In a business environment plagued by uncertainty and disruption, it pays to have reliable business partners in your corner. Whether the source is a trade war, a global pandemic or a sudden shift in buying behavior, companies have to be able to respond quickly and without negatively impacting their warehouse or distribution center (DC) operations.
Knowing this, more shippers are turning to outside business partners to help them enhance their warehouse and fulfillment operations, achieve higher efficiency levels, and ensure optimal levels of customer satisfaction. In this column, I’ll spotlight the current warehouse environment and share a few insights on how a reputable managed services provider can help your organization significantly enhance efficiencies and workflow while allowing the business to focus on what it does best.
Long before terms like “social distancing” and “COVID-19” became part of our everyday dialogue, warehouses and DCs worldwide were dealing with a “new normal” operational environment. From the boom in e-commerce to the tight labor market to the need for omnichannel operations, the pressure was already on and logistics managers were feeling it. When COVID-19 emerged, those challenges intensified as demand for certain essential goods skyrocketed.
In response, warehouses began hiring more people (a challenge in a world where six-foot social distancing rules had to be rolled out), addressing customers’ immediate needs, and paying attention to safety stock levels. With an eye on maximizing output while also adhering to new regulations, more supply chain and business leaders found themselves in need of an experienced managed services partner to identify efficiency gaps and improve overall operations.
With their essential warehouses at maximum output, companies need better operational efficiency and streamlined solutions. At the same time, a lot of facilities have been ramping up their e-commerce style networks in order to meet the needs of their customers.
The latter is particularly relevant in an environment where more consumers are buying online and picking up at the curb — a movement that was already in full swing prior to the pandemic, but that’s since ramped up significantly. By combining people, processes, and technology, the right managed services provider can help companies across the spectrum deal with their individual challenges.
In the logistics setting, the differences between managed services providers, temporary employment agencies, and third-party logistics providers (3PLs) are significant. Where some managed services providers offer a new approach — delivering a comprehensive solution that spans people, processes and technology — the other two specialize only in specific aspects of the end-to-end logistics process.
Companies that are ready to align with a management services provider should start by conducting an objective assessment of their operations to identify the gaps and areas in need of improvement. Operational areas where visibility is low and key performance indicators (KPIs) are difficult to track, for instance, are probably prime candidates for improvement supported by a reputable managed services provider. When selecting your partner, look for these key attributes:
A trained labor pool. You don’t want a partner that certifies forklift drivers and then lets them loose on your warehouse floor. Rather, seek to engage a provider that offers intensive training sessions for these and other warehouse employees. It starts with a general warehousing overview, and then more industry-specific training, safety training (i.e., on personal protective equipment usage), and other core modules.
Willingness to take on an active management role. Where temp agencies send workers to the warehouse to cover open positions on a “temporary basis,” the best managed services providers step into an active management role and cover the complete hiring and training process. Look for a partner that will be contractually responsible for the flexing up and down of your workforce so that all you have to worry about is getting your products made, fulfilled, and shipped on time.
Data and KPIs that feed incremental and overall improvements. Look for a partner that understands the technology and equipment that’s suited for your operating environment. At minimum, the company should be able to prove that it has a host of skillsets and tools that are applicable in your operation. A retailer whose e-commerce orders fluctuate depending on seasonality, for example, would benefit from having historical data on its desired inventory levels for high-demand items. You want to be prepared for dips in supply or spikes in production and your managed services partner should be using historical trend data to help deal with those ebbs and flows.
A commitment to safety. The potential partners you’re talking to must incorporate safety as part of their initial employee onboarding process. If not, it’s time to look for another managed services provider. Safety should always be the number one priority for any warehouse. There has to be day-to-day progress on your safety goals; it can’t just be a weekly or monthly safety meeting.
A holistic approach that meets the needs of today’s consumer. Managed services partners should be positioned to handle the daily warehouse tasks throughout your facility —from effective inbound receipt of products, to inventory of the products, to the put away of the products themselves. These are critical points in a world where large e-tailers are delivering same-day and next-day.
Proven best practices. Look for a partner whose best practices have been proven across numerous different warehouse operations so that warehouse workers don’t have to use ‘trial and error’ to figure out what does and doesn’t work.
Ability to shoulder the operational and financial burden of HR. Historically, warehouses either trained new employees in-house, worked with a temp agency, or hired a 3PL to help. By outsourcing the task to a managed services provider, the same company can effectively offload the operational and financial burden to a reputable partner.
With most warehouses being asked to meet changing customer demands—but not being given more time, resources, or labor to do it — leaning on a managed services partner to manage the people, processes, and technology behind the fulfillment just makes sense.