Chapter 1 How to Maximize Warehouse Efficiency with a Shipping Audit
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As a small business, when you first start building out your shipping process, it’s easy to just do what gets the orders out the door and never re-visit how to make your processes more efficient. The first step in efficiency? Tackle your physical space and audit how the system is (or isn’t) working.
Just like weeding through the family garage, it often feels easier to leave the system you’ve had in place for weeks or months (or years) exactly where it is — inertia is real.
However, you should be examining what is working and where you may be losing speed and money. Even if nothing seems wrong, it’s still a good idea to do a shipping and fulfillment audit at least once a year to maximize efficiency.
Ask yourself the following questions.
1. How am I maximizing space?
Everyone has a few consistently top-selling items. Unless these are huge and unwieldy, they should be kept near your packing and shipping station for easy access and packing.
Better yet, if these items sell all the time, find a way to pre-pack them. Even if you work through a dropshipper, it is still possible to have the dropshipper pre-pack some goods in your packaging, saving time as those orders come in.
2. Is my storage area clearly labeled and are the products easy to find?
Remember the scavenger hunt from grade school? Give a friend or a person who has nothing to do with your shipping process simple directions to your system. Ask them to help locate a product in your storage area and get it to your shipping station as quickly as possible.
If they disappear for too long into the bowels of the warehouse (or garage, depending on your situation), calculate the time and ask them where they had trouble. You might decide on a whole new labeling and coding process to help any new employee quickly find your products.
3. Are my products stored in a way to maximize ease of access?
Don’t load heavy items on top shelves. Put frequently bought items in the easiest to reach places. Do you have items that are frequently bought at the same time, like socks and belts? Keep them on the same shelves.
Some businesses do well “kitting” those frequently bought together items and giving them a new SKU. Keep visibility clear. Do what works best, whether that means clear bins to see through or grouping items alphabetically for fast access.
Use a labeling system on both the product bins and whatever shelving works best for you that perfectly matches whatever spreadsheet or system you keep on file.
4. Is my shipping station organized efficiently?
Time yourself or a partner going through the process of packing a product for shipment.
Are the scissors, packaging and tape materials all together in a bin for easy access? Are the FedEx and Flat Rate boxes in the right place? Do you need to move the scale, or pre-build some boxes? Do you find there is a lot of physical backtracking through the process from start to final label, or are you able to have a streamlined assembly? Where can you cut steps, literally and figuratively, to save time and money?
5. Is my shipping station where it should be?
This tip relates to the one above. Evaluate where your shipping station is in relation to your storage space. If it’s not a seamless transition from picking to printing, it may be worth a reorganization.
Many of you started with businesses in a garage or your home office, or you may still be there. If your inventory is growing, ask if it is still wise to keep the product and the inventory in your home, or if you would gain efficiencies by renting a dedicated space.
6. Am I bookending the shipping process well?
By bookending, we mean, do you have a dedicated space on the front end of your packing and shipping area to store goods that have been sold but not yet packed. And, after packing, is there a clearly designated place for all packed goods to be stored until shipped?
You don’t need any product lost or misplaced along the route. Clearly marked bins, shelves or color-coded carts, (green for sold but not packed, red for “ready for shipping”) can make all the difference.
7. Does my shipping station have a clear documentation step in the process?
No one enjoys the drama of upset customers clamoring for orders they never received. The stress is compounded when tracking is haphazard or hard to access quickly.
Tax time is also massively easier when you have been diligent with your paper trails. What is your system for keeping track of notes regarding shipments and orders, receipts, invoices and more? Do you have a backup binder or print copy of recent orders in case computers are down?
Having an efficient space in which to do the physical parts of your shipping process is one of the easiest ways to save time every day.
Do you have the right warehousing tools?
Just as it is important to have an efficient shipping space, it’s also mandatory for you to have the right tools with which to ship your products.
Not having properly-weighed orders, insufficient boxes or packaging can cost you valuable time and money. While there are certainly fancier items to make your process even more efficient, these are your most essential items to help you get your orders out the door.
1. Shipping Scale
This is the first item you’ll need. The ability to accurately weigh your packages will save you time and money on postage, and eliminate the need to weigh and drop off your packages at the post office or carrier locations. Goodbye post office lines and trips! You can buy a shipping scale for under $50. If you sell only very light items (under 10 lbs.), a food scale might be an even cheaper route.
This one may seem like a no-brainer, but it’s important to get the right type of boxes for your products. Before you nail down exactly what you’re going to get, make sure you get a few samples so you can not only see the product in-person, but also test out which will ship your product for the least amount of cost while still adequately protecting your orders.
Once you’ve decided on a few sizes, you can save money by purchasing boxes in bulk. You can find a large variety of boxes at Uline or eBay. USPS offers free Priority Mail & Priority Mail Express shipping boxes and envelopes that can be delivered to your door.
3. Filling & Cushioning
Protecting your items from damage through filling and cushioning, without spending a ton of money, is also important. Fragile items may require bubble wrap or packing peanuts, but durable items don’t require much padding.
Even though it’s not specifically for packing, you can also recycle your newspaper and use it for filling and cushioning many items.
4. Label Printer
While you may already have a laser or inkjet printer, and they work just fine, we recommend a thermal label printer. They produce clear labels at higher speeds versus a laser or inkjet printer, and they never require ink.
Thermal label printers run a couple hundred dollars or you can rent them for as little as a few dollars a week.
5. Packaging Tape
Securing your shipment is important, and packing tape costs can add up. Discount retailers, and even the Dollar Store, offer quality packaging tape that works well. This is another area where buying in bulk can save you a bundle.
6. Tape Measure
Depending on the shipping carrier, the size of your shipment box can determine all or part of the shipping cost. Use a tape measure to calculate your item dimensions, and fit them in the box closest in size to save money. Don’t forget to allow room for packaging material.
Do you have the right boxes?
It’s not enough just to have boxes or use whatever you have lying around your house or warehouse; you need to source the right box sizes for your products and your orders, especially with dimensional pricing as the standard for FedEx and UPS.
The trick your parents used to play on you by putting a small present in a big box isn’t how you should be shipping your orders to your customers. So, let’s go over the keys to choosing the right box for your situation.
Finding a Source
For less customized boxes, you have several options. Box stores and postal outlets sell packing materials and packages for shipping both large and small items. USPS famously offers free boxes for using their Priority Mail and Priority Mail Express services, so if you use those methods, you may be set by just ordering from them at their online store.
If you want more choice, or if you want to use another carrier, you’ll also have to find another source. Some of our clients also source standard packaging and box materials through places like eBay.
There are many different sizes and shapes of boxes to choose from. Standard practice says to pick a package that is just slightly larger than the item being purchased (about 2″ on all sides) to accommodate for some protective packing material, but not so large so that the product is at risk of damage or undue shipping costs are incurred.
Your Resource All Your Boxing Needs
While there are many places you can find boxes, a big contender in the space is Uline, which claims 1,300 box sizes and types.
The most widely used and recommended shipping box is the corrugated box, or cardboard box, because it is durable and lightweight.
If you ship many different items of different shapes and sizes, your best bet might be a multi-depth box, so you can easily resize it as needed. Multi-depth boxes are scored at intervals on the sides of the box. To obtain the desired size container, you simply cut down to the size wanted.
Dimensional Weight Pricing
If you haven’t already done so, you’ll want to consider packaging changes to minimize the effect of dimensional weights. Keep in mind that for the carriers that enforce dimensional weights (like UPS and FedEx), they will choose the higher of the two rate types: dimensional vs. actual weight.
This is where choosing smaller box sizes, eliminating any extra packaging materials, and testing your particular setups before you start ordering packaging in bulk can help you keep costs down.
To Customize Packing Or Not?
As the ecommerce market grows, it can get harder and harder to stand out in the crowd. One way to do that is through unique packaging.
We all know the look of the Amazon or Zappos box. But is it a good idea for your business?
Pros of Unique Packaging
They’re not as expensive as you think.
“The cost of printing has minimal impact on box cost on any order size,” says Dennis Salazar, President and Co-Founder of Salazar Packaging, a packaging consulting company.
“Utilizing a flexographic process results in a much more affordable cost because the copy is pre-printed on the board before it’s made into boxes. The custom printed boxes are custom manufactured to order, so there are no stock or standard sizes. This also means you can get the exact size you need, not just something that is ‘close and available,’” notes Salazar.
They’re fantastic for marketing.
Having a unique box means your customer knows exactly what and from whom their package is.
Every time they look at that box in the future, your brand is immediately brought back to their mind, which may increase your repeat business from them. The box is the closest you get to giving your customers an in-person shopping experience: online shoppers can’t go in your store, peruse your shelves, and pick something out. But your branded box CAN replicate that experience on a much smaller scale.
They reinforce your branding.
Even though this technically falls under the gigantic umbrella that is “marketing,” it’s important enough to specify on its own. Your brand should have a certain personality, whether it’s geeky like Loot Crate, expensive & elegant, eco-friendly, or any of the other millions of options.
Your packaging should reflect that personality and extend it so that it’s easily accessible to and understood by your customer base.
Cons of Unique Packaging
It makes your orders easily identifiable.
While part of the entire reason you would have unique packaging is to let your customers know exactly what’s in their box and from whence it came, it does the same thing to passers-by. More than likely, you don’t want easily identifiable packaging if you sell high-value options. Then, your box might as well serve as a banner ad to potential less-than-ethical opportunists that the box contains some pretty expensive stuff.
While insurance and requiring signatures can help guard both you and your customer from adversely being affected by theft, it’s probably not a good idea to openly advertise that there’s currently a $1,000 computer monitor sitting on your customer’s porch.
The higher price tag will affect your margins.
If you have to regularly worry about competitively pricing your products because you’re in a rather full market, the higher cost of unique packaging may be something that’s too impactful on your profit margins. As we said back in the intro, and a few times since, you’ll have to test and run the numbers to make sure that such a venture will work for your situation.
Whether you go for or against having unique packaging for your business, it’s a choice you can make now, and always revisit down the road as your situation changes.
Next up, we’ll look at how to calculate shipping costs.
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