Radical Efficiency: How ShipStream Optimizes Inventory Management and Fulfillment Needs

How much better would you sleep at night if your inventory was managed correctly and your fulfillment center was running as smoothly as you know it could?

At ShipStream, we work with shipping experts just like you to achieve what’s possible with your space, products, and team. Merchants get the reliability they need for matching production to orders and fulfillment, while 3PLs get scalable organization required for handling a wide range of customers and their sales channels.

We accomplish this by helping your facilities stick to leading best practices and optimization efforts, which are all built into our best-in-class solution.

Your fulfillment is at its best when it considers the entire supply chain and end-customer for every order. So, let’s look at what that might mean for the way you’re organized, and what can be done to maximize the capital you have available.

How Does ShipStream Embrace Lean Inventory?

Lean inventory management is a systematic approach to tightening up your inventory and supply chain. The goal is to reduce waste and protect margins through continuous improvement.

Our philosophy is an expansion of lean supply chain and manufacturing processes to look specifically at the warehouse and all the places you can save on time, cost, and stress. Running a lean inventory helps you maximize every product and SKU, having as few things as possible getting in the way, taking up space, or eating into your margins at any given moment.

What does lean inventory management mean for your business?

Lean inventory management has five pillars that help you understand its purpose and impact. They’ve been given many updates and names over the years, but we look at them as:

  1. Identify Value: Define the value that your company hopes to get from a better inventory practice. Where do you benefit? How can this change improve your work? How does your team get this change?
  2. Flow: Examine your existing process and see how current inventory flows through your warehouse and supply chain. Map everything you can and start looking for redundancies or extra work. Remove obstacles and inefficiencies.
  3. Kanban (Pull): Only pull inventory when you have an order for it. Excessive inventory can slow down any process and may increase waste output, so limit how much you move and when to protect costs and keep the workflow smooth.
  4. Kaizen (Continuous Improvement): The most significant gains happen incrementally, and Kaizen is about getting your entire team to work together to improve efforts. This principle helps you stay adaptable to change by being flexible, which every warehouse needs.
  5. Perfection: Perfection is an ongoing process of planning, testing, and implementing changes to keep refining inventory and practices. Six Sigma is often applied here to help companies stay on track with improvement goals.

Those are high aims for any warehouse, but they do come with targeted gains.

Lean inventory management is also designed to address seven common areas of waste.  These will improve your operations in a variety of ways across the entire supply chain.

What are the seven wastes of lean?

Lean manufacturing and inventory practices consider a wide range of wastes, and specifically target seven that it can remove from your processes.

  1. Transportation: Transportation waste is when materials are moved without being directly associated with a sale or order. You’re moving goods from one location to another without it supporting an order, so waste is related to staff labor, equipment, training, and extra space.
  2. Inventory: Inventory waste includes anything related to goods that you’re holding. You’ll face costs for storage, capital tied up in it, transport, containers or equipment for holding the inventory, climate control systems, and more. This also includes if stock is damaged due to space limitations.
  3. Motion/Action: Waste of motion is any motion or action taken that does not add value to your service or offer. It covers human motion as well as the use of equipment, and layout is a common culprit that makes people reach too far, walk too much, lift heavy objects from high shelves, or search for consistently misplaced items.
  4. Waiting: Idle time is lost money. Doing nothing or having to move slowly because another process is backed up generates significant waste, but lean’s prioritization of workflow management can eliminate much of the time operators spend doing nothing.
  5. Overproduction: Overproduction generally refers to manufacturing too many products, tying up raw materials, space, and human capital. For warehouses and fulfillment centers, overproduction generally means having to store inventory beyond what is being sold, increasing costs associated with managing stock. Overproduction can compound waste because it can generate additional waste in transport, storage, motion, and more.
  6. Over-processing: Over-processing occurs when companies focus on adding more value to a product than the customer requires. Generally, this is expressed by the example of painting a part that a customer will never see. For your warehouse, this could be investing in unnecessary temperature controls, packaging or infill that the customer doesn’t need, or working in areas with ambiguity. When you don’t have standard procedures and processes, some employees may become less productive as they take more time or duplicate procedures.
  7. Defects: Defect waste in the warehouse centers on your order handling and occurs whenever a mistake causes you to need to duplicate, replace, or refund an order. Typically, these errors occur when there has been a mistake in order data entry, errors in pick and pack, missing deliveries, or a mistake that causes a product return. Training, failure to check orders, bad suppliers, and cluttered warehouses are your big culprits.

How Can ShipStream Help?

ShipStream has created a leading warehouse management system designed to help you address each of these pain points and wastes, making it easier to implement and thrive Lean. Not only can we give you the metrics to understand inventory and related transport moves, but we provide fulfillment center design to help eliminate motion and waiting-related wastes.

Together, we’ll tackle your overproduction and over-processing concerns by using customer data. We top it all off with order verification and mobile scanning support to mitigate defects, reduce wrong orders, and lower returns caused by the fulfillment team.

How do I design my fulfillment center for optimal efficiency? 

Fulfillment centers and warehouses don’t have to look the same, and yours likely shouldn’t be built to a “standard” that’s not relevant to your data. Layout plays a significant role in how fast your team can pick and pack orders, put away inventory, and count what you have on hand.

ShipStream is designed to help you understand layout considerations for your facilities and make suggestions for optimizing efficiency. We know that aisle widths can make a significant difference if you’re using a forklift or are storing especially bulky items. Tracking product velocity can ensure that it is easy for pickers to get common products, minimizing walking and overall time per order.

Built-in measurements for your team, as well as overall order analysis, allows us to make ongoing suggestions to your layout for continual, compounding efficiency gains. You’ll also get help with minimizing dust and debris, avoiding gaps and empty spaces on shelves, and suggestions for packing station placement and technology to optimize your workflow.

Layout optimization

Here are some ways that companies are optimizing their layouts right now:

        Testing storing SKUs in an individual location or multiple locations across a warehouse

        Grouping products by standard orders

        Adjusting row size and shelf height based on traffic and common orders

        Reducing traffic by designating one-way rows or forklift-only locations

        Changing picking order for each sale to optimize traffic

        Testing multiple picking methodologies

        Preplanning picking waves

        Recording movement and actions across the fulfillment center for better data

        Identifying bottlenecks and training needs

        Supporting dynamic slotting

Warehouse setup checklist

ShipStream helps operations of all sizes, whether you’re managing stock from a single location, have multiple warehouses, or ship products for numerous clients. We can customize your layout and design best suited for each building, equipment setup, and product portfolio.

Contact us to learn more about warehouses like yours that we’re already helping. We can also provide information to gather for production and work areas, ergonomic considerations, and much more. We’ll put together a warehouse setup checklist specific to your operations to help you get organized and improve workflows, while reducing risks and capital requirements.

WMS for 3PL

A modern warehouse management system is a brain for your warehouse or fulfillment center. It manages, tracks, and facilitates all activity that happens at your location, including the orders that move goods through your supply chain. Everything that occurs in your warehouse can be tracked and supported by a high-quality WMS.

Using a WMS, you can look at warehouse and fulfillment activities happening at any given moment, review trends from last month or last year, and plan for tomorrow or next month.

The biggest reason you, or any 3PL, needs a warehouse management system is to reduce the risk of error, loss, damage, and waste. A WMS can automate many of your team’s daily tasks and help you operate better. Get rid of manual and data entry errors with automated order processing, auditing and verification of goods during the pick and pack process, automatic label generation for orders, receiving and putaway guidance, and even scheduling for your dock.

Every operation has relevant data.

A WMS helps you manage and understand that data so you can turn it into actionable information.

What is a cloud-based WMS?

A cloud-based WMS is simply WMS software that operates in the cloud, much like your email, ERP, and any of the apps you have on your smartphone. Instead of needing to install a server and data warehouse, your information is stored by the provider and accessible on any connected device.

Why is that important? A cloud-based WMS doesn’t face the restrictions of an on-premise solution. For your operations, that means it can scale as your SKUs scale or reduce, keeps up with inventory expansions, get more updates, and integrate better with the software your vendors, customers, and sales channels use.

A cloud-based WMS also means that if hardware at your location fails or is damaged, you don’t lose information. Instead, you simply go to another computer or mobile and get back to work.

How does it improve inventory management?

3PL order management can be tricky when inventory is difficult to count and track. A WMS helps you address this concern by tying inventory to specific clients and locations, with a constant trail of data to ensure you always know the right inventory to use for any order.

Perhaps the biggest inventory management benefit for 3PLs comes from the cloud-based WMS being able to scale with you as you grow.

So, adding a new customer or new product lines doesn’t cause you to hit a SKU ceiling or force you to create new pages and formulas in Excel.

You get complete inventory management that tracks everything you receive from a customer from the moment arrives until it leaves your warehouse bound for the final buyer. WMS inventory tracking and management ensure no products cross between customers and everyone is paying for exactly what they use.

With the right cloud-based WMS, your 3PL operations will always be able to see inventory and storage space per client, labor costs for each client, and the workforce you’ll need to meet receiving and fulfillment demands across your entire operation each day.

How to choose the right 3PL

Third-party logistics providers (3PLs) can make it significantly easier to run your business. They serve as your product distribution arm, reaching customers wherever they are and working to get you the most affordable carrier pricing. 3PLs often receive cheaper shipping rates from carriers compared to standard businesses because 3PLs work with multiple clients and have a high volume of daily shipments.

The right 3PL will help you control your inventory and storage costs, meet customer demands for speedy and accurate deliveries, and reduce many of the wastes we identified in our review of Lean Inventory Management.

But, how do you choose the right 3PL?

ShipStream has identified four of the top ways you can evaluate potential 3PL partners in order to find the right fit for your business. (And, if you are a 3PL, we’ve got a smart WMS designed to help you run a better operation and safeguard your margins at scale.)

Geography

The location of your 3PL matters for two reasons.

First, the further they are from you or your manufacturer, the more it’ll cost you to ship your inventory to that 3PL. Because they serve as your main warehouse and distribution arm, all of your products will move through your 3PL. The closer they are to you, the more affordable (and faster!) it is to move completed products to their warehouse.

The second consideration is affordably reaching your customers. A 3PL that is centrally located to your customers or that has multiple distribution locations can quickly move products. In today’s environment, even B2B sellers are experiencing the “Amazon effect” of having customers demand two-day shipping. 3PL location can make it easier to meet this demand without seeing your margins disappear.

Communication

3PL order management and fulfillment require a significant level of planning and communication. You need the ability to tell the 3PL when a shipment is coming in and what your orders are, and they need to be able to communicate inventory levels, product concerns, and costs.

Ask your 3PL how they communicate and if you can get alerts or immediate notifications when there is a concern — especially in terms of low stock, stockouts, product loss, or customer concerns.

Communication starts in the vetting process for a 3PL vendor. Find someone who is willing to work with you, explain their operations, and create a straightforward way to stay engaged. If a company takes this effort when they’re just on your shortlist, they’ll likely be a great partner if you choose to use their 3PL services.

Software

Part of the communication requirements for 3PL partners includes the software that they’re using.

Does it integrate with your CRM? What about your sales and order systems? Can you see into the operation to understand inventory levels and storage costs? Can you generate reports that include the 3PL’s data through a customer portal or direct integration?

You want a 3PL whose software works with you too. At ShipStream, this is one reason we make live inventory especially easy to share. 3PLs and their customers can access real-time inventory levels, plus it’s simple to integrate this across your supply chain — from production and storage to order and fulfillment — so you can forecast when to manufacture more goods and ship them to your 3PL.

The better the software your 3PL runs, the more likely they are to be able to control costs such as labor and storage. When a 3PL’s warehouse is organized best, you’ll both save.

Scalability

How big is your business today and how much do you want to grow in five years?

The right 3PL fulfillment partner is one who can meet both of those needs. When business owners talk to us about how to find 3PLs, customers, and other partners, we always discuss scalability. It’s important that you chose a partner who is able to grow with you and has a business trending positive like yours.

Specific to 3PLs, you should consider the overall growth of your business as well as your product offerings. An effective third-party logistics partner will be able to meet the increased demand for overall space in their warehouses as well as increases to the number of SKUs you have.

By using best-in-class software like ShipStream, the 3PL isn’t capped at a certain number of SKUs, products, or kits. They can adapt to your growing product lines with you so that your business is always able to test and grow in a way that makes sense for you.

Strategic inventory management

What would you do if there was a smarter way to store, count, and manage the inventory that makes you less likely to run out of stock, have spoilage, or damage your products?

That’s the promise of strategic inventory management, a data-centric approach that reviews your entire inventory, storage, and picking operations to focus on having the right products at the right time and location. By better understanding your inventory, you enable your operations to run leaner, managing costs and overhead while ensuring customers are satisfied.

5 challenges of inventory management

  1. Supply chain is too complex to track
  2. Manual errors incur costs
  3. Inventory counts don’t match actual items
  4. You aren’t able to forecast the future correctly
  5. You can’t assess people or performance

Solving the 5 inventory management challenges with software

  1. Using high-quality WMS tools, you can ensure that you have automatic restocking to avoid lost sales. Tools like ShipStream can factor in lead time and safety stock needs, even across multiple locations, ensuring that you understand your supply chain and are prepared for any disruptions.
  2. Automation helps you leave the Stone Age and protect your business by reducing manual errors related to inventory counts, order accuracy, on-time deliveries, and more. Avoid cost increases and reputational harm with smarter inventory management tools.
  3. The best inventory counting never stops, ensuring accuracy and reliability. ShipStream recommends you adopt warehouse tools that automate your inventory management and encourage consistent counting to minimize errors and determine untraceable inventory caused by damage, theft, or loss.
  4. It’s time to improve your data and platforms to support strong analytics. Tracking information across your entire supply chain and looking at historical data ensures that you’re operating with the best knowledge. Attain your goals with smarter software, whether that’s increasing cash flow by reducing capital investment in inventory, stocking up ahead of a busy season, or improving overall margins by getting rid of excess inventory.
  5. Training and workforce understanding are essential to running your warehouse like a well-oiled machine. Measurements like KPIs (key performance indicators) are needed to help you utilize working capital and prevent turnover as well as meet daily fill-rates and order accuracy targets.

How does ShipStream do it?

ShipStream aims to answer these and many more inventory management challenges by putting automation and data at your fingertips. We’ve taken industry best practices and turned them into task requirements, so pickers are always scanning each order, packers perform their own audits, and your dock runs smoothly for shipping and receiving.

Leadership gets smart dashboards that highlight every customer, order, and other KPI that’s important specifically to you. That’s on top of leading inventory tools, forecasting analytics, and warehouse analysis that helps you organize physical space as well as people and equipment for the highest operational efficiency.

How to scale business inventory

Whether you’re an ecommerce shop aiming to grow or a 3PL looking to take on more customers, scaling your business almost always comes with scaling inventory. To prepare yourself for tomorrow’s growth, you need an inventory management system today.

Scalability is the core focus of protecting your investment and that starts with data. Forecasting demand and marketing planning support ensure you properly prepare to meet what comes next. WMS tools are designed to help you plan for predictable growth and understand the cyclical nature of business.

By measuring inventory turnover across historical data, you’ll understand when to restock and how much budget to allocate to your inventory. With ShipStream, you’ll get help managing cash flow to optimize business inventory and scale storage and other requirements, all within the same dashboards and platform.

How to handle unexpected growth

Inventory control can make it easier to manage operating expenses that are predictable as well as those surprises we all hope for in business. When you reach unexpected demand and rapid growth, your cash flow needs to adjust.

By managing your entire operation in a WMS like ShipStream, you’ll be able to immediately see revenue requirements for unexpected growth and identify key areas you can adjust. Less successful products or those with longer lead times can be reduced to make room for new inventory. Ads and promotions can help clear out old stock.

And you’ll even get help ensuring you’ve got the necessary equipment and workforce scheduled, plus carrier requests and truck/dock management to meet increased order demands.

Using ShipStream to keep your operations smooth and reliable also helps you create positive vendor relationships. So, when you need to dramatically increase order rates or sizes, your satisfied partners are more likely to say “yes.”

Controlling handling costs of inventory

Every inventory and warehouse have its own unique mix of costs and considerations. There’s no blanket statement to help you manage costs or exceptions when they occur.

You need a customized plan that knows your business, products, suppliers, and carrier needs.

ShipStream is uniquely capable of tailoring reports, warehouse management, inventory tools, and business intelligence to meet the specific demands and scale you face at any given moment. Contact us directly for more information about how we tailor the entire system to your operations and what that means.

Don’t settle for a generic plan. Get specific with ShipStream.

Coordinating truck schedules and inventory management

One of the most important logistics management tools for 3PLs and large businesses is the management of your dock and truck schedules. One delay can impact your entire day, so working with your team, suppliers, and carriers is essential. Software, including WMS tools from ShipStream, is your best way to ensure that schedules run smoothly, and coordination can occur plus adapt to potential delays or issues.

Better trust and inventory scheduling are still a competitive advantage, especially during your busy seasons and holidays.

Having a proper team ready to receive each shipment as it arrives and one to load trucks when they’re ready can prevent backups and delays throughout your warehouse. Logistics management software can help you out here by understanding the size of shipments coming in, the number of orders going out, and the human and equipment requirements for managing orders.

Coordinating trucking schedules to optimize inventory costs

Logistics management software is required if you’re going to run as lean as possible because it can handle the complexities inherent in advanced docking procedures.

Cross-docking, for example, allows you to use recently unloaded goods in outgoing orders, often without shelving those products. Pickers instead will go to a designated dock area to finalize tasks and packers expedite these orders as well. You must have reliable logistics management software like ShipStream in place for this process to ensure goods are properly verified when unloaded and inventory counts protected as items come from the dock as well as warehouse shelves.

When you’re able to accurately move inventory and operate in cross-dock scenarios, you’ll see reductions in storage and handling costs as well as have less capital tied up in inventory. It’s a smart way to save if you can properly manage and time truck schedules and inventory management.

Value stream mapping

Lean management principles can be hard to visualize, which is where value stream mapping comes into play for companies like yours. This process helps you understand all the steps a product takes from creation to delivering to the end-customer, with optional routes for possible returns or replacements.

The purpose of value stream mapping is to help you identify every step your product takes, learn more about your business and partners involved, and see if there are areas of improvement.

Value stream mapping typically includes multiple types of flows, all of which are required to trace the entire lifecycle of your product. Some common flows include:

        Information: How orders are generated and move through your supply chain, including those that originate with the customer and any that may cover vendors, suppliers, and production arms.

        Materials: The goods and raw materials you need to create your product, including how it flows through each process. If you’re a 3PL, this can include kitting, assembly, storage, pick and pack, and similar activities.

        People: Complex processes or those with specific legal requirements may need direct, specific individuals to check or verify certain steps. It can be useful to identify these separately from materials because demands on individuals can vary and may impact your production lines differently than a lack of raw material would.

ShipStream makes it easy for you to look at required information and calculate needs, from cycle time support to managing pallet and batch size requirements. Plus, we’ll help you connect the state of things and potential improvements back to those 7 Wastes of Lean.

Streamline Pick and Pack

Pick and pack are the heart of your warehouse operations, ensuring that the right goods get to customers on-time. Accuracy, speed, and reliability of pick and pack are a make-or-break metric for every single warehouse.

When done right, optimized pick and pack operations keep costs low, customers happy, and give you plenty of room to grow. When things go wrong, you’ll face increased costs from returns, unhappy carriers and vendors, skyrocketing costs, high employee turnover, and many more nightmare scenarios.

It’s all about getting pick and pack right, which is why we’ve made it easy for your warehouse to incorporate industry standards and best practices as soon as you turn on ShipStream.

Pick and pack best practices with ShipStream

ShipStream is designed to help warehouse workers and managers put pick and pack best practices into place easily and effectively. We’ve programmed our WMS to facilitate the easiest picking and smartest order based on staff, workload, and warehouse orientation.

Here are just a few of the best practices you get as soon as you turn on ShipStream:

  1. Pickers work on the right number of orders for the smartest picking routes and methodologies based on warehouse size and order volume.
  2. Pickers get a list of items being picked that is placed in the order they’ll find each item.
  3. Scanning goods as they are picked and organized ensures orders are picked accurately.
  4. Pack stations work from the same lists and use scanners to double check every order before it goes into a box.
  5. Inventory counts are automatically updated with every pick and pack operation. Returns are also incorporated once your team approves them to be used for future orders.
  6. Workers are alerted when products look similar or SKUs are often confused, helping minimize human error.
  7. Recurring scanning and checks ensure inventory counts are accurate and operators have what they need.
  8. Alerts ensure that all products move from one station to the next, so orders stay accurate as they move throughout your warehouse.
  9. After learning your order data, ShipStream’s analytics tools can make suggestions for picking routes, shelf locations, and warehouse layout to optimize every aspect of your pick-pack operation.

Method support and improvements

Your warehouse is unique and sometimes your pick and pack methods will be too. So, ShipStream makes it easy for you to test and review multiple methods, while also suggesting operational improvements based on order volume and average products per order.

We’ve made it easy for warehouses of any size to support discrete order picking (working one order at a time), batch picking (picking as many of a certain product as you need for all orders), wave picking (combining batch and discrete), and even zone picking (multiple pickers grab products in their zone for all orders, with packers combining products from pickers to fill orders).

You tell us how you need to operate, and we support it.