Strengthening your supply chain one link at a time. 

Outsourcing Warehouse Operations – What Do You Need?

In my previous blog, which you can find here, I addressed best practices when considering the insource vs. outsource decision for managing transportation within an organization.  Many of the same principles apply when considering the same decision regarding warehouse management.  If the chosen strategy is to outsource warehouse operations, it is paramount that the bidding community understands all operational requirements in the most detailed levels possible.  It is best to provide these operations details via six components – Receiving, Putaway, Storing, Picking, Packing and Shipping.

To elaborate on this point, let’s take a look at those processes and information needed to define the requirements of each:

1. Receiving
   • How many trailers/containers arrive per day/week?
   • What is the percentage of floor-loaded vs. palletized loads?
   • How many average SKU’s are on each pallet? Each load?
   • What is the inspection/quality control and receiving process?
2. Putaway
   • What is the putaway process (to include new SKU’s)?
   • Does the system direct the employee to a location?
   • Who is responsible for maintaining the SKU Master?
   • Is the process different for backordered items versus regular stock items?
   • What is the process for damaged SKU’s?
3. Storing
   • How many pallets on-hand will be needed? Seasonality based?
   • Any special storage requirements (i.e. Heavy/long product)?
   • Is product stackable? How high?
   • Is any product considered Hazmat? What classification?
   • Are there any temperature/humidity requirements?
   • Are there storage methods that must be followed (i.e., FEFO, FIFO)?
4. Picking
   • Are there picking methods that must be followed (i.e., FEFO, FIFO)?
   • How many full pallet, case and each picks will be completed on an annual basis?
   • What are the picking profiles (cases per line, lines per order, etc.)?
   • Are there unique processes when picking sample items?
   • What is the verification process to ensure accurate picking of SKU’s and quantities?
5. Packing
   • What is the labeling process for each mode?
   • How do packing processes differ by customer, including third-party fulfillment providers (i.e. Amazon)?
   • What is the expected number of overpacks needed for the case and each picks?
   • What value-added services are required during the packing process?
6. Shipping
   • What is the process for arranging and selecting carriers for pickups?
   • What is the process for arranging customer deliveries and receiving delivery confirmations?
   • How many shipments by mode are expected on an annual basis?
   • What percentage of shipments are floor-loaded versus palletized by mode?

There are also common requirements across all processes, such as:

• What material handling equipment is needed across all processes?
• What is the technology infrastructure required to execute the processes (i.e. EDI connections, supplier/customer web portals, warehouse management system)

A best-in-class warehouse RFP contains answers to all of these questions, as well as any unique operational characteristics that require additional labor, material handling equipment, IT infrastructure and storage requirements.  This will help obtain the ultimate goal of an apples-to-apples comparison of bid responses and selection of the warehouse services provider.
 
—Brian Fish, St. Onge Company
 
 

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