Retooling your Distribution Center – what does that mean?

Retooling your Distribution Center – what does that mean?


Many Shippers find it cumbersome, yet necessary, to continually re-think their supply chain as the customer demand for enhance delivery evolves.  Well, they aren’t the only ones who must adapt to the changing demands.  As a 3PL partner, “retooling” has become a constant contributor to the business and certainly to the Distribution Center.

With Amazon providing Prime and its free two-day shipping, fulfilling orders from online business has quickly become the norm.  Other large retailers have followed suit realizing that the younger generation is trending to instant gratification.  Rapid shipping methods, same-day deliveries, transparent and real-time tracking and communication are driven by a younger buyer who wants it now.

As a Third-party logistics provider, these dynamics change your mindset within the 4 walls.   The large retailers, like Amazon, have their own active facilities and network to accommodate their service expectations.  But there are many that don’t have the infrastructure <or want it> like Amazon.  Using a 3PL partner who can provide a multi-channel service can be a perfect option for their supply chain.

The following RETOOLING AREAS are the 3PL’s mantra in life nowadays if they plan on a long and successful legacy.

Warehouse vs Distribution Center – the simple warehouse continues to require more sophistication. The storage warehouse has evolved into a high-performance, turnkey machine that is improving itself on a daily basis.  This machine requires efficiency, transparency and connectivity that allows itself to elevate its DC service to a whole other level.  Nothing is status quo – everything is constantly changing.  Continuous Improvement is the mindset.

Rapid Processing – With the introduction of smaller orders, higher volumes and increased frequency, that can impact productivity within the DC if some areas are not reconsidered and reworked. Storage and Pick layout in the facility is key to a productive and efficient process.  Eliminating travel distances <hey, have you ever walked a 200,000 s.f. building?> and touch points in the process must be carefully thought out and processes initiated.  These changes may require more space, more equipment, or different equipment, different racking and potentially a distinct skillset of people.

Multi-channels – While the consumer demand for faster orders is trending that doesn’t eliminate the other distribution channels that are necessary in the supply chain. A distribution center must accommodate several order types even within the same product lines.  Some orders go out in full pallet quantities that are distributed a specific way to accommodate the large merchandisers of the world like Costco.  So, to serve these channels, a DC must now be able to methodically handle an EACH, CASE and PALLET type of order environment.  This can impact space needs, different types of layouts and unique processes with quality checkpoints.

Quick to Market – Speed is the word of the day. Once orders have quickly moved through the DC, they must now get to the customer within specific and short delivery parameters.  This requires having relationships (or your own transportation service) to manage a variety of order types.  Small package and Pallet transportation are both necessary depending on service needs. Tracking, visibility and real-time information are required for success.

Closer to Customer – While larger order types can indulge in a little longer delivery cycle, the small order cycles must be quick. Even the longer cycles can be demanding.  The only way to assist in this area is to be closer to your customer.  This may require a Shipper to have multiple DC within their network but using a 3PL within the specific market can instantly create customer satisfaction with the limited order windows.

Added Services – You can’t be everything to everyone. However, a 3PL’s success is providing efficiency, cost reduction and high performance to their customers.  It makes sense to provide as many services within the 4 walls that generate logistics efficiency.  A single source logistics provider who can manage the distribution center, other value- added services and transportation as a TOTAL PACKAGE can bring more to the table to their customer offering more value in their supply chain.  The challenges to this are that there are different operations within the Operation.

Leveraging technology – Efficiency is not all about just People. Having the foundation of strong systems that can drive efficiency into a process is invaluable.  Efficient processes combined with depth of data and connectivity will satisfy customer leaving them in control of their logistics activities.  The integration of these systems also allows the integration of the services resulting in transparency and visibility to everyone.

Expertise is Priceless – The skillset for warehouse and transportation associates has increased dramatically throughout the years. These employees must be able to think on their own, handle systems and specialized equipment, be cognizant of efficiencies and processes, able to learn and change as needed, engaged in the business and care about serving their customer.  However, each position may require different expertise and skillset.  Not everyone can do everything.  Finding good people, engaging them, training them and inspiring them at their jobs is a challenge that many companies are facing.

So, what does tomorrow look like?  Who knows!  But selecting a 3PL that understands the necessity of retooling and reimagining their business will certainly help you understand that changes that are required in yours.  Make sure you have a 3PL partner that can change with our business and offer you solutions to the new challenges that will certainly come your way.

MILAN understands this.  As MILAN celebrates their 50th year of servicing customers in the supply chain, they realize where they’ve been and where they are going and going and going . . .