In today’s 24/7 business cycle, warehouses must be fully integrated and ready to provide instant information about inventory as it is being handled. To remain competitive, this means updating information as soon as tasks are completed and being Web-centric in order to meet growing customer expectation for round-the-clock responsiveness. 

This trend will continue to grow, with short and long-term growth relying upon a company’s ability to evolve, keep pace with change, adopt the latest technologies and break free of obsolete systems.

The imperative falls on oversight managers to find new strategies for aligning operations, customer support and labor resources to ensure effective problem solving and quick execution. The ability to adapt has become an essential component for companies making the transition from catalog to digital sales of its product line, while managing the challenges of a large centralized distribution facility. 

Keeping Customers and Workers Happy
While many companies have shifted into an Internet environment, some have failed to recognize the need to update warehouse management. This situation calls for the leadership team to take an in-depth analysis of their market and recognize the two-pronged challenge: customer dissatisfaction and decline in workforce morale.

When a warehouse is failing to meet demand in a timely way, Internet customer dissatisfaction about delivery times will grow, bringing such comments as, “Why do I have to wait three days?” On the other end of the spectrum, a workforce that is tasked to work overtime to meet the flexible demand schedule leads to increasingly dissatisfied workers, bringing such comments as, “I hate working late and on weekends because we have fallen behind on orders.” 
To address these conflicting challenges, the management team should meet with employees representing all aspects of the company’s operations to start a dialogue, evaluate their suggestions and gather information regarding customer satisfaction. 

Understanding New Challenges in the Digital Age 
Managers should also take stock of key trends brought about by the digital age, including: 

• With the 24/7 digital age, customers have higher expectations, i.e., same or one-day shipping service. 
• With the standard work schedule -- the way most companies have always done it – orders made on the Internet can pile up over the weekend. 
• When work schedules fail to align with customer demand, workers fall behind -- adding pressure and creating an unpredictable work schedule -- which in turn leads to costly overtime. 
• All of the above issues can lead to delivery delays and unhappy customers, who will take their business elsewhere. 

In the digital age, a perceived lengthy time gap between order and delivery is no longer acceptable, especially for time-sensitive health and wellness products, like catheters and disposable underwear. 

Adding to the challenge, when a company has a broad inventory or one that includes a complex product line, any commitment to a one-stop solution and shipping in-stock orders within 24 to 48 hours is compromised without the right strategies. 

Two Important Strategies
To overcome today’s challenges, companies should create a two-part plan to realign labor resources to meet peak demand – and, at the same time, improve customer satisfaction.

Strategy Number One
In periods of high demand, warehouse employees should work longer hours to accommodate the volume. On slower days, they should work shorter days. This reduces overtime costs. If overtime is still required, it should be scheduled well in advance so that workers can have an opportunity to better manage their private time. 

This strategy can eliminate 90–95% of shipment delays, and greatly improve customer satisfaction. What’s more, workers will be more content because they have a predictable schedule that allows them to coordinate commitments outside of work. 

This simple, clearly communicated and effective solution has been shown to enable companies to better manage customer and labor expectations, and reduce costs. 

Strategy Number Two
Cross-training employees can be highly effective, and benefits everyone because each warehouse employee is learning every job in the warehouse. The result is that, for example, if the main forklift operator is out sick, anyone on the floor will be ready, able and well trained to take his or her place. 

Real World Success
Let’s take the example of a national distributor of healthcare products. Its fill rate was less than 50% of products sent on the day received, and only two-thirds were shipped by the end of the next day. After implementing the above two-part strategy, today the company benefits from exceptional results:
• Two-thirds of the orders go out the day they are received, while 97% go out by the end of the first day 
• Customer inquiries about estimated delivery have reduced by more than 50%
• There has been a 20% reduction in head count 
• The workforce is happier, creating a more optimistic company culture and a labor force that is working toward the same goals

The real-time standard of the digital age has created new challenges for warehouse management. Thanks to two simple strategies, companies can better serve customer’s needs while maximizing labor resources. In order to remain competitive and position themselves for more sustainable growth, companies should not only adopt these changes, but stay flexible and open to new ideas going forward. 

Kray Kibler, chief financial officer, Scrip Companies, first joined Scrip in May 2006, gaining broad and deep experience throughout the business with responsibility for oversight of the Company’s financial, IT, human resource, customer service, distribution operations and field/corporate sales. Prior to joining Scrip, Kibler served as corporate controller at AbilityOne (Patterson Medical) from 2001 to 2006, where he oversaw the financial and IT operations during a period of rapid growth and acquisitions. Before this, he spent seven years in public accounting before holding positions as a tax manager at Wilson Sporting Goods and as a controller for a national not-for-profit organization.