- Mistake №1. Renting a warehouse without taking into account business specifics
- Foodex24 experience: renting a warehouse three times more expensive
- Mistake №2. Forgetting about data exchange between warehouse and online store
- The Foodex24 experience: spending 6 hours for delivery and losing more than 100,000 UAH
- Mistake №3. Your employees don’t know the warehouse map
- Foodex24 experience: picking an order about 40 minutes
- Mistake № 4. Not to monitor the expiration date of products
- Foodex24 experience: accepting products that shelf life is expiring
- Warehouse logistics outsourcing: how to avoid warehouse management mistakes
- Selecting a 3PL provider to outsource warehouse logistics
- Сonclusions: Warehousing management is an important part of business
Warehouse management is an important part of the business processes of commercial companies. On the other hand, warehouse logistics is not a major business activity. As a result, companies face difficulties: how to choose a storehouse, organize its work, build processes, and so on.
In the PROMAN publication, entrepreneur Vladislav Savenko described how he launched online delivery Foodex24 in 14 days and shared the problems encountered. His experience proves that warehouse management is not as easy as it seems.
In this article, we will show what mistakes make new companies in warehouse logistics by the example of startup Foodex24. We will also explain how to avoid problems in warehouse management even if your company has recently evolved in the market.
Mistake №1. Renting a warehouse without taking into account business specifics
Finding a suitable warehouse is a difficult and important task. The premises should be the most efficient solution for receiving, handling, storing, and distributing goods. Besides the fact that the warehouse has to meet the requirements of the business, it must be profitable.
Foodex24 experience: renting a warehouse three times more expensive
According to Vladislav Savenko, Foodex24 decided to deliver products not from supermarkets, but their warehouse. But the company spent a lot of time looking for storage space. But even when the “perfect” warehouse was found, it turned out that it had no permissions. Getting them could take more than a month. There was no time to wait.
Therefore, the company had to urgently look for a new warehouse, but already with all permissions to store its products. The cost of renting premises tripled than was expected.
Tip from WareTeka: You should responsibly select a warehouse. It is very important to choose a storehouse based on business needs and the specifics of storing your goods rather than the cost of the rental. Be ready that searching for a suitable warehouse will take some time and may require additional investment. If you don’t know how to make proper selection criteria or a list of necessary permissions, please contact an expert.
Mistake №2. Forgetting about data exchange between warehouse and online store
Before reaching the buyer, the goods pass a long way. First, the customer makes an order, then the information gets to, for example, CRM. Managers send a request to the warehouse so that employees can complete the order and send it to the final consumer. If a mistake occurs at any stage, it negatively affects the following processes.
The Foodex24 experience: spending 6 hours for delivery and losing more than 100,000 UAH
According to PROMAN magazine, the founder of Foodex24 counted on the high speed of delivery. However, in the first days, they were forced to bring orders in six hours.
When the company started to operate and work normally, failure in the accounting system and the logistics program took place. The data was displayed incorrectly: about 50 orders managers simply couldn’t see, addresses and phone numbers were shown incorrectly, the stock balance could not be estimated.
A failure in information systems caused several problems at once. First, the couriers could not deliver the orders on time, and the information about the availability of products on the website was wrong. When users ordered the product, managers had to call back and report that the product was not available.
In addition, the company had no time to upload certain categories of goods. And when the system fell it was impossible to do that. That’s why the goods purchased earlier totaling 100,000 UAH were just stored in the warehouse, expiring their shelf life.
Tip from WareTeka: It is very important to ensure fast data exchange between the online store and warehouse systems. In the first stages, it is possible to process and enter information about orders manually. But as your business expands, the accuracy and efficiency of manual processing will be lower, and the number of errors will increase exponentially. It would be better to consider how data exchange would be done in advance.
Mistake №3. Your employees don’t know the warehouse map
We have already explained how a properly designed warehouse layout can significantly increase efficiency. You can read our tips in another article. But even the most modern warehouse with all the necessary communications and equipment can be inefficient. It happens when staff can hardly navigate through it. They don’t know where certain categories of goods are stored, search for a film for a long time instead of quick packaging, and so on.
Foodex24 experience: picking an order about 40 minutes
According to the founder of Foodex24, it had to take no more than 20 minutes to deliver orders within 1.5 hours. Then the couriers would have had more than an hour to deliver the order without delay to any part of Kyiv.
However, Foodex24 hired employees and started the activity too fast so the staff couldn’t learn the warehouse map. So one order could be picked for an hour. If you add time while the courier takes the order to the customer, the delivery was too slow. When the staff was already familiar with the warehouse layout, it took about 10-20 minutes to complete the order.
Tip from WareTeka: Give your staff time to learn the warehouse map. Don’t forget that each product must take its place. It is also important that warehouse staff maintain order. Because if things are in right place, the speed of the operation is increasing.
Mistake № 4. Not to monitor the expiration date of products
It is essential to observe the conditions of storage and the shelf life of the products. Otherwise, spoilage of goods and losses cannot be avoided. It is not enough simply to order products, unload them, put them in the system, and place them in the warehouse. The products must be thoroughly inspected and sorted according to their shelf life.
Foodex24 experience: accepting products that shelf life is expiring
Foodex24 found that there are a lot of products that expiration date is almost over in the warehouse. Many suppliers brought such kinds of goods, and company employees accept them because of their carelessness. Online delivery had to sell out the product to benefit from this situation.
The company solved this problem thanks to regular inspections of dates and sales of products on a first-in, first-out basis. The company sells the first goods that were first received. Reducing the price of end-of-life products also helped Foodex24 to minimize losses.
Tip from WareTeka: Take stock of products and monitor their implementation. Of course, it is impossible to avoid storing products with a short expiration date. Therefore, many companies use a first in first out basis (FIFO). According to this method, goods that enter the warehouse first must be shipped also first.
Warehouse logistics outsourcing: how to avoid warehouse management mistakes
As practice shows, most companies make mistakes because they have no experience. Moreover, warehouse logistics is a sector-specific activity that plays an important role in business but is not the main direction for the company.
To avoid mistakes in warehouse management, small and medium-sized businesses should outsource logistics to 3PL providers. These are companies that deal with logistics professionally: they can plan product flows, the stock balance, invest in professional software. In addition, the experience of the partner’s logistics provider helps many companies to avoid mistakes at the beginning of their activity.
Comparing the Foodex24 experience, the main advantages of warehouse logistics outsourcing are:
- You don’t need to rent a warehouse – you use your partner’s premises. Since it is the main activity for 3PL logistics, they invest in high-class warehouses (typically A or B).
- You don’t need to invest in purchasing and maintaining a warehouse management system (WMS). Logistics providers use specialized software for quick and convenient data exchange with partners. You can update information about the availability of goods on the website, monitor the stock balance. As a result, the level of customer service is increasing, and the delivery is becoming faster.
- You have already well-qualified warehouse staff. You don’t need to hire people to work in the warehouse. A logistics partner provides you with a human resource with good experience in this field and knows how the warehouse logistics processes should occur.
- Every item that enters the logistics partner’s warehouse is thoroughly inspected. 3PL providers are interested in ensuring that your business doesn’t suffer losses. When the goods enter the warehouse of the logistics provider, the employees check the number of products, expiration dates, make sure that the packaging is not damaged, and so on. In this way 3PL guarantees quality.
Warehouse logistics outsourcing allows businesses to focus on their main activity.
Selecting a 3PL provider to outsource warehouse logistics
Although warehouse logistics outsourcing allows optimization of processes, it is difficult to find a suitable 3PL provider in practice.
In Ukraine, the contract logistics market is closed: if you try to find information, you probably wouldn’t get data about conditions and tariffs. Companies send requests directly to 3PL providers. Then you’ll waste a lot of time analyzing the information, reaching an agreement on details of the cooperation, signing a contract, and arranging the data exchange.
We offer a solution — WareTeka On-Demand service. It is a service for companies that want to quickly choose a logistics provider taking into account the specifics of their business.
Now WareTeka cooperates with more than 30 logistics providers throughout Ukraine. Therefore we have up-to-date information about the contract logistics market and 3PL conditions. To choose a logistics partner, we analyze the characteristics of your business: in which cities your company operates, what turnover it has, what type of product to store, and so on.
Contact us and we will find you the best partner for warehouse logistics outsourcing.
Сonclusions: Warehousing management is an important part of business
Every business needs resources, a team of experts, and, of course, excellent management. Even significant investments can be wasted if they are not managed properly. It is impossible to avoid all the risks, so a good option is to ask for help.
Warehouse management in the logistics of the enterprise is of particular importance. Efficiently organized warehouse logistics facilitate well-coordinated work of the whole company and profitability of the business. In no case, this field shouldn’t get out of your control. If you don’t have specialists in the field or a suitable storehouse, that’s not a problem. Contact a reliable 3PL provider and get organized work of the warehouse without risks and extra costs.