While some organizations may continue to operate the same way they did 50 years ago, today’s competitive business climate forces distributors to take a hard look at their warehouse operations and reevaluate how these spaces can transition from a lost capital expenditure to a profit center.
When asked about the technology used in their warehouses and distribution centers, 44% of respondents surveyed for Peerless Research Group’s recently released 2022 Materials Handling Technology Study said their companies are currently in a phase of “cautiously embracing change.” At the same time, 19% reported taking a wait-and-see approach and 23% revealed they’re moving slowly and among the last to adopt technology.
As I consider these survey results, I can’t help but to think of a Bob Dylan song I’ve always been particularly fond of, titled, The Times They Are A-Changin’.
Although the “cautious middle” approach to digital innovation isn’t new, it is a mentality that’s historically plagued the distribution industry. And it’s why we still hear companies unknowingly utter what I call the six most expensive words in distribution: “We’ve always done it this way.”
Unsurprisingly, the solution usually involves adopting the right software and hardware to breathe new life into operations. That said, many have a hard time understanding the importance of adapting to evolve, even though it’s critical to the bottom line and the longevity of the business. Regrettably, the urgency of this need typically isn’t recognized until it’s too late.
Escape the Comfort Zone
In my years of working with enterprise application software for businesses, one of the biggest hurdles I’ve witnessed is watching the way decision makers choose to stay within their own comfort zone. This is common, but certainly not exclusive to, businesses run by generational families that are content with the status quo. Steady as she goes (a nod to another group of musicians I’m a fan of, The Raconteurs) is the approach; however, this mentality introduces significant hurdles when there’s a stronger need to introduce change that would otherwise improve the business.
Growth is great. That is until it starts to get in the way of the ability to get goods to the customer accurately and on time. Equally concerning is the fact that I’ve witnessed distribution businesses add more employees to their warehouse under the guise of “growth” – when what they’re really doing is supporting inefficient, manual processes that are heavily reliant on institutional knowledge. What these organizations often find is that adding more employees doesn’t necessarily yield higher productivity because paper-driven processes deny them the ability to reach a level of accuracy and efficiency required to stay competitive in an increasingly digital world.
When owners become complacent or buy into the “we have always done it this way” approach to warehouse operations, they run the risk of needing to eventually raise the white flag and sell their business. It’s an unfortunate exit strategy, and it’s not pleasant to think about. To avoid such a fateful end for their organizations, distributors must learn from stories of failure and have the mindset to keep evolving with the technology of the times that keeps their operations efficient and their business competitive.
Conceptualize the Need
As our industry advances with new technologies, I still see warehouses and distribution centers using old-school techniques such as whiteboards or spreadsheets to manage inbound and outbound logistics. For some, the issue is less about being stuck in a comfort zone and more about a struggle to envision the autonomy and financial benefits of those new technologies. In other words, conceptualizing the need becomes an obstacle.
To help distributors recognize such obstacles as the true opportunities that they are, providing examples is key. Say you’re considering a warehouse management system (WMS) to streamline and automate operations. You may be told that a WMS will have a positive ripple effect over your entire organization, from human resources to the C-suite, and that you can expect to see significant operational gains in nearly every functional warehouse area, from receiving, putaway, and picking to cycle counting, shipping, and more. But let’s cover what these gains look like in practice.
Think of a WMS, for example. At its most basic level, a WMS eliminates paper-based processes that directly hinder company growth. Paper-based systems inherently lead to more errors and customer frustration because every time a warehouse manager resolves an error, it costs the company money. Paper will never compete with automated systems. Besides the operational inefficiencies, think of the money wasted on the materials and supplies needed to support manual processes (e.g., toner, staples, clipboards, filing cabinets, storage space, etc.). If a distribution company is looking to compete on picking accuracy, delivery and improved customer service, the WMS would allow them to abandon paper for good.
Let’s take this example a step further. A WMS that offers inbound transportation management allows complete control over scheduling deliveries by simply assigning specific times and bays. This ensures that the right equipment and manpower is ready for unloading (e.g., pallet loaded vs. floor loaded). When the shipment arrives, employees can check the trucks in and out as the system automatically captures metrics on both sides of the operation. Giving warehouse managers the ability to keep an eye on time, space, employees, and vendors more effectively is a win-win in anyone’s book.
Ask any distributor responsible for fulfilling e-commerce orders and they’ll tell you returns are a big issue. The right WMS can make life easier by handling the logistics to manage returns. These tools help e-commerce distributors achieve significant shipping cost savings for the company and its customers, adding to the overall ROI of the system.
When you consciously examine obstacles and open your mind to how technology can lead the way for the betterment of your business, it’s easier to conceptualize and justify a WMS investment. This allows you to forge beyond and away from any stagnation stemming from that “we have always done it this way” mindset.
Flip Obstacles into Opportunities
Embracing technology and digital transformation isn’t about giving up control or abandoning your comfort zone, it’s about changing one’s perspective. At the same time, it usually comes down to user adoption and trusting the software and hardware to do the job it’s intended to do. The key is to find a genuine vendor partnership that provides your warehouse or distribution center with the right technology and support needed to foster a paradigm shift that will effectively flip perceived obstacles into viable opportunities. The result can help your business slash expenses and eliminate outdated and costly manual practices as well.
While the six most expensive words in distribution are, “We’ve always done it this way,” ironically, the six most transcendent words in distribution echo the name of a hit country song by Jason Caraway, “I Wish We’d Done This Sooner.”
Mark Van Leeuwen has been with PathGuide Technologies, Inc. for over 10 years. He has more than 25 years’ experience building a strong clientele and ensuring customer success by working with distributors to understand and appreciate their unique business issues and opportunities.
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