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Logistics or Warehousing?

I remember the excitement of signing our first lease for warehouse space in the 1980s: 15,000 square feet seemed like a cavernous abyss that would hold countless cartons of forms and stock paper. It also meant that I could sell even larger orders and help customers with their space management. I would hire someone to watch the inventory and someone to deliver it. Simple, right?

“Warehouse logistics is a science,” warns Steve Dodson, Vanguard Direct’s director of logistics for the past two years. “Planning, coordination and implementation is at the core of operating a distribution center.” Dodson knows full well the sophisticated logistics required of what we casually call “warehousing.” He worked for 15 years at Sears. “With such a large organization,” Dodson said, “it was vital that we continually found efficiencies in our process.”

Dodson says that minimizing costs through efficiencies is the premise behind logistics. Physical layout, flow of inventory, stocking methods, inventory methods, and receiving and shipping are just some of the factors involved with designing a good logistical process.
If you ask Dodson a question about a task, he’ll produce a spreadsheet analyzing all of the possible outcomes. “I tend to be analytical,” he admits, “but you have to be. Everything we do involves a combination of people, systems and processes resulting in a myriad of ways to approach a task. My job is to select the best one and execute.”

When Vanguard operated a small warehouse, our attitude was “put 10 pounds of potatoes in a five-pound bag.” It didn’t matter where we put the inventory or how long it stayed there; we just wanted to help our customers. This led to painful inventory taking, constant carton shifting, and much more labor involved with every task. I remember moving 10 pallets of paper to get to a single carton of forms in the back of the warehouse.

“Minimizing footsteps is the key to an efficient operation,” says Dodson. “Each item that comes into our location is profiled and placed accordingly.” Dodson designed Vanguard’s new distribution center using industry-accepted profiling methods. Fast-moving items go in flow rack positions; slow-moving items reside on less optimal flow rack positions or shelving, while reserve inventory is kept in the bulk storage area. Dodson convinced Vanguard’s owners to invest in a conveyer system as well. The conveyer runs throughout the flow rack area and significantly reduces the cost of picking. “For the same level of business, we had four times as many employees picking inventory in our old location as we do now,” Dodson says.

Dodson employs an alphanumeric location identification system utilizing bar code technology to assist in locating and tracking inventory. The system is simple and allows someone with little training to find the exact location of any item easily and quickly. “Our warehouse is dynamic,” says Dodson. “A carton of print can move from bulk storage to the flow racks to the hand assembly area and back to the flow racks. It’s important that we can easily track items.” While bar coding is time consuming and labor intensive in the initial setup, it ensures accurate inventory and more efficient item retrieval. According to Dodson, not everyone should bar code inventory. The decision stems from how many inventory items you have and how much it might move around the warehouse during its storage life. But, Dodson warns, “if you are growing your business, it’s important that you install it before you get too big and lose control of your accuracy. It costs way more to look for something than to know where it is and go right to it.”

Speaking of accuracy, when asked about the single biggest problem in keeping accurate inventory, Dodson said “one area beats them all – receiving. More than 90 percent of all accuracy issues stem from the original receiving. The typical receiving department wants the goods received and put away as quickly as possible, ignoring minor details. This causes big problems, especially when it comes time to do a final reconciliation.”

In an antiquated warehouse operation, inventory shortages are the norm. It’s rare that you end up with too much. Dodson believes that receiving should be a deliberate task with a detail-oriented staff. “I look for meticulous and methodical people for receiving, versus highly energetic people for the picking and shipping area,” he says.

If you choose a third party fulfillment facility to work with, Dodson suggests looking for one that is clean, organized and secure. “In addition to talking with the manager or salesperson, take the time to meet some of the facility staff and determine their competence level,” he says. Simplicity in pricing is another key factor, since many operations have complex invoicing with hidden costs. “Make sure you have verifiable costs with an audit trail,” advises Dodson.

Today, with 100,000 more square feet of warehouse space, Vanguard Direct has a comprehensive and scalable logistics offering. You might think it’s a luxury, but our clients insist on it.