Many companies struggles with increased costs in warehouse logistics because of e-commerce and omni-channel. One of the first thing many companies do is looking at some kind of technical solution to warehouse logistics. For example automation or maybe a voice-pick solution in order to increase efficiency and lower costs. What they do is focusing on the symptoms not the real cause of inefficiency.
One thing I often notice is, we are stuck in our “box”. We see our challenges and try to solve them without questioning why this process is a part of the flow. We only accept the current state and try to find an in-house solution. But actually, often the best solution is outside your organization. It can be something for a supplier or maybe the sales organization to do in order to make the flow smoother.
For example, inbound receive a pallet with goods. The first process is to pick everything up then label the goods. Then put it back in the pallet, and then stock it. That is certainly not lean! Have someone in purchasing contacted the supplier and asked if they can label in the same process as pack? If you have several suppliers of a product but with different part numbers, there is WMS who can handle multi part numbers for the same product. In that way, you do not need to relabel. This is why it is so important to work cross-functional. There is time to save and time is money!
The same with outbound. If there is sales campaigns the sales organization need to communicate, when the campaign is beginning and what products is included so you can prepare picking areas with whole pallets and the right packaging material and so on. It is all about communication, understanding and respect!
The senior management need to understand the benefits of a cross-functional organization and build a culture where all departments have respect and understanding for each other. The bottom line in budget counts, not only each departments individual performance. You need regular meetings with all departments included where you discuss potential projects in order to increase efficiency, quality and service that is dependent of cross-functional collaboration.
What I have described above is silos and that is one of the most common sub-optimization issues in many companies. Sales department make their decisions and purchasing make their without looking at consequences in the middle of supply chain, the warehouse.
However, in order to remove silos and build a culture where all the employees understand that the bottom line is the only thing that counts. Your senior management need to start the journey of change and remove department bonuses that prevents collaboration and honors sub-optimization. That is actually common in many companies. Purchasing and Sales have bonuses that build stock in warehouse. Often too many sales campaigns that increases warehouse costs so much there is almost no margin left.
Time is money in the logistics and if you can save time, you increase the margin and make your company more competitive. That is why supply chain is in focus right now and many companies is willing to invest so much in warehouse logistics, it is the most important margin enhancer. With cross-functional organizations, you can take the logistics to the next level.