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Green Distribution Center Solutions

Optimizing distribution & wholesale strategies for greener products and supply chains.

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Only a fraction of companies are able to meet their customer service objectives on 99% of their orders, while simultaneously reducing warehouse labor costs year-over-year. A key characteristic of companies that have been successful in this endeavor is their use of Warehouse Management Software (WMS). (Download an Aberdeen Group whitepaper about WMS)

Distribution Efficiency with Warehouse Management Software

The metrics of success are different for every industry, and the key performance criteria to distinguish Best-in-Class distribution centers, according to Aberdeen Group include:

  • Warehouse labor costs decreased year-over-year, relative to revenue
  • Pick accuracy rates of 99%+
  • Shipping accuracy rates of 99%+
  • Perfect order rates of 99%+

Methods that can help achieve these metrics of high efficiency distribution centers include conducting a business process review, conducting a formal software vendor selection, keeping management software current, implement a regular maintenance and support program and adopt high performance warehouse strategies like advanced pick methodologies, slotting, labor management, and speech-based warehousing advantage.

Highly Automated Facilities

Sophisticated distribution center can now provide day-to-day operation of the warehouse that is planned and optimized with sophisticated Warehouse Management Software (WMS).

Warehouse management systems transmit instructions wirelessly to workers equipped with mobile computers, who execute the tasks and confirm their actions with bar-code scans. The location of every item in the warehouse can be tracked in real time, and there is little or no administrative work required to operate the warehouse.

Manual Distribution Centers

Manual operation requires that warehouse managers plan all processes and hand out stacks of paper instructions. Pickers roam the warehouse searching for products, with little opportunity to automate their work. Each order is carefully checked for accuracy in a labor-intense downstream process. Behind the scenes, a team of clerks enters data from handwritten notes into the accounting system to record what was received, moved, picked, or shipped.

Industry Trends

  • Only 47% of companies have a "true" WMS in their distribution centers
  • Best-in-Class companies are 27% more likely than their peers to focus on creating an agile and flexible warehouse adaptable to change

Five Key Process Capabilities in the Warehouse

  1. Cycle counting
  2. Bin level location management
  3. Real-time put-away and stock moves
  4. Paperless receiving
  5. Order picking with mobile devices

Best in class companies are disproportionately more likely to have adopted these five capabilities using a warehouse management system.

Cost Savings in Warehouse Management

IKEA is a global furniture retailer with 250 stores in 33 countries, supported by 33 distribution centers worldwide. Installing a WMS and implementing cycle counting allowed them to save nearly 3,000 man-hours per facility by not having to perform an annual physical inventory. They've also avoided shutting each facility down for four days during the inventory process.

Other benefits reported by WMS users are higher levels of on-time in-stock order shipments, and accuracy of orders. The use of order picking mobile devices is also a productivity boost.

On-Demand WMS Options

Human errors with an on-demand WMS. Off-site maintenance of a software solution can alleviate the need for an in-house IT departmen in small operations, and can bring a system into use with a few short weeks.

Instead of writing down information on paper logs, workers are equipped with mobile handheld computers. Bar-code scanning replaces handwriting, and all transactions are directed and confirmed in real-time.

WMS components include automatic data capture (bar coding and speech); Bin-level location tracking; Real-time mobile communications; and process direction. Systems also need to be easy to upgrade to meet changes in compliance mandates, scale, or new technologies.

The WMS is a systems consisting of several components:

  • the WMS software application
  • A wireless network in the warehouse
  • Mobile devices (handheld computers bar-code scanners, headsets, etc)
  • Bar-code label printers

Adapting to changes in the distribution business model takes some managerial effort. Upfront costs need to be planned and managed. Software integration takes time, talent and effort. Changing to a new system takes time for adaptation. And of course, it takes time and knowledge to choose the right solution.

These managerial challenges can be addressed with:

  • Minimizing upfront costs with online or on-demand WMS solutions
  • Document carefully every aspect of how the two systems will need to communicate
  • Map out supply chain processes up front.
  • Seek a list of suppliers and compare their advantages and limitations. Read industry publications; hire a consultant or systems integrator; gather market research, and conduct online research about potential vendors.
The upside of refining your warehousing operations is that you can save on labor costs and other operational costs. And optimizing order processing can make your customers happier in addition to adding to your throughput with no additional warehouse space.

That can be green! And $green.

Green Warehouse Operations

There are many additional improvements that can be incorporated into a greener footprint in your warehousing needs or operations. Here are a few recommended by
  • Cost and service are the most important criteria when designing warehouse network.
  • Other relevant issues include highway infrastructure, real estate issues, labor climate, and carbon footprint concerns.
  • Reduce fuel consumption by identifying the shortest distance between a warehouse and customers

    Additional ideas to investigate include:

  • Replace energy inefficient lighting with LED and natural light
  • Use solar PV powered electric forklifts
  • Use natural gas or biodiesel powered trucks
  • Insulate warehouse roofs and improve ventilation to optimize use of natural weatherization
  • Consider LEED certitication of your new warehouse buildings

One example of a green warehouse is the LEED certified 260,000-square-foot warehouse facility in Ridgefield, Washington that is owned by United Natural Foods and is the distribution center for their customers in Portland and Oregon.

Commencing operations in December 2007, the Ridgefield facility utilizes high-performance environmentally-friendly systems that reduce energy use by 30% when compared to a typical building of the same size. The facility is powered by 100% renewable energy, which avoids four million pounds of carbon dioxide (CO2) emissions annually, and features motion-activated water sensors and flow controls, reducing water use by over 40%.

Some of the environmentally focused initiatives used during development include building materials that were composed of a minimum 30% recycled content, low or zero-VOC emitting paint materials and carpets made from 100% recyclable materials. Furthermore, all wood products were selected from FSC ("Forest Stewardship Council") suppliers and 95% of construction waste was diverted from local landfills.

The cost of these environment improvements was minimal, less than 1 percent to the cost of construction.

Read more about green distribution at Distribution & Wholesale for Green Products and Supply Chains.

Edited by Carolyn Allen, owner/editor of California Green Solutions
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