CEOs of companies that ship $10 MM to $200MM/year can cut costs 50%.
The first step is for every CEO to see current WM costs!
1) Cut labor costs by ending our old paper pick ticket.
If you pick by paper then you also probably pick in order. That alone increases your warehouse labor up to 100%!
Example: To fill an order for one cup, one pen, and one stapler your picker picks one cup, one pen, and one stapler instead of picking all the pens for all the orders simultaneously and then associating them with orders at the shipping station.
2) My error rate is ____% and my true cost of pick/ship errors $______/yr.
- Errors costs you a return freight charge of $ ____ plus and a re-ship of $ ____.
- 5% to 15% of customers who return goods terminate their patronage. If your 5-year profit per customer is $1,000 then a 2% return on every 100,000 shipments is a loss of $100,000 to $300,000.
- If 50% of your returns are in non-sellable condition, then add that to your cost.
- Returns in re-sellable condition incur packaging and refurbishment costs.
Note An effective WMS cuts your error rate 90%, to less than .1% of total shipments.
3) My best picker makes ___ picks per shift. My worst picker makes ___ picks per shift.
You track performance of sales productivity – why neglect warehouse productivity? The right WMS reduces “supervisor costs” and automatically directs warehouse personnel to perform the optimally productive tasks in the most efficient sequence. Reports detail individual employee output and provide multiple confirmation points to catch errors.
4) My training costs per new warehouse worker is $ __________ .
Instead of multiple hour’s wages of worker and supervisor , your standard should be less than one hour’s wages of the employee hired. This is achievable with a good WMS that instructs on every task from the screen of an RF handheld barcode scanner. If you have seasonal businesses, this is essential for reducing costs.
5) My costs for software/shipping solutions like Ship Station is $ _____/yr.
You can stop paying monthly fees for shipping solutions like Ship Station if you have a good WMS directly integrated with your shipping partners.
6) My ratio of B2C vs. B2B inventory and sales is ____% / ____%.
The CEO who sees and knows monthly B2C vs. B2B shipments has control over both types of inventory costs. Without a good WMS, the carrying cost of your inventory might be 50% higher than necessary.
7) Right now it takes us _______ hours from receipt of order to shipment.
Your standard is to ship every order on the day received. Without a good WMS, you move at a snail’s pace (if it’s more than 3 days, the snail is dead). A best-of-class WMS allows pre-manifesting so that tracking numbers can be sent to customers when items are picked. Customer cancellation of orders decreases dramatically once a tracking number is provided to the customer. Lost time = Lost revenue.
The more you know, the more you grow. CEO’s who welcome objective expertise in benchmarking current costs can see large profits from small changes. You can tell your board you see, understand, and control WM costs better than ever and have more profit to fuel growth. Contact DCI if you welcome the input of experts (888) 395-0809.