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CCoontrolllingling
andd R Reducingg
FFuulfi llmllment CCoosstts
By Curt Barry
W
E ALL know we’re in a toughh bub siness clili- the center, reduce inbound and outbound freight costs, and
mate. With many companies coming out of improve service levels and turnaround times.
less than perfect fall and holiday seasons, there Because they represent the largest expenditures, the
is an urgent need to increase productivity and reduce costs areas of greatest potential savings are:
without having to make major capital purchases to do so.
Direct labor Indirect labor
Here are fi ve major areas and 25 ways to reduce your cost
Outbound freight Inbound freight
per order, increase capacity without expansion, and improve
service levels in warehouse and fulfi llment. Th e source of this
Occupancy Packing materials
information is experience gained in our consulting work with
multichannel companies, as well as from the F. Curtis Barry
Benchmarking
& Company Benchmarking and Best Practice ShareGroups
A program to set up internal benchmarks will reduce your
for Fulfi llment.
cost per order or hold the cost in line as volumes increase.
Perform an
Translate these as goals down to department and individual
work standards.
Operational Audit
Th e table, Total Warehouse Cost Per Order on page 32,
An operational audit is a starting point. Operational assess-
shows 20 direct companies back end fulfi llment expenses
ments should identify your needs, and help recognize poten-
including direct and indirect labor, occupancy and packing
tial improvements to process, layout and use of space, staff
materials. Total Warehouse Cost Per Order column does
productivity, systems and freight analysis. Th e objectives are
not include shipping costs nor does it include any off set for
to lower the cost per order, increase storage capacity within
shipping and processing revenue. Th e reason for excluding
Continued On 32 whwytriright
30 May 2009
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