Warehousing & Distribution

What is Warehousing & Distribution?

‘Warehousing’ is storing or accumulating goods until issue or delivery, while ‘Distribution’ refers
to delivering goods safely and efficiently. Both these activities could happen with related logistics but
loading or unloading of goods at the origin or destination would be optional as per prior agreement.
In today’s context, these two activities need specialized attention to detail, as these activities represent a
crucial part of a business, such as Inventory, Delivery, and Customer Services. For an effective business
operation, these two activities should be analyzed separately. However, from an operational perspective,
it is ideal to integrate both to reap the maximum benefit for all parties and to keep costs under control.

What are the Key Areas to Focus?

In warehousing, it is critical to have an efficient Warehouse Management System (WMS) with the maximum utilization of space. This means the use of maximum floor area for operations while going vertical with an efficient racking system. Generally, the tendency is that once you have the warehouse processes, and technology in place, then it continues unattended for several years. There should be continuous monitoring of the system during the year with at least a revision of the system once every two years.

Spend time to re-evaluate all your operational resources. Ensure that your warehouse layout and inventory management strategies are properly aligned to make your business profitable. All your cost-effective measures will provide you with a competitive advantage against the competition. Remember, your style of warehousing may need to change from time to time because the “supply chain logistics industry” is undergoing tremendous change every day.

Without any doubt, it is easy to say that technology is the key to modern warehousing, but it is very costly. Therefore, it’s important to focus on aspects that can deliver higher efficiency within the existing systems. Introducing simple solutions like “automated conveyor belts” could be very advantageous in eliminating manual handling and improving efficiency.

In the area of Distribution, the transport and logistics businesses can be very lucrative, and at the same time highly competitive. This attracts many operators into this line of business though it requires a high level of core competencies to succeed.

A few tips to follow

Knowing your operational costs

Knowing your operational cost is critical. If one doesn’t track the fixed and variable costs precisely, then the business will have difficulties in determining profits and losses. For example; fixed costs cover driver’s salaries, permits insurance, and so on, while variables would cover things such as fuel and maintenance.

Tracking fuel cost

Tracking fuel costs is difficult, but it can be made easy with an automated transport management system. Such a system allows monitoring of fuel usage per truck, giving visibility for saving options and making it easier to establish an efficient accounting system. Manual calculations in this area are usually prone to errors and make it difficult to figure out business income.

Route planning and tracking

It is important to focus on a ‘load more’, ‘travel less’ strategy. Plan for milk runs, Hub and Spoke models, or direct deliveries while focusing always on return loads. Remember, the application of these models would depend on the individual type of operations.

 

Distribution has always been aimed at faster delivery but in today’s business, shipment tracking is crucial for achieving operational efficiency. Therefore, the use of technologies such as GPS and Geofencing can be used to make the entire distribution system more efficient. GPS will indicate the exact location while Geofencing will indicate when the delivery enters your business boundaries. These cost-effective tools can help businesses cut down on idling times at the docks, reducing detention and quicker turnaround for vehicles. Also, when the operational staff is informed in advance of the deliveries with the necessary information through such systems, the operation and planning become extremely efficient at the most competitive cost.

 

It is important that your business operations related to warehousing and logistics are kept open to change and that you stay agile to keep you ahead of the curve. These are just a handful of tips that traders can use at any point to ensure a smooth Warehousing and Distribution operation.

This article is a part of the Business Tips for Trading Across Borders series — A collaborative effort of The Ceylon Chamber of Commerce and United States Agency for International Development (UASID) Partnership for Accelerating Results in Trade, National Expenditure and Revenue (PARTNER) Activity

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