By Liam Smith
It is easy for the big players, as they have all the logistics in the world. Big businesses mostly own warehouses they use so they don’t have to pay rent and don’t they have to hire other companies to handle the transport and distribution of their products. Things get complicated with small businesses as they struggle to maintain their supply chain and distribution. Furthermore, there is the issue of storage and warehouse management, as most often they have to outsource these services. However, there are a few tips that can help entrepreneurs better handle warehousing and distribution based on several factors.
Do you require a turnkey solution?
Provided you already have an up and running warehousing solution, improving your business can basically go in two directions. Firstly, you have the option to improve only part of the shipping and storage process, such as automatization or digitalization. Perhaps you need automated platforms that will use bar codes to speed things up and decrease the chances of getting the orders wrong.
Secondly, you might be dissatisfied with the whole distribution chain and you really desire a total overhaul. In this case, you are going to have to find a turnkey solution that will handle every aspect of transport, from ordering procedures, shipping, housing, and all the way to the end-user delivery. Of course, this option is more costly but it guarantees that every aspect of your small business supply chain will be modern in terms of technology and procedures.
Dealing with thy type of packaging
It might seem that packaging does not play a major role in total shipping costs but in fact, this is an important segment of your business. If you don’0t believe us, just ask the end-users who injure themselves opening them. In fact, it is estimated that as much as 60000 customers get injured each year trying to pry open the packages. Apart from safety, you need to reexamine what type of packaging is eco-friendly and which is the cheapest material, like cardboard.
Also, the material handling equipment you own will determine whether you opt for cartons or pallets. Consult your workers constantly on the type of packaging they prefer and that is the easiest to manipulate. Also, if you are outsourcing warehousing, you can check your partner’s business practice to see what type of packaging other companies use and try to copy their style.
The equipment and the goods
Speaking of the equipment, the packaging is just one factor in determining the type of equipment you need if you own the storage unit in the first place. If you decide to rent a warehouse or outsource this part of your business altogether, you can count on your partners to take care of this segment. If you are planning to expand your business, then it would be wise to start creating a fleet of your own. If nothing else, you could acquire a single forklift or a scissor elevator just to get you started.
The goods you sell will also influence the shipping procedures, material handling equipment, and the packaging heavily. Are these bulky items that require a single big padded container or is your produce comprised of smaller objects that can be shipped together?
When is the right time to manage warehousing on your own?
As we mentioned earlier, your business will (hopefully) grow over time, so at some point, it will become logical and profitable to start managing warehousing and distribution on your own. One of the surest indicators you need to improve storage management is when you start running out of room. Once manual material handling equipment become unusable, consider renting or buying a bigger space. Furthermore, if you start noticing that your workforce is under a lot of stress because of increased or uneven workload, you might want to reexamine the entire distribution network. Quite often this happens because your business has grown in size without you even noticing and the first indicator will be the lack of housing space as orders pile up.
Do startups need warehousing?
We associate the term “startup” heavily with the IT sector that sells software, so entrepreneurs often disregard the need for a warehouse in the very start. As we suggested earlier, the smaller your business is, the lesser it will require a warehouse and it can resort to renting. However, you are going to need to some type of storage space from day one, so be sure to have an extra room inside the office space, if nothing else that will act a provisional depot in the beginning. And oh yeah, even software developers like gaming companies need storage for hard disks, CDs, and DVDs.
Setting up warehousing and distribution
One of the biggest mistakes you can make is delaying the decision to set up your own warehousing and distribution system. Once the first pile-up of products occurs, you will have to go prospecting for potential locations and create a budget for this new segment of your daily operations. On average, your very own warehouse will cost around 75.000 dollars, which is not a cost that is unimaginable to finance.
Once you find the ideal location, preferably on the town’s outskirt but still close to your main office, you are ready for the furnishing phase. Shelving and material handling equipment are the most obvious initial investment but you shouldn’t forget about licensing either. Since you’re diversifying your company’s business, the law will probably require you to get a separate license for storing goods. This is important if trade with food, for instance, as you will need to install freezers and refrigerators inside the warehouse. Finally, if you haven’t dealt with storage units before, then you’ll need to hire new people to handle this segment of your small business as well.
Perhaps we haven’t stressed this enough but all the improvements in warehousing and distribution serve the purpose of improving the service you offer. We say service but in reality, we mean goods that your customers will not judge solely based on quality but on efficient delivery as well and this is where warehousing and distribution play an essential role.
Liam Smith – Australian based blogger with an extensive portfolio specialized in Manufacturing and Logistics, of late writing on behalf of Sitecraft in Sydney. He can usually be found with an espresso in one hand and a book in the other. When not working, he’s spending time with his family and friends or putting pen to paper for his own personal pursuits.