Turning the Corner: When Small Gains Equal Big Dollars
by Justin Willbanks
For many of today’s young companies, order fulfillment initially took place out of a garage using very manual and labor-intensive processes. As business began to grow, so did the requirements for space and, ultimately, labor. This led to a transition to a larger warehouse space and perhaps a handful of hourly associates. But despite this increase in volume, the method for fulfilling customer orders tended to remain the same, manual and labor intensive. At this point in a company’s lifecycle, the dollars lost from process and layout inefficiencies take a back seat to getting product out the door and keeping customers happy. I often find that companies experiencing this early, rapid growth tend to possess a false sense of satisfaction with the way things are operating. This creates a tendency to simply add labor as volume increases rather than trying to flatten that hiring trend line by becoming more efficient. It isn’t until they realize the potential savings from making a few small changes that they begin to understand the impact these inefficiencies are having on their bottom line.
You may be wondering, “What are these small changes and how can they be having such a large financial impact?” For starters, one of the first things I look for when walking through an operation are the small wins on processes that occur thousands of times per day. They are often the most overlooked despite being easy to implement and requiring very little investment. A prime example would be to eliminate 1-2 keystrokes during the picking process. This four or five seconds removed from every line picked can translate into thousands of dollars per year. Combine this with a dozen other similar improvements and you’re suddenly able to pour a chunk of much needed change back into building your business. In today’s world of Amazon expectations, companies hoping to compete must adapt by squeezing any available savings from their supply chains, regardless of company size or age. Not to mention engraining a “Continuous Improvement” culture at the onset will prove to be much easier than doing so down the road.