While some organizations may continue to operate the same way they did 50 years ago, today’s competitive business climate is forcing distributors to take a closer look at their warehouse operations and re-evaluate 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 for the recently released Peerless Research Group answered Material Handling Technology Study 2022 said their companies are currently in a phase of “cautiously embracing change”. At the same time, 19% said they are taking a wait-and-see attitude and 23% said they are evolving slowly and are among the last to adopt technology.
Looking at these poll results reminds me of a Bob Dylan song I’ve always loved, titled Times are changing’.
While the “cautious middle” approach to digital innovation isn’t new, it’s a mindset that has historically plagued the distribution industry. And that’s why we still hear companies unconsciously utter what I call the six most expensive words in distribution: “We’ve always done it this way.”
Unsurprisingly, the solution usually consists of using the right software and hardware to revitalize the business. That said, many find it difficult to understand the importance of adapting to evolve, even though it is critical to the bottom line and longevity of the company. Unfortunately, the urgency of this need is usually not recognized until it is too late.
Escape the comfort zone
In my years of working with business application software for companies, one of the biggest hurdles I’ve seen has been looking at how decision makers choose to stay within their own comfort zone. This is common, but by no means exclusive, for businesses run by generations of families who are content with the status quo. Fixed when she goes (a nod to another group of musicians I’m a fan of, The Raconteurs) is the approach; however, this mindset comes with significant hurdles when there is a stronger need to make changes that would otherwise improve the business.
The growth is great. That is until it starts hindering the ability to get goods to the customer accurately and on time. Equally concerning is the fact that I’ve witnessed distribution companies add more workers to their warehouse under the guise of “growth” – when in reality they support inefficient, manual processes that rely heavily on institutional knowledge. What these organizations often discover is that adding more employees does not necessarily lead to increased productivity, because paper-driven processes deprive them of the ability to achieve the level of accuracy and efficiency necessary to remain competitive in an increasingly digital becoming world.
When owners become complacent or agree to the “we’ve always done it this way” approach to warehouse operations, they risk eventually having to 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 failure stories and have the mindset to keep evolving with the technology of the times that keeps their operations efficient and competitive.
Create a concept of the need
As our industry advances with new technologies, I still see warehouses and distribution centers using old-fashioned techniques such as whiteboards or spreadsheets to manage inbound and outbound logistics. For some, it’s less about being trapped in a comfort zone and more about the 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 real opportunities they are, providing examples is essential. Let’s say you’re considering a warehouse management system (WMS) to streamline and automate your business. You may be told that a WMS will have a positive ripple effect across your entire organization, from human resources to the C-suite, and that you can expect significant operational benefits in almost every functional warehouse area from receiving, warehousing, and warehousing. from picking to cycle counting, shipping and more. But let’s see what these benefits look like in practice.
Consider, for example, a WMS. At its most basic level, a WMS eliminates paper-based processes that directly hinder business growth. Paper-based systems inherently lead to more errors and customer frustration because every time a warehouse manager fixes an error, it costs the company money. Paper will never compete with automated systems. In addition to operational inefficiencies, consider 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 wants to compete in picking accuracy, delivery and improved customer service, the WMS would enable them to ditch paper for good.
Let’s take this example a step further. A WMS that provides inbound transportation management provides full control over delivery scheduling by simply assigning specific times and slots. This ensures that the correct equipment and manpower are ready to unload (e.g. pallet loaded vs. floor loaded). When the shipment arrives, employees can check in and out of the trucks as the system automatically records statistics on both sides of the operation. Empowering warehouse managers to more effectively monitor time, space, employees and suppliers is a win-win for everyone.
Ask any distributor responsible for fulfilling e-commerce orders and they’ll tell you that returns are a big deal. The right WMS can make life easier by arranging the logistics to manage returns. These tools help e-commerce distributors realize 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 pave the way for the betterment of your business, it is easier to conceptualize and justify a WMS investment. This allows you to overcome any stagnation that comes from that “we’ve always done it this way” mentality.
Turn obstacles into opportunities
Embracing technology and digital transformation isn’t about giving up control or leaving your comfort zone, it’s about changing your perspective. At the same time, it usually comes down to user acceptance and confidence that the software and hardware will do the job for which it is intended. The key is to find a true supplier partnership that will equip your warehouse or distribution center with the right technology and support it needs to foster a paradigm shift that will effectively turn perceived obstacles into viable opportunities. The result can help your business save costs and eliminate outdated and costly manual practices.
While the six most expensive words in distribution are “We’ve always done it this way,” ironically, the six most transcendent words in distribution reflect the name of a Jason Caraway country hit, “I wish we had done this sooner.”
Biography of the author
Mark Van Leeuwen came along PathGuide Technologies, Inc. for more than 10 years. He has over 25 years of experience building a strong customer base and ensuring customer success by working with distributors to understand and appreciate their unique business problems and opportunities.