3 Ways to Innovate in Operations and Fulfillment and Deliver ROI

innovation

This past week we visited one of America’s largest omnichannel retailers to discuss a radically different service concept they were contemplating. If successful, the new service will be a disruptor for many businesses in the multichannel marketplace.

What really surprised us was their department dedicated to researching new concepts, systems and services. Think of it as a laboratory with a sizable budget to research, find applications, adopt new concepts and discard ones that didn’t prove out or have a return on investment.

As fast as ecommerce and omnichannel is changing, is your company using its resources – time, money and talent – to continue to move ahead? Ecommerce, marketing and merchandising have research projects. Are you innovating in operations and fulfillment fast enough to lower costs and improve customer service? Is there enough time and budget set aside to reach specific break through ideas?

In two of our prior blogs we discussed innovation in fulfillment centers, including this one and another on our recent Operations Summit session “Build, Buy or Best of Breed,” in which Shao Li of Uncommon Goods showed us their in-house designed and built handheld scanner, developed for around $10,000. The manufacturing cost was 10% of commercially available units. The project uses a scanner frame produced on a 3D printer plus commercially available technology and runs off the Android OS and related smartphones.

Every one of us has an endless list of projects, peer and performance reviews added to our plates. I’m just saying some of the more critical projects need to be formalized, defined, scoped and even funded to research their application to your operations.

To help with defining the project, consider these four key points as you frame up the parameters with management:

  • Project Statement: a succinct statement for the research project;
  • Benefits: you want to achieve from the project if it proves feasible and has ROI;
  • Objectives: for the potential project to be detailed including requirements, needs of the users, expected cost, timeframe, ROI, etc.;
  • Resources: what internal resources (e.g. HR, IT, management sponsor) and funds will be involved in the research phase. 

Three Project Examples 

Here are three examples that can benefit many fulfillment centers. My purpose is to get you to think about where you can get the most benefits in your operation and how you can define the research objective.

Scenario 1

Project Statement: Determine how to report productivity by department and employee

Benefits: Report actual vs. planned cost for units, orders and packages shipped in your operations weekly. Ultimately, report goals vs. actual costs to improve management of labor cost and budget.

Objectives: Report hours worked and labor costs by department – receiving, put away, replenishment to forward, picking, packing, shipping, returns and inventory control. The research phase should include hours worked by function and employee, combined with units of work achieved in the same time period. Record when employees change functions during the day, such as going from receiving to returns processing. What are the ballpark costs for the systems and the data capture equipment?

Resources: Include HR in the project; include senior management and your first line management as needed. Invite vendors to make presentations of their capabilities. Recommend conferences which have sessions helpful to the objective.

Scenario 2

Project Statement: A feasibility study on how your warehousing functions can be greatly improved through implementing a standalone WMS.

Benefits: The ability to track labor costs and inventory more closely through your operation. You can add modules such as labor management and inbound/outbound transportation management systems.

Objectives: The present OMS would remain in place. What major functions could be enhanced or are new to the operations process and systems? Could there be labor savings? What equipment, programming and human resources are needed?

Resources: Include IT in the research process. Invite vendors to make presentations of capabilities. Once you understand the potential benefits, talk with selected companies.

Scenario 3

Project Statement: Improve line managers’ abilities to manage operations throughout the distribution center.

Benefits: Reducing errors and labor costs, and providing better direction and nurturing employees under their control, reduced absenteeism.

Objectives: Identify individual needs of line managers, and develop a plan for improvement for each one. Identify relevant educational programs through community colleges, university, consultants or online programs. Are there specialized topics that could be addressed in one- or two-day in-house sessions that senior management can prepare and present? Estimate budget, timeframe and potential results.

Resources: Include HR and senior management in the objectives to get their perspectives. 

These are three major innovation projects that most fulfillment centers can research, develop and implement that will deliver a return on investment. Happy innovating!

Curt Barry is Founder and Partner of F. Curtis Barry & Company

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