Logistics Planning Blogs - LPC International

Question: “What is the most effective way for a company to go about tendering a contract for outsourcing logistics in order to get the most effective provider”.

Answer: The benefits of outsourcing can be considerable, in terms of opportunities to reduce costs, and the improvement of customer service.

Introduction

If you’re reading this the chances are that your business has survived the Credit Crunch followed closely by the Recession and you are now facing up to the reality of a difficult economic situation for some time to come.......

Implementing a suitable warehouse management system is the most important thing you can do to improve the efficiency of your operation and cut your running costs. However, all the main WMS systems rely on you having an organised system of barcoding. Without barcodes, you won’t be able to use a WMS to its full potential to improve efficiency and accuracy.

So the very first thing for a warehousing business to do is to review how you currently use barcodes and if this can be tightened up. Although barcodes have been used for decades in retail and logistics, many warehouses still do not make full use of this useful labelling system. In this article we will briefly look at how implementing a barcode system in your warehouse can cut operating costs, while simultaneously paving the way to implement a WMS.

There have been a number of trends in the supply chain that have had an impact on the major retailers in the UK, around the growth in imported goods. The retailers have always sold imported goods, but generally used to take ownership on receipt at their DC’s in the UK. However overseas sourcing has changed in a similar manner to the growth in factory gate pricing in domestic sourcing, and the increased control of the inbound supply chain by the retailer. The establishment of buying offices in the Far East and the sourcing of products direct from the manufacturers and suppliers rather than the wholesalers and middlemen has allowed the retailers to take an increasing level of control of the inbound supply chain.

Though the current recession will undoubtedly bite deeper than those of the recent decades, recovery will come, and those businesses that have managed best during the recession will be best placed to take advantage of the upturn, when it arrives, says Bob Williams of LPC International.

The logistics sector will undoubtedly be hard-hit as consumer demand falls, and the demand for warehousing space and transport services declines. The decline in demand will be difficult in an industry which, by tradition, is very competitive, provides high levels of customer service and works on tight profit margins. Downturns inevitably affects those margins, and customers – who themselves suffer similar economic pressures – inevitably look to their service providers to take a share, and sometimes more than a fair share, of the “pain” of dealing with the situation.

What then, can de done to address the problem? Unless you are have sufficient resources and are confident enough to invest capital in the development of new facilities and infrastructure for the future, then planning for recession is essentially about introducing measures to drive costs out of the business in order to become “leaner and meaner” while still maintaining a healthy customer base.

LPC International is a leading logistics and supply chain consultancy specialising in warehouse and facility design and operational support. Based in Cirencester LPC has extensive experience in many industry and business sectors and has worked on both new facilities and re-engineering of existing, ranging in size upwards from 5,000ft2.

For a small business with a single warehouse there is huge pressure on your team to deliver cost-effective logistics and inventory management. For established businesses, you may have a time tested set of procedures and a warehouse team who have been with you for many years. This may work well for you at the moment, but does your current way of working equip your business for growth and change, does it rely on the knowledge in peoples’ heads, and is it as efficient as it could be? In a competitive and rapidly evolving marketplace, businesses with the flexibility to optimise and improve their warehouse processes are better positioned to save costs and secure new customers – pushing them ahead of their competitors.

A Warehouse Management System (WMS) helps you optimise your supply chain by improving control of your warehouse and logistics processes. There are many sound reasons to invest in a WMS, which we have discussed elsewhere on this blog. However, the question we will address in this article is how a warehouse management system works for you and how it uses this basis to affect positive changes throughout your operation.

The “changes” in terms of stockholding and in the pattern of demand that many companies are experiencing are becoming increasingly prevalent in distribution as companies endeavour to take cost out while improving or maintaining service levels. These changes have resulted in:

The Cloud is one of those terms that doesn’t have a commonly accepted, unambiguous definition. From the supply chain point of view, it can be considered an outsourced service that supplies or supports your IT systems. Virtually the complete range of systems and services can be ‘Clouded’ and this has the same drivers as shared user warehousing and transport services – sharing overheads and resources reduces costs; the ability to flex capacity to meet demand; paying only for what you use; and management by a third party.