Weekly Logistics Report
This week's update contains two choice article summaries:
- A perspective to consider: FBA vs. in-house fulfillment
- Should you be automating your warehouses without robots?
FBA Changes as we Prepare for a Successful Peak (US)
Amazon is becoming more selective for who qualifies for FBA
Companies who do not qualify must remove their products from Amazon warehouses
In July, Amazon became more selective with who qualifies to sell through Fulfillment by Amazon (FBA). In an attempt to make warehouse space for high performing products, Amazon raised the qualifying criteria for low performing products. This selection process is determined by the Inventory Performance Index (IPI); merchants with a sub-500 score will no longer qualify.
The IPI is a composite of:
Excess inventory level (units of inventory that is in storage for over 90 days)
Sell-through rate (how much inventory is sold by the amount of inventory)
Stranded inventory level (how much of your inventory cannot be sold because of an inactive listing on their website)
In-stock inventory level (whether you have enough inventory for your popular items)
Companies affected by this change may look into other 3PLs or in-house fulfillment. Here's a quick breakdown of pros and cons for both:
Pros of a 3PL: no need for their own warehouse
Cons of a 3PL: little visibility and lack of control over fulfillment processes (i.e. size of box products are packaged in and the carriers packages are shipped with)
Pros of in-house fulfillment: visibility and control over fulfillment processes (ability to drive down costs)
Cons of in-house fulfillment: requires a robust TMS to run fulfillment operations
Smart Packing and smart multi-carrier rating tools can help companies who are moving fulfillment in-house gain visibility into their warehouse operations and drive down any related costs. Additionally, businesses looking to reduce their impact on the environment should also factor in utilizing optimal box sizes to minimize packaging waste.
Warehouse, Parcel Operators Add Thousands of Jobs Ahead of Holidays
Source: The Wall Street Journal - read the article here
32,200 warehouse jobs were added in September
Companies will need to look for alternative strategies to keep fulfillment costs low
The eCommerce industry is booming; companies are adding thousands of warehouse workers. According to the U.S. Bureau of Labor Statistics, there were 32,200 additional warehousing hires in September alone. With eCommerce as the preferred way to shop both now and in the future, companies will need to look for alternative strategies towards managing fulfillment costs.
Businesses often assume employing additional warehouse workers is the only solution to handle increased shipping volume. Unfortunately, the salary of additional workers and carrier surcharges won't improve profit margins.
The answer is finding a shipping solution that enables businesses to handle increased orders with fewer employees. This isn't a pipe dream. With the right shipping software in place, businesses can do just that.
One way we've seen businesses improve efficiency in today's market is by switching from separate pack and ship stations, which require at least two employees to be present, to a consolidated pack and ship operation that only requires one station, which only requires one employee be present.
Instead of throwing bodies at the problem, automating warehouse processes allows eCommerce businesses to achieve a higher level of throughput with fewer employees.