. Efficiency gains will result in improved speed and accuracy, and the reduction of picking errors and mislabeling. Given the demand, and competitiveness of the industry, every efficiency gained is a leg-up on competition.

Here are four ways to improve efficiency within your DC in 2019:

1 Invest in your workforce – Unfortunately, the rise of e-commerce has coincided with an industry labour shortage. This puts extra strain on DCs to remain efficient, while managing through constant turnover. The more DCs can do to retain and recruit talent, the more efficient and productive they’ll become.

Improving in this area in 2019 starts by investing in company culture – show workers there is room for growth and they have a voice through mentorship and training programs, emphasize safety practices, and re-think performance incentives and wage structure. Investments up front with labour will go a long way to running a smooth and efficient DC in 2019.

In addition, reducing the physical stress on employees will help reduce turnover. DC operations are tough jobs featuring primarily manual labour. DC managers need to be strategic in how they are using their labour force and equip employees properly.

2 Reduce Steps – It’s estimated that each step a warehouse associate takes costs the company three to four cents. If each DC worker wastes just eight minutes each hour performing “wasted motion tasks”, that adds up to 6.9 weeks per year per person. There are nearly one million workers in DCs across the U.S., with an average pay of US$16 an hour working 40 hours per week – that’s wasting roughly $4.24 billion per year and roughly $16.3 million per day.

3 Go paperless – Nothing cuts into efficiency in 2019 more than paper. It’s an unnecessary supply and wastes space and time. Paperless practices such as mobile applications, RF-scanning paperless picking, and MES and ERP software add a major level of efficiency and accuracy to DC operations. Printing paper not only wastes time, it also wastes steps as oftentimes workers need to walk back and forth from one fixed printer to the next. One goal for a forward-thinking DC manager in 2019 should be to reduce the amount of paper used.

4 Prioritize quality assurance – Quality Assurance (QA) is a set of activities for ensuring quality in the processes by which products are developed. This differs from Quality Control but is vital in adding efficiencies in DC operations. QA is a proactive process that reduces defects in the DC. Investing up front in QA in 2019 will add a level of efficiency and give DCs a leg up on process and speed.

DCs should take time to plan what they want to accomplish with their QA process, and clearly define standards and set goals with Key Performance Indicators in an effort to measure the results they’re aiming to achieve. Eliminating errors before they arise through QA implementation will be a major efficiency gain for any DC, a strong QA process completes this.

Next year will be even more competitive for the DC market than the year before. While full robotics and automation are exciting and flashy, DC managers cannot underestimate the impact their human labour can make on operations. A goal in 2019 for all DCs should be to equip their staff with the necessary tools and support to increase efficiency and accuracy. Investing and supporting labour is a great place to start.