Logistics Strategies You Should Steal From Amazon
BY Jill Krasny
So you don't have $17 billion in the bank. That doesn't mean you can't take a page from the everything store's playbook.
A fascinating (albeit one-source) segment on 60 Minutes thataired Sundaytook viewers behind the scenes at an Amazon.com shipping facility, which was just as futuristic as it sounds.
Tiny robots known as footers shoved packages off a conveyor belt. And somewhere down the hall, an inventory picker (human, not robot) perused the endless halls, plucking items that shoppers had purchased. Everything was efficient, from the machinery that slapped a black sticker on the boxes to the grouping of products, not by category but space.
Watching the show, I wondered if entrepreneurs could pull off such feats in their warehouses. Without $17.09 billion in revenue to play with, could they achieve such efficient results?
It turns out they can, so long as they stick with the basics. Here, two logistics and transportation experts weigh in on what Amazon gets right, and how you can too.
Always Be Automating
“As a small business grows, it is critical that they invest whenever possible into automation,” says Cameron Baird, the chief executive of CargoBarn, an Inc. 500 alum. A human touch is integral to quality customer service, but “the most efficient companies leverage technology to streamline processes, promote cost savings, and cut down on errors.”
Hundreds of variables also come into play when a company is transporting products. Product temperature, dimensions, weight, required delivery date, availability, location, are key, and costly if things go awry. Since the human brain can only manage so much, investing in WMS/TMS software helps to automate these tasks. Baird also says to consider outsourcing them to a third-party logistics company like Red Prairie or Transplace.
Build Something Small
Bruce Welty, the chairman and CEO of Quiet Logistics, an order fulfillment company that manages the online inventory and distribution for retailers like Zara, Gilt, and Bonobos, sees the beauty in thinking small.
“As your business grows, you can add to it in a modular way,” he says of his company’s robots, who move racks of merchandise. “In the distribution world, everything is moving at breakneck speed, so it’s hard to make changes. But with this, you can just add to the system and it will continue to operate. If the company changes or grow, we just add to it.”
And while it may sound obvious to some, small businesses should always be thinking about flexibility. "You want to be wary of any large infrastructure investments," Welty adds.
Make Everything Portable
“If you’re going to do fulfillment on a growing operation, you’re going to need more space,” says Welty matter-of-factly. “Every building has a theoretical limit on its space and it’s really disruptive when you change locations.” It can be difficult to repurpose the equipment that you already have. But if it’s portable, that’s another story. “You can just move the robot,” he says.
Keep It Simple
Something both experts agreed on was how effective Amazon has become at making everything simple, and uniform. There is no differentiation across any of the warehouses. “You have less software to manage, maintain, and support because everyone uses the same thing,” says Welty. “And if you need to move people from one building to the next, you have fewer opportunities for problems to arise because of the uniformity.”