As businesses are remodelling their supply chains, analyses of warehousing and distribution operations are bringing to light areas for improvement. Archival Garcia, Vice President of Sales at Microlistics, sits down with MHD to discuss where businesses are losing out, and how enhanced visibility is key to success.
When COVID-19 hit in early 2020, businesses had to suddenly transform their operations to survive. “COVID-19 hit businesses overnight, and great retail stores had to shift into fulfilment centres,” Archival Garcia, Vice President of Sales at Microlistics, tells MHD. “We had to turn sites around with our WMS technology in only three months. Our retail customer base has more than doubled in the last two years, growing more than it has in the past 25 years.”
With the unexpected shift in operations, businesses were forced to analyse their warehousing and distribution processes in record time, says Archival. As a result, business leaders saw where they were losing out in productivity and profitability and had to consider solutions to these now visible problems.
Archival says the key for these managers to maximise profitability is enhancing their visibility on the warehouse floor. “It means understanding elements in the warehouse – in particular the inventory, the tasks and the labour – and understanding in real time what is on hand at any given moment to be able to provide accurate fulfilment options to the customer,” he says. “With all the growth in e-commerce, businesses have to be able to service those complex flows, and we can’t do that without understanding what we have and how we’re getting it there.”
According to Archival, this enhanced visibility in the supply chain is key. “Businesses need to understand how fast they can go and how efficient they can be,” he says. “The other big aspect is accuracy – that they’re picking the right product for the right order at the right time, all the time.” Archival offers this list of areas businesses can focus on to improve their operations, and how Microlistics can help.
“Many people don’t know that in this region most businesses are now online, yet many are servicing online orders using the same workflows as their store fulfilment,” Archival says. “The problem with the pandemic when it hit is when all the stores closed, businesses had to send items to each customer individually.” When this happened, Archival says it became apparent that many businesses didn’t have a clear idea of what costs were involved in handling products and delivering the last mile. He notes companies thought they were making a large profit margin when they were selling high numbers of a product online, but failed to account for labour, speed and cost margins. “They didn’t have the visibility of how much time or costs were involved with picking an order,” he says. “What we do is offer that visibility, that this is how long it actually takes to fulfil an order for a type of unit, and this is how much it will cost you.” Archival refers to Microlistics WMS and the real-time data it portrays on dashboard screens. “It supports every task, so every task is time and date stamped so you get a real understanding of when the task was released, picked and finished,” he says.
The system displays real-time inventory levels, broken down into fastest and slowest moving goods, to understand each individual warehouses’ needs. “The fast bit is really critical, because if you have fast moving inventory in a warehouse location that’s hard to reach, you’re already playing catch up and can’t get the most out of your system and marry it up to what you have practically,” he says.
The most expensive aspect of warehouse operations after real estate is labour, Archival says, and its important businesses have full visibility on these costs.
“Labour costs in Australia are extremely high compared to a lot of other places, which means it’s imperative to get workers to reduce non-direct warehouse tasks as much as possible,” he says. “Businesses need to ensure that whatever their labour resources are doing is always related to getting product in, storing it, and getting it out.” The Microlistics WMS provides both inbound and outbound data, both currently and historically over the past few weeks, months and years. “You’re able to create your own KPIs to see how you and your workers are doing and can even place them side by side to create healthy competition,” he says.
The outbound system is especially designed for incentivising labour. “The system sees all the product and where it is, so you’re able to bundle tasks together to improve productivity,” Archival says. “You can incentivise by seeing data around who’s picking more, who’s picking better and more accurately since you have real metrics.”
The dashboards provide the ability to have the data presented in an easy-to-read format, rather than hidden away in a spreadsheet or in a system. “Now you can get a real understanding of who your best workers are by taking the subjectivity out of performance evaluation since everyone is treated equally and fairly,” he says. “When you measure a person, you can measure how much of their working time is productive, and how to maximise it.”
Another key area that benefits from enhanced visibility is inefficient processes within warehouses. Archival says it’s most important that managers have the flexibility to understand certain scenarios. “In the past, businesses would try to fulfil orders in full to save on transport and send it out, but with the minimal shipments and lack of container availability due to COVID-19 there’s a lot more movement to just pick what you can bill for it and get it out the door,” he says.
When other orders start being treated as back orders, that’s when he says businesses can get themselves into hot water. “If you don’t have that visibility, you’ll be shocked by how difficult it is to reconcile and see what’s left and what processes you need to follow. If you treat normal orders the same way you treat back orders, then you’re already behind the eight-ball.” By implementing WMS dashboard technology, Archival says businesses are able to understand what they are able to do to begin with, how they’re performing with the current strategy and how future strategy adjustments will impact their operations either positively or negatively. “As a WMS provider we’ve got the efficiencies of the operations down pat, so the next level of advancement is to have visibility of what’s happening and how any of these affect your business, such as workforce planning and strategy,” Archival says.
When businesses fail to accurately charge clients, it becomes a cost to the business itself, Archival says. “If these costs are higher than they thought, it becomes a loss for the business.” If 12 single line orders come through, and a warehouse worker spends their time individually selecting each item, packaging it and sending it off one by one, they’re wasting 12 fold the amount of time. Archival says in this instance, time equals money. “If the worker is able to bundle that task and pick all 12 items at the same time, perhaps pre-print the labels and stick them on as they’re packing the product, that becomes a lot more efficient,” he says. “The key is for us to be able to provide those metrics. How businesses operate is always changing, so giving visibility and showing why we are taking so much time to complete these orders and why it’s costing so much is imperative to maximising profitability.” Providing enhanced visibility allows businesses to see what changes mean for their operations, and how to respond in kind to keep up with them. Archival points out that Microlistics WMS offers a billing module which captures every single activity that occurs on the warehouse floor. Each activity is automatically rated to fully understand recover actual cost.
“The current business environment is really dynamic. Any big changes or anything that goes wrong, the whole warehouse feels it,” Archival says. For this reason, implementing enhanced visibility is the key to future success. As businesses shift to omnichannel and e-commerce delivery, diversify into new product types and onboard new customers, the need for visibility will only grow, according to Archival. “Those factors are instant gratification, so if you miss a timeframe, a service level or an order, there’s a bigger connotation for a brand for that,” he says. “It’s driven by the fact that what you think you know might not necessarily be true, and that this is how fast you’re actually going.” He says the data itself isn’t what’s important – it’s how its presented in a meaningful way to focus on accuracy and productivity. “Our metrics will tell you what’s actually happening, and without that visibility, you’re blind.”
For more information on Microlistics, click here.