When Does Increased Spending on Warehouse Technology Make Sense?

Many recent articles and surveys featured in The Wall Street Journal and other publications indicate that companies plan to increase their warehouse technology spending this year.

One top reason is related to employee satisfaction and retention in an extremely tight labor market, as these headlines indicate:

“Struggling Front Line Workers Say Technology May Decrease Work-Related Stress” – Bloomberg Law, Jan 12, 2022.

“Improved technology is the No. 3 item workers said can help reduce their stress and help them become more effective, improved technology was listed after better wages and more paid time off.” Fortune, Jan 12, 2022.

It makes sense – there are a lot of great warehouse technologies out there. But every year I walk through warehouses littered with technology that cost tens to hundreds of thousands of dollars yet never quite achieved what it was supposed to do. It reminds me of all the unused exercise equipment most homes have, now covered in clothes destined for the dry cleaners.

So, before you buy, it’s critical to be sure that four particular components of your fulfillment operations are 100% solid. 

What is Required for a Rock Solid Warehouse Fulfillment Foundation?

Over the last 30 years, the foundational technologies for running a superior small parcel distribution warehouse have remained unchanged. Organizations can add all the new warehouse technology they like, but just as blocking and tackling are the fundamentals in the football world, there are four specific operational components that must first be optimized, or your distribution operation won’t reach the metaphorical playoffs.

To build the foundation for a top-tier distribution center (DC), you’ll need to fix, repair, and/or replace your current technology stack in this order:

1. Barcode your products and locations.
2. Purchase and install a warehouse management system (WMS) that can (at a minimum) support your projected 10-year growth requirements. Also, hire a great “outside” project consultant that has been through similar WMS installations in the past. Tier-one WMS installations are not do-it-yourself. You and those within your organization are too close to your processes and don’t know what you/they don’t know. Fresh eyes and experience are a must during both the planning and implementation phases.
3. Have a well-designed warehouse control/conveyor (or tilt-tray) system to move packages/shipments through your warehouse.
4. Install a tier-one multi-carrier shipping system. These are systems that can easily ship 50,000 packages in an eight-hour shift. You may say “I don’t ship anywhere near that number,” but delays, downtime, and system contention (of particular regard when you use 3rd party API’s and hosted shipping systems) are productivity killers in a well-oiled DC. If the actual parcel shipping process backs up, everything behind it backs up as well

I’m not saying there aren’t great warehouse technologies out there – there are. But, if these four components of your operations are not 100% solid, you are building your warehouse technology stack on a foundation of sand.

Every other piece of technology you can buy should be designed to support these foundational pieces. These four products/processes alone can allow you to easily achieve 70% to 80% of the potential gains from your operation. Focus on these before you consider spending on any “nice-to-have” tools.

Learn More

In Our Blog: 3 Logistics Hacks to Speed Up Shipping Operations

Read the Guide: 9 Ways to Reduce Warehouse Management Costs

CLS Shipping Experts Are Here to Help

How can we help? CLS has the industry, freight management, and carrier expertise and the shipping platform to help you address peak season carrier capacity challenges. Our team of shipping experts can help you weigh your options in considering zone or hub skipping, or other shipping methods to ensure that your shipments are delivered. Our multi-carrier shipping software, InfoShip®/Vx, is also already connected to many leading regional small parcel and LTL carriers, which may be helpful to you.

Rick Williams is a parcel transportation management expert with 40 years of experience in shipping and supply chain operations and technology. CLS has worked with many companies to streamline workflow and improve productivity in the warehouse through the combination of streamlined workflows integrated with multi-carrier shipping software, integrated pack/ship stations, data collection solutions and more.