Before you consider outsourcing your warehouse pick and packing to another company you first need to determine what you are hoping to achieve. In general, there are a few reasons why you may want another company to do your warehousing activities:
Depending on your existing costs and order picking performance, you may or may not improve by outsourcing, so first it is critical to gather data. At a very minimum you need to be determining your existing:
The next step is straight forward. Begin contacting 3PLs and discuss their numbers. When searching for a 3PL you can speak with the big players, although you shouldn’t rule out a smaller operation. One client ScanSKU worked with, approached their freight forwarder to do their pick/packing. They had noticed their freight forwarder had spare warehouse space and idle labour (when a delivery was not being unloaded). In this case the company had to spend more time with the 3PL setting processes and expectations, although as they were a smaller 3PL, they were much more accommodating and flexible then a big player would have been.
Once you’ve identified a short list of 3PLs, key metrics you want from them include:
In doing a comparison it’s not just about costs and performance, also enquire what reporting they can provide you. Can they send reports such as frequent inventory reports, real time order status updates? Do they charge extra for any of these services?
There are some other key factors you mustn’t overlook when assessing outsourcing your pick/packing. Some of the big ones include:
Overall, outsourcing your eCommerce businesses’ pick and pack warehousing can be a great idea. There are cost savings, potential order picking accuracy improvements and the opportunity to shift some of your business risk out of your company. By far the biggest advantage to outsourcing your pick/packing, is having your own people focus on value add activities, leaving the monotonous pick packing to a company who specialize in it.
ScanSKU develops and manufactures held-held Android Based Barcode Hardware Solutions. ScanSKU partners with app and software developers in Inventory, POS, Asset Management and Mobile Invoicing Industries, to ensure the customer can begin using the solution right out of the box.
]]>Kitting or Bundling is the warehouse management term for grouping of more than one item together into a saleable unit. A fitting example is, you may sell a shower head and a shower arm together. The head and arm are 2 separate products in your system and the customer can order then separately, or they can order them together as a kit.
Selling the 2 SKUs as a ‘kit’ makes it easier for the customer to find the item and decide to buy it as they don’t have to go searching through your website or catalogue to the compatible components. Some items also must to be sold as a kit, for them to function. Another common time a kit is required is by large retail stores. They may be purchasing multiple SKUs from you, packaging them together and selling them as a kit. When they want to re-order stock from you, they may prefer to order the ‘kit’ from you, not calculate how much of each component they require.
Setting up kits and assigning barcodes ensures your inventory is accurate as it is very easy to become confused when working with suppliers/customers in particular with you have product returns and customer exchanging components of a kit.
Handling kitting/bundling is critical to managing your inventory although it is fairly simple. Each SKU/component in the KIT has its own unique barcode. In best practice, this should be printed on the SKU. This barcode does not need to be a registered UPC or EAN, you can make up your own barcode. In the example of the shower head and arm the barcodes are as follows.
Both these SKU Numbers are entered into your inventory system and you maintain the inventory for both SKUs separately.
The next step is to create a ‘virtual’ barcode for the Kit. In this example, we have created the Barcode: MLS-KIT-004
This Virtual SKU is also entered into your Inventory system. This SKU then needs to be linked to the 2 SKUs it’s made up of. This ensure when a customer orders a Kit, the inventory for both components is adjusted to reflect the stock sold. It also ensures when one of the components sells out, the kit is no longer available to the customer. *Almost all inventory systems are capable of handling kitting, if you need a recommendation, please contact us.
About ScanSKU
ScanSKU develops and manufactures held-held Android Based Barcode Hardware Solutions. ScanSKU partners with app and software developers in Inventory, POS, Asset Management and Mobile Invoicing Industries, to ensure the the customer can begin using the solution right out of the box.
]]>Determining the locations of your SKUs in your warehouse (known as slotting) used to be an easy concept. In the new world of warehousing focusing exclusively to a large degree on eCommerce sales, this is no longer so simple. eCommerce sales in the US grew to over $348.9 billion last year and it is not expected to slow down. As a result, today’s method of slotting your warehouse needs to grow and adapt as well.
Slotting had the potential to become complex depending on your SKU type, although generally you would identify your top selling SKUs and rank right down to your slowest moving. The second main step was to plot out your warehouse and determining the size of each storage location and distance to your dispatch area. Using this information, you would then slot your fastest moving items in the closest location to where your pickers started their picks from, second fasted item in next closed location and so on.
The old method has now becoming more difficult for a number reasons such as
Now that we understand the challenge what is the solution? The main underlying factor here is data.
Issue:
Frequently changing SKUs and many orders with small order sizes
Solution:
Data accuracy is critical. You can no longer just slot every 6 months using the previous 6 months were of data. You don’t need to invest in a slotting tool either. Set up spreadsheets, tracking demand for your products on a weekly basis. Most cloud inventory management systems will be able to pull this data quite easily. Compare this weekly demand tracker to the locations they’re currently stored in with a ‘distance to dispatch’ field. You don’t also need to re-slot products weekly, but keep on eye on this report and if it’s clear a product is no longer a top seller, yet sits in the prime warehouse location, it will be worth considering moving it. This is best done when stock levels for that product are low, right before replenishment.
The second challenge to overcome is new SKUs being added to your range more frequently. You will not always know the demand of the new SKUs which makes this tricky. Best practice is to base the demand on comparable products your stock. Then slot the SKU is a location based on that demand. Monitor it closely over the first 2 months and don’t be afraid to re-locate the SKU is it no longer makes sense to have it in that location. Tracking demand weekly will help with this.
Issue:
Add on services such as gift wrapping and kitting (packing different products together, to be sold as one)
Solution:
This requires a re-think on there your ‘prime’ locations are. If certain products are often sold as a ‘kit’ then it would make more sense to locate these close to your work area where kits are assembled. This may not necessarily be in your dispatch area. The result is you may have multiple ‘prime’ locations depending on the SKU. Again, this can be captured and identified in spreadsheet easily.
Anthony Thai is the Operations Manager for ScanSKU. ScanSKU develops and manufactures held-held Android Based Barcode Hardware Solutions. ScanSKU partners with app and software developers in Inventory, POS, Asset Management and Mobile Invoicing Industries, to ensure the customer can begin using the solution right out of the box.
]]>