Category: Fulfillment

How Can Supply Chains Boost Slipping Workforce Morale While Under Transition? 

The highlight of 2023 has been labor unions rising up in demand for better working conditions, job security, and fair wages. Such calls could get louder in the future. 

Reprint of an article in The Logistics Report by Vishnu Rajamanickam, Oct 4, 2023.

“Workers are integral to supply chains” Nick Pellegrino, COO, Boxzooka, “despite all the automation and process transition.”

The initial portions of this article discuss the ongoing Automotive Worker strike, and the full article is linked here. The article continues with:

This isn’t just a story of automotive supply chains. Manufacturing, at large, is undergoing a transition where automation of non-value-added repetitive tasks is becoming cheap enough to replace humans in the equation. The same is true of warehousing and fulfillment operations, as is evident with the ILWU’s skepticism over allowing automation in their yards.

Integrating automation into supply chains without appearing predatory to the workforce is a challenge. How do we deal with workforce inertia that occurs from supply chain transitioning?

“It is important that workers realize they are integral to supply chains despite all the automation and process transition,” said Nick Pellegrino, the chief operating officer of order warehouse fulfillment company Boxzooka, with extensive experience running agile fulfillment facilities.

“We had a customer who added jewelry to their product line. One Friday, we received 5,000 different jewelry items. Based on SKU velocity assumptions and demand forecast, we slotted the new inventory over the weekend. When it went to market on Tuesday, it sold out immediately,” said Pellegrino.

“Had we been in a highly automated environment, it would have been challenging to adapt so quickly. Instead, we were able to adjust because of our human workforce, creating a pick line to get every order out within 24 to 48 hours, far exceeding our service-level agreements.”

This flexibility, Pellegrino argued, was due to a strategy that prioritized operational agility, which entailed a healthy mix of human workforce and automation.

For instance, consider an AutoStore™ servicing a 30,000 sq. ft. portion of a massive warehouse. Cubes would be built 100 feet long and 30 feet tall, with robots operating on top of the cube. Inventory gets inducted into totes placed in a grid within the cube. When the order arrives, the robot brings the tote to an operator who picks the SKU. While this is incredibly optimized for consistent demand, dynamic changes in SKUs and product lines — like the above scenario — would need more malleable fulfillment options with humans as the lynchpin.

So, how do we ensure workers feel comfortable and at ease? “By giving them a full-time employee status,” pointed out Pellegrino. “It’s common to see companies have a 50% full-time and 50% temporary labor mix, which isn’t great. I’d call for at least 90% of the workforce to be full-time, even if it means handling seasonal peaks in demand.”

Incidentally, an important demand in the UAW strike runs parallel — the call to end the tiered employment system that engages workers on a ‘temporary’ basis, extracting comparable work from them as full-timers, but at lower pay scales and worse benefits.

“The key to retaining employees in today’s labor market is to focus on being an employee-centered operation,” said Pellegrino. “It is about actively upskilling the workforce.”

“At Boxzooka, we have associates who started with basic tasks and have gradually moved up to become leads or even supervisors. We even have client success managers who started at an hourly rate and moved through the ranks to a position where they directly interact with our clients. This offers team members a career path, not just a job. Whether advancing to a forklift driver position, becoming a lead, or moving up to a supervisor role, it’s important to provide opportunities.”

This is congruent with what Biden, one of the more worker-friendly presidents in recent times, has promised — better-paying blue-collar jobs. Pellegrino contended that a dynamic of shared prosperity takes root by fostering an environment where blue-collar workers can have career mobility and seek growth opportunities.

Such an ecosystem will also lower employee churn rates, helping companies scale operations sustainably. “This is significant considering some poorly managed operations in the industry can see turnover rates exceeding 100%, where you’re replacing your entire workforce every month,” said Pellegrino. He suggested that making internal promotions a part of the retention strategy will signal to the team that upward mobility is attainable, keeping them motivated and engaged.

“Employee engagement is another critical aspect, which builds organizational culture. Creating a sense of community and encouragement within the team while supporting individual well-being and a work-life balance translates into dedication from the team. This way, when a client issue requires immediate attention, I would never have trouble finding volunteers willing to step in. Automation can’t replicate human commitment.”

To that effect, building a sense of community in manufacturing or warehousing operations would require mid-level managers and frontline leaders with solid people skills. “My first job right out of college was as an industrial engineer for Coca-Cola. I remember asking the VP of Manufacturing why they hired me, and he said while they looked for engineers who were analytical and process-driven, they specifically took me for my people skills,” said Pellegrino. “Strong leaders make it easier to implement processes and engage with the workforce.”

Ultimately, while automation does warrant change in regular operations, the primary concern for those on the frontline isn’t the technology itself, but job security. It’s essential to remember the very human faces behind these jobs. To many households, these jobs are lifelines, providing a steady income and the promise of climbing the economic ladder.

“If employees are treated well, given a good salary, and offered opportunities for growth within the company, employee turnover decreases. People become more committed and are less inclined to leave their positions,” he said. “In an employee-centric environment, companies can be confident integrating automation into operations without sacrificing workforce morale.”

By Tom Behnke

When building and growing an online brand, it is important to consider the option of split distribution. Before we dive in any further, let’s understand what this logistics strategy is and how it works.

Split distribution is a method for having inventory strategically allocated and distributed to multiple distribution warehouse fulfillment locations to optimize delivery efficiency. This strategy also helps mitigate risks such as disruptions in supply chains, natural disasters, or logistical challenges in a specific region by spreading inventory across various locations.

How the products and quantity are divided among the multiple locations is based on numerous factors such as customer demand, geographic proximity, transportation costs, and delivery time requirements. By distributing inventory across multiple locations, businesses can ensure that products are positioned closer to customers, reducing shipping distances and thus minimizing transit times and costs. This approach leads to faster order fulfillment and improved customer satisfaction.

How Split Distribution Logistics Work?

When a customer places an online order, order management systems determine the optimal distribution point. This system incorporates order management, inventory, and transportation data to automatically determine the most suitable warehouse fulfillment center for picking, packing, and distributing the package. Notification is sent to the warehouse management system, WMS. The algorithm considers factors such as the availability of all the ordered items in stock and the ability to ship the order at the most affordable cost. While the order processing speed remains consistent, the presence of strategically located warehouse fulfillment centers enables quicker and more cost-effective shipping. Now that we understand the process let’s explore the advantages and disadvantages of split distribution in more detail.

Advantages of Split Distribution

Outlined below are a few of the positive effects that result from implementing a split distribution approach that could improve your overall business:

Faster Delivery: When inventory is divided among multiple strategically located distribution centers that are closer to customers, it decreases shipping time by reducing the distance packages need to travel. As a result, order fulfillment becomes faster, leading to enhanced customer satisfaction.

Cost Savings: Intentionally locating the product near the customer minimizes shipping distances, resulting in time and cost savings for shipping. Businesses can reduce shipping expenses and take advantage of lower freight rates. This principle also applies to returns, as sending them to the nearest facility can reduce shipping costs and time for both the business and the customer.

Regional Market Penetration: Businesses can enhance their ability to cater to consumers in diverse markets and regions by dividing their inventory based on location. This approach enables businesses to meet local customer preferences, address market demands, and comply with specific regulations. For instance, consider a clothing brand that sells bathing suits and beach weather attire. Instead of exclusively storing warm-weather items during the summer season, the company can optimize its inventory by increasing the stock of beach weather attire and strategically allocating it to distribution centers located in regions with warmer climates. By adopting this approach, the brand can effectively target consumers in those regions throughout the year, catering to their specific needs and preferences.

Inventory Optimization: The strategic division of inventory across multiple locations is an essential part of the strategy. Analyzing SKU velocities and items often purchased together is a starting point. There are many technology tools to assist in optimizing inventory, and it helps to have a lower SKU count. This approach facilitates efficient replenishment, reduces instances of stockouts, and enables businesses to allocate inventory according to regional demand patterns. As a result, businesses can achieve improved inventory turnover and minimize holding costs.

Enhanced Customer Service: Small businesses face a challenge when competing against larger companies that can afford to provide free and fast shipping, which has become a customer expectation. By adopting split distribution strategies, smaller businesses can compete effectively by offering quicker delivery times and lower costs to customers. Ultimately, regional distribution centers create a win-win situation for smaller businesses and their customers.

Risk Mitigation: Having products stored in multiple distribution locations helps to mitigate risks associated with disruptions in the supply chain. For example, if one distribution center encounters operational issues such as natural disasters, labor challenges, or technical problems, the presence of other centers allows for uninterrupted operations and ensures the continuity of service. This risk diversification strategy helps businesses maintain a reliable supply chain even in the face of unforeseen challenges.

Scalability and Flexibility: As businesses expand their operations, split distribution offers scalability and flexibility. By adjusting the distribution centers in response to evolving market dynamics, businesses can efficiently adapt to changes in customer demand or geographic reach. This enables them to remain agile and responsive to market shifts as they occur.

Challenges with Split Distribution 

Perfection is elusive, and split distribution comes with its fair share of potential challenges. It is crucial to acknowledge and plan for the following obstacles:

Increased Complexity: When implementing any type of process change, it introduces a level of complexity. In the case of split distribution, this complexity extends to managing inventory, coordinating transportation, and establishing efficient communication and coordination between distribution centers. These tasks demand additional resources, systems, and processes to be effectively managed. Incorporating this strategy entails certain areas that pose higher risks for complexity, such as:

• • Potential for Inconsistent Customer Experience: If fulfillment centers exhibit varying levels of efficiency or there are disparities in inventory availability across locations, there is a potential risk of inconsistent order fulfillment and delivery experiences for customers.

• • Order Fulfillment: Efficient coordination, synchronization, and real-time visibility among centers are essential to guarantee accurate and timely picking, packing, and shipping of orders. Inaccurate communication and data may lead to order delays or errors, underscoring the importance of maintaining seamless communication and accurate information across the distribution network. Avoiding multiple shipments on the same order is paramount.

• • Returns: The possibility of customers having to return items to different distribution locations emphasizes the importance of accurate technology and communication among the centers. Additionally, coordinating and managing customer inquiries or complaints across multiple centers can present its own set of challenges.

Higher Initial Investment: When considering the implementation of the split distribution strategy, businesses need to consider the potential higher-than-expected initial investment. Whether a business is partnering with a third-party logistics (3PL) provider or managing logistics in-house, there will be upfront costs associated with split distribution. 3PL providers may adjust their rates to account for the increased costs associated with additional labor, equipment, and technology requirements. Conversely, when a company aims to establish a new distribution location, there are considerable expenses involved in the acquisition and operation of an in-house center.

Inventory Fragmentation: Inventory fragmentation refers to the distribution of products across multiple locations, resulting in smaller stock quantities at each location. This scenario can arise when inventory is divided among distribution centers, retail stores, warehouses, or through consignment arrangements with retailers. With inventory scattered across different locations, it becomes challenging to accurately track and coordinate inventory levels. This fragmentation poses difficulties in inventory management, necessitating additional efforts to consolidate and synchronize inventory across various locations. These efforts are essential to ensure efficient operations and meet customer demands effectively.

Higher Overhead Costs: Expanding the order fulfillment and distribution footprint of a company that handles these operations in-house entails substantial costs. Operating multiple distribution centers leads to increased ongoing operational expenses, such as facility maintenance, staffing, utilities, and other overhead costs associated with each location.

Check The Boxes

Does split distribution make sense for your business? Does it check off all the boxes? Before embarking on split distribution, businesses should conduct a thorough analysis and evaluation of the advantages and disadvantages. It is essential to outline the operational capabilities, costs, and customer requirements during the planning phase and prior to implementation.

In summary, the split distribution strategy offers businesses enhanced operational efficiency, cost savings, improved customer service, and risk mitigation. It enables companies to optimize their logistics network and meet the evolving expectations of customers in a dynamic and competitive market.

At Boxzooka, we provide split distribution through our three strategically located warehouses across the United States in New Jersey, Pennsylvania, and Nevada. Our team has been successfully managing split distribution for numerous clients who have experienced the benefits firsthand. Moreover, our partnership with businesses has minimized the challenges and risks associated with split distribution, thanks to our advanced Warehouse Management Technology (WMS) and efficient communication systems. If you believe that your business could benefit from split distribution, don’t hesitate to complete a contact form and connect with a Boxzooka fulfillment expert to discover how we can contribute to your business’s success!

By Tom Behnke

eRetailers know that managing the costs of warehouse fulfillment services and transportation methods is challenging. Fulfillment warehousing costs include the expenses associated with receiving inventory, product storage, and processing orders. In contrast, transportation costs include multiple rates and assessorial fees for the delivery of products to customers. Optimizing these fundamental aspects of an e-commerce business can significantly impact profitability.

There are key cost-saving measures and factors to consider when reviewing fulfillment warehousing and transportation costs. These include:

Warehouse Location: Choosing strategic warehouse fulfillment center locations for your products can significantly impact transportation costs and delivery timeframes. When launching a business, it’s common for eRetailers to operate initially from a single location. However, they soon realize the importance of catering to customers across the entire country. By strategically placing popular products in fulfillment warehouses closer to major customer bases, eRetailers can significantly reduce shipping distances and transit times. This not only improves customer service but also helps in minimizing transportation expenses.

Inventory Management: Efficient inventory management practices help reduce both fulfillment warehouses and transportation costs. Optimizing stock levels ensures that products are readily available for order fulfillment while minimizing excess inventory and associated warehousing costs. Today’s technologies for warehouse management and regional distribution help provide analytics about a company’s products. Carrying non-moving and slow-moving products becomes a drag on the business and should be dealt with on a regular cadence.

Packaging and Dimensional Weight: Proper packaging can optimize space utilization during transportation, reducing shipping costs. Optimizing package dimensions and weight to meet carrier-specific guidelines can help avoid dimensional weight charges, which are often based on the size of the package rather than its actual weight. There are numerous shipping methods and carriers to evaluate for your brand and packaging specifications. Assessorial charges may be buried behind the carrier’s base rate grids.

Carrier Negotiations: Many 3PLs provide transportation management services and save retailers time and money with volume discounts and shipping options. Negotiating contracts with shipping carriers can help businesses secure better rates based on shipping volumes and delivery requirements. The same principle applies to the expenses incurred for shipping returned packages. Moreover, there are opportunities to utilize USPS for “last mile” services, which are often more economical, albeit slightly slower in delivery time, typically taking a day or two longer to reach the destination.

Order Consolidation: Consolidating multiple customer orders into a single shipment whenever possible can help reduce transportation costs. This practice minimizes the number of individual shipments and takes advantage of economies of scale.

Automation and Technology: Implementing warehouse fulfillment and transportation management systems can improve efficiency, accuracy, and cost-effectiveness. Automated processes, such as order processing, inventory tracking, and label printing, can reduce labor costs and enhance operational efficiency.

Data Analysis: Analyzing data on fulfillment and transportation costs, customer locations, order volumes, and shipping methods can provide valuable insights. This analysis can help identify patterns, optimize operations, and make informed decisions regarding inventory placement and shipping strategies.

Customer Expectations: Balancing costs should be done in a way that aligns with customer expectations. Offering various shipping options (e.g., standard, expedited) allows customers to choose delivery speed while considering associated costs.

It’s important to note that the optimal balance between warehouse fulfillment and transportation costs may vary depending on the specific business, industry, and customer requirements. Regular evaluation and adjustment of strategies based on performance metrics and customer feedback are important to maintaining cost-effectiveness while meeting customer expectations.

Boxzooka offers extensive warehousing fulfillment services that encompass a powerful transportation management system. We are excited to collaborate with you to develop cost-effective strategies specifically tailored to your brand and clientele. For more information on our transportation management services, please complete a form to connect with one of our fulfillment experts.

By Tom Behnke

Despite all the advances in warehouse automation in ecommerce fulfillment, enabling greater efficiency and addressing the common difficulty of finding enough workers to perform the highly repetitive, physical tasks, most organizations are not looking to jump in with both feet.

In fact, a 2022 survey by Modern Materials Handling found that as much as 90% of organizations had not implemented warehouse automation technology, as we cited in a report on automation trends.

Nick Pellegrino, COO of third-party logistics firm Boxzooka, certainly understands this view. A former EVP of parcel and fulfillment services for Newgistics, then Pitney Bowes after the firm was acquired, Pellegrino is very familiar with capital-intensive warehouse automation installations. These have included autonomous mobile robots (AMR), goods-to-person systems, and automated storage and retrieval (AS/RS).

“I’ve been through all that,” he said. “There’s a time and a place for it when a business reaches a certain scale that requires automation, especially to try to eliminate repetitive, non-value-added activities. But for us, serving premium brands, we don’t want to be the biggest fulfillment provider, but we do need to provide a high level of flexibility and customization.”

Pellegrino said all kinds of warehouse automation tools are still on the table as the company looks to expand, just not in the consideration set at the moment for a variety of reasons. Boxzooka’s brand clients include La Ligne, Bandier, M.M. Lafleur, Weworewhat and Onia.

Pellegrino said automation, including warehouse robotics, can sometimes place limitations on an operation’s flexibility. For instance, he said, Boxzooka is looking to switch to craft paper vs. petroleum-based polybags for a client that wants to improve its sustainability profile. In that instance, he said, the vacuum gripper on a robotic arm might have difficulty grasping the new material without destroying it.

“When you’re making an automation decision, it could create these kinds of flexibility issues,” he said. “As a customer’s order profile shifts, from so many orders per day, or now they launch a new product in apparel, or get into perfumes, colognes, and cosmetics from an acquisition, we need to say yes and figure it out.”

Pellegrino said Boxzooka addresses the need for flexibility and customization by tapping its homegrown WMS and cross-training associates on a variety of tasks. Its multi-client fulfillment centers, averaging about 100,000 square feet, are located in New Jersey, Nevada, and Pennsylvania.

“A lot of the time, companies have the right (automation) solution, but they haven’t really contemplated all the IT integrations,” Pellegrino said. “WMS TMS, and ERP all interface with automation, and sometimes they don’t realize what it takes on the tech side to integrate. You have to pull out a lot of costs to justify. Our WMS is helping us postpone decisions on warehouse automation right now.”

Article written by Mike O’Brien

Originally published on Multichannel Merchant

In today’s cutthroat and constantly evolving e-commerce landscape, businesses are turning to outsourcing to handle the complex task of returns management. Entrusting returns management to a fulfillment center can prove to be a strategic and lucrative decision for businesses seeking to efficiently manage returns without incurring high financial or personnel costs. In addition, providing customers with a dependable and streamlined returns process is a cornerstone of excellent customer service and a crucial component of cultivating a positive customer experience. Outsourcing returns to a warehouse fulfillment center not only ensures exceptional customer service but also helps to eliminate the headaches and costs associated with managing a returns process, allowing businesses to focus on what they do best.

Streamlined Returns Management: The First Advantage of Outsourcing to a Fulfillment Warehouse Center

The first advantage of outsourcing to a fulfillment warehouse center is the ability to streamline returns management and significantly reduce processing time. Fulfillment centers have the experience and expertise to process and manage returns quickly and efficiently. Returns are typically received through automated systems that alert both the customer and the warehouse fulfillment center of their arrival, helping to identify any problems or issues quickly. This ensures that all returns are managed in a timely, organized fashion and lets you free up resources to focus on other areas of the business.

Cost-Effective Shipping and Handling: The Second Benefit of Outsourcing Returns

The second benefit is that shipping and handling for returns are much more cost-effective when outsourced. Not only does this save you money in the short term, but it also ensures that all returns are correctly tracked, regardless of destination. In addition, this provides customers with a sense of confidence that their returns are being handled properly.

Access to Knowledgeable and Experienced Staff: The Third Benefit of Outsourcing Returns

While businesses may face high upfront costs related to setting up a returns center and the necessary personnel, equipment, and management, partnering with a third-party fulfillment center eliminates such start-up fees while providing access to knowledgeable and experienced staff. In addition, outsourcing costs are often calculated as a direct percentage of sales, meaning businesses won’t be stuck paying for idle supplies, equipment, or personnel as returns volumes fluctuate. Plus, many fulfillment warehouse centers offer additional services such as FedEx, UPS, or USPS pick-up, inspection, and inventory management so businesses can keep their costs under control.

Reporting Capabilities and Established Protocols: The Fourth Advantage of Outsourcing Returns

Finally, outsourcing returns to a warehousing fulfillment center allows you to take advantage of the center’s reporting capabilities and established protocols for managing returns. This lets you easily track return items and their associated costs to monitor their activity and adjust your business processes as needed. This experience and expertise relieve you of creating and managing your own systems. Furthermore, because they know how to deal with returns, they’ll be able to limit the costs you’re taking on.

Conclusion: The Benefits of Outsourcing Returns to a Fulfillment Center

Outsourcing returns to a quality warehouse fulfillment center and offers significant advantages to businesses seeking to reduce expenses and streamline operations. The use of a fulfillment warehouse center can result in faster and more efficient return processing due to enhanced logistics management, thereby increasing customer satisfaction levels and sales while enabling companies to respond more rapidly to shifts in the marketplace. Furthermore, a warehouse fulfillment center’s added efficiency and cost savings enable businesses to manage resources better and ensure a more dependable fulfillment process, resulting in greater control of costs and improved data security. Ultimately, outsourcing returns to a fulfillment warehouse center is a highly effective approach for businesses to provide superior customer satisfaction, achieve cost control, and enhance operational efficiency.

Take control of your returns process today and unlock the full potential of your business with Boxzooka’s industry-leading returns fulfillment services. Don’t miss this opportunity to streamline your operations and increase customer satisfaction. Contact Boxzooka now to learn more and take the first step towards better returns management.

By Brendan Heegan