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COVER STORY
whwytriright 32 Controlling and Reducing Fulfi llment Costs
Managing the Work Force
seriously. Use team building to take your organization to a
new level and improve productivity. You can communicate
Develop labor budgets. Have a labor budget by season, your vision and your plans, while involving the team in the
month and week based on order forecasts and planned pro- planning and decisions. Set goals and objectives to main-
ductivity. Th is is the tool to use to determine your detailed tain the corporate vision and hold your management team
staffi ng plan, hiring and training plan and seasonal hiring. accountable in achieving the vision. Do eff ective personnel
Take a good look at your current staffi ng ratio. Full time, evaluations that tie in productivity and goals.
if not kept productive, may be costly. Change the mix of full
time, part-time and fl ex-time staff . Consider diff erent shift
Transportation
structures and schedules to match regular labor to the volume
(3 12-hour or 4 10-hour shift s, or split weeks).
Management
Controlling inbound and outbound freight costs can make
Manage the labor force. Labor is the largest controllable
the diff erence between profi t and loss for your business.
expense item in your DC. Capture regular and premium
hours and labor dollars. Set these daily against volumes (e.g.
Inbound freight. Represents two to four percent of gross
orders, lines, etc.). Include history as a cumulative report by
sales for domestic product and six to 12 percent of imported
month, week and day, and measure your continual improve-
product. Freight consortiums like DM Transportation have
ment internally against yourself. Th is history helps with your
lowered some of our clients’ inbound costs by 15 to 24 per-
budgeting next season. Look for ways to improve picking
cent. Equally important are the vendor compliance and
and packing as about 50% of the labor dollars are in these
inbound in transit visibility that shippers can provide so
two areas.
that you can schedule receipts, plan labor, and alert buyers
and, ultimately, the customer to product availability. Your
Hiring, retention and att rition (turnover). Review the rea-
company, not the vendor, should control the routing and
sons att rition is so high and work to close the gap. Review your
carriers for inbound receipts.
hiring, retention and training practices. How well are you able
to staff for the peaks? Consider some type of incentives for
Outbound freight. Can represent six to eight percent of the
keeping good people. Spend more time in the hiring process
average order. Customers are becoming more sensitive to the
explaining the job and your expectations. Don’t underesti-
cost of shipping in their purchasing decisions. Expedited car-
mate the need for adequate training; consider cross-training
rier plans have 90 plus accessorial charges, which continually
in jobs where it makes sense. Use your staff to provide leads
increase the shipping costs. Continually look at renegotiating
for new hires. Stay in touch with past seasonal help and off er
contracts. Use USPS and zone skipping where tracking and
them incentives to return.
slower delivery will be acceptable. Use a qualifi ed consultant
to negotiate contracts.
Using an agency for peaks. If you just can’t staff for the peak,
seek out a good temporary agency. How can this bring more
fl exibility to your operation? Th e trade off s are overstaffi ng
Best Practices and
or overtime.
Process Improvement
Scheduling. Take advantage of off -shift functions such
Use what you have more productively. Th is is a mantra
as primary pick slot replenishment, staggering start times
in fulfi llment today. By not taking care of the basics of ful-
by functions (picking and packing), multiple shift s, and
fi llment, you are adding costs to the warehouse operation.
doing your slot moves at night. Bett er utilization of space
Increasing current capacity and utilizing that capacity more
means less congestion, and improves labor effi ciency and
eff ectively are key objectives. Do the basics well before you
MHE utilization.
consider more sophisticated systems and methods. Get as
Tea m bu i ld i ng. Successful organizations take team building
much productivity as possible out of the existing layout,
Continued On 36 whwytriright
34 May 2009
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