Warehouse & Fulfilment Centre
Difference between warehouses and fulfilment centres
In retail and eCommerce, the traditional concept of warehousing has transformed into what we call today urban fulfilment centres (FCs). Warehouses are still there but the traditional concept has also branched out a hybrid version of itself. These fulfilment centres are trimmed to perfection to achieve the distribution objectives of modern-day eCommerce. While the primary functions of pure warehouses are storage and distribution, fulfilment centres serve as mini-warehouses where eCommerce order fulfilment processes are initiated and goods are made ready for further distribution or last-mile delivery. The role of FCs is to optimize the storage and flow of inventory over long distances and execute the order fulfilment activities of penultimate nature like sorting, packaging, labelling, product mixing, dispatching, handling returns, etc.
Contemporary business models and strategies in retail and eCommerce have played a big role in the emergence of urban fulfilment centres. The word ‘urban’ is often attached to fulfilment centres because these centres are often located in or around urban cities to deliver to urban customers. Another reason for the emphasis is the magnitude and complexity of order fulfilment carried out every day of the week throughout the year to get the orders delivered to customers consistently.
But why choose fulfilment centre?
By using a network of fulfilment centres, eCommerce players or retailers could keep their inventory strategically closer to the markets that help them to shorten the delivery timelines. Shorter delivery timelines give a competitive advantage as customers prefer the earliest possible delivery of their orders as a given default.
Secondly, FCs help in inventory management and keeping costs optimized. These FCs also work as temporary warehouses equipped to handle eCommerce order fulfilment. Online retailers need not store everything everywhere.
Thirdly, FCs let eCommerce players utilize the expertise and resourcefulness of the local logistical partners associated with the nearest fulfilment centre.
Challenges in managing warehouses and fulfilment centres
A service-level agreement (SLA) is a written and binding understanding, usually between a company and its suppliers/vendors, defining the services delivered by the suppliers/vendors/service providers to the company or its customers. These SLAs are a form of binding assurance that the services will be rendered as per the defined standards. In the online channel or eCommerce, retailers and online marketplace platforms are dependent on the services of many suppliers and vendors for outsourced operations. If these SLAs are not well-defined and the operational standards and objectives are not incorporated, it leaves loopholes in how the service providers comprehend the business interests of their clients and how they carry out their operations. Any misunderstanding, understating, or lack of comprehension could lead to inferiority in the services delivered. Such situations have far worse repercussions when the services are delivered to or accessed by the end customers.
Competitiveness and efficiency in delivery function
With product homogeneity, eCommerce companies and retailers in the online channel seek to do their best in services. And delivery has emerged as a fiercely fought competitive aspect for businesses. A delivery promise of a day early or even by a matter of a few hours significantly aids online retailers to secure more orders. In a large market base, this small difference in delivery timeline creates a huge difference in terms of orders acquired. And to be able to fulfil the delivery promises, these fulfilment centres need to get many things right from planning to execution. This list includes strategic locations for FCs, efficient inventory management, space optimization, fail-safe processes and operations, right technologies and business IT systems, highly dependable logistics, etc. All these aspects working together collectively determine the ability of a business to live up to its delivery commitments.
Managing the space
Real estate is an expensive affair and carries long-term financial implications for businesses. Efficient layout planning of warehouses and FCs is critical to ensure strategic and efficient utilization of the available space. This is applicable even if the services of third parties are hired. While renting or hiring warehouses and FCs, understanding layout planning helps businesses choose and specify the customization requirements. Irrespective of whether the warehouses/FCs are rented or owned, layout planning has a bearing on how swiftly, safely, and correctly flow of inventory takes place in these places towards successful order fulfilment. The layout plan of an FC affects its holding capacity, shelf management, zone allocation, safe and smooth movement of inventory and staff, etc. But at the end of the day, the established SOPs for warehouse and fulfilment centres must be developed and followed to ensure that the available space is utilised as per plans.
Managing the flow of inventory
Excess inventory and idle space are two circumstances that put stress on warehouses and FCs. With excess inventory, the space management goes haywire. With unused spaces or empty shelves, the costs of renting or operating a warehouse/FC still have to be incurred. Inventory level optimization is the way to avoid these two extreme situations. This is possible when demand forecasts are accurate, purchase plans and procedures are well-defined, real-time monitoring of inventory levels are taking place, lead time estimations are precise, operations are defined through SOPs, etc. Thus, even after securing a large number of orders, order fulfilment may get hampered if the threshold limits of the warehouses/FCs are breached.
The last-mile delivery can be that squeeze of lemon in the milk which could turn what has been a delightful journey for customers into a poor experience. Everything done so far to deliver a superior customer experience could meet a tragic failure if the last mile delivery fails to live up to the expected standards. Here, the focus should be on employing the right team of delivery associates going through a stringent selection process. If the service is outsourced, the same set of rules must be made applicable to the outsourced agencies when they hire their employees. The second set of requirements is well-defined operations and providing the necessary training to the ground staff.
Identifying the IT requirements
Managing warehouses and fulfilment centres now calls for professional expertise. To be able to define or specify the strategic IT software requirements of a fulfilment centre, one must first have insightful perspectives of the functioning of the contemporary fulfilment centres. With rapid developments in the field of business and technology, the task becomes even more challenging. Business software applications play a big role in managing FC and warehouse operations. The business-IT systems have to be kept in sync with the business and marketing strategies and the rest of the supply chain and distribution operations.
How YRC can help: a glimpse
With over eight years of experience delivering expert consulting services in retail and eCommerce, YRC envisions emerging as one of the best consulting firms in the world. In retail supply chain warehouse consulting and eCommerce fulfilment centre consulting, we offer a multitude of warehouse consulting and fulfilment centre consulting services that help clients hailing from over more than 20 verticals. We deploy an experienced team of warehouse consultants and fulfilment centre consultants to work on our projects.
SOP development is one of our core competencies in retail and eCommerce supply chain management. With SOP design and development, our goal is to make businesses process-oriented enterprises. Our SOP experts work to ensure that the clients’ business processes and operations remain on track with adequate checkpoints to control deviations if any. The operational roadmaps shall be defined for all the activities that are intended to be carried out in the warehouse or the fulfilment centre. These include demand forecasting, purchase and procurement, handling and packaging, logistics and delivery operations, selection of service providers, process audits, etc. Employees will have a clear sight of what they are supposed to be doing and what standards have to be maintained. There will be no scope for shirking of responsibilities and the scope of errors and mistakes shall be brought down to near-zero levels. We design and develop SOPs for warehouse management as well as for the management of fulfilment centres.
The layout plan of a warehouse/FC is an important activity of eCommerce and retail supply chain management. In layout planning, we assist clients in designing an efficient layout plan for their warehouses and FCs. This is directed towards optimizing the use of the available space and achieving smooth and agile inventory and distribution operations throughout the year. Our experts also provide guidance in inventory flow planning to ensure that there is no constraint of space at any given point of time in the routine course of business. Aspects related to safety and movement of people and inventory are also addressed. In ensuring that the layout planning is fruitful, it is important to develop and strictly follow the established Standard Operating Procedures for warehouse and FC.
Last-mile delivery integration
The last-mile delivery is a critical component of the order fulfilment process. Anything gone wrong in the last-mile delivery could jeopardize all the efforts done to provide a superior customer experience. The scope of our consulting in retail and eCommerce supply chain management is not confined to the boundaries of the warehouses or fulfilment centres. We will also work to ensure that you have a reliable last-mile delivery function. YRC’s team of fulfilment centre consultants assist in formulating the last-mile delivery strategy, establishing the SOPs, selecting delivery partners, and logistics process integration.
Businesses need to identify and incorporate the right software platform for managing the operations of their warehouses or fulfilment centres. The software application or the ERP is required to keep records of incoming and outgoing inventory, register and track movement of goods, and share the inventory information with other stakeholders and process owners in inventory, purchase, order fulfilment, and delivery functions. Having the right software application assures that the operations are within the scope of a unified digital ecosystem. Our team of fulfilment centre management consultants help identify the software requirements for managing the information system of warehouses and FCs. We also ensure that the software application stands integrated with the SOPs and the rest of the business processes. But before dealing with the IT and software part, it is important to first develop the Standard Operating Procedures for warehouse and FC.
All the business planning and strategies shall be of little or no use if the right people are not present in the organization and they are not managed properly. We help businesses keep their organizations strong and agile from the core. Our consulting services for warehouses/FCs cover assessing manpower requirements, classifying departments and size of teams, recruitment SOPs, PMS design, training programs, etc. For example, in training consulting, our objective is to ensure the availability of trained staff for your warehouses and fulfilment centres.
Audit for the sake of audit is not sufficient. In process audits, more important than measuring the performance is the ‘how’ of the performance achieved. That approach leads to business process improvement which is critical for any warehouse/FC to improvise its efficiency and effectiveness in its contribution to the business goals and objectives. Our audit goals go beyond tracking the performances of warehouse/FC operations and encompass evaluating the merit of the processes under examination.
We are a boutique retail and eCommerce consulting firm with an experienced team of warehouse consultants and fulfilment centre consultants. To know more about our warehouse consulting and eCommerce fulfilment centre consulting services, drop us a message and we will get back to you.
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