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Increasing Profitability with Automation & Validation

Supply Chain

I was reminded recently that there are really only two ways to improve your organization’s profitability; increase revenues or decrease costs. Arguably, increasing revenues does not necessarily translate into higher profits.Take a moment to think about how much revenue it would take to bring the same amount of dollars to the bottom line as would a 2% decrease in operational costs.

Consider the cost of a shipping error. Shipping errors results in lower customer satisfaction and potentially affect customer retention rates. Customer service personnel can spend hours addressing a shipment error. Warehouse personnel must investigate what happened, potentially restock the wrong item then pick, pack and ship the correct item. A rush delivery further erodes any margins left on the sale. Even cash flow is affected. Accounts receivables staff may need to be notified.

Shipping the wrong item or the wrong quantity of an item is the most common error. Perhaps the wrong unit of measure was picked; say one carton was picked instead of one unit within the carton. Other types of errors include shipping multiple boxes when only one box would have sufficed and also errors in packaging that cause an item to be damaged while in transit.

Part of the problem is that the fulfillment process is often tedious and repetitious. When employees are not paying attention at each and every step, errors will happen. Manually checking every outgoing shipment is too costly. The answer to reducing shipment errors is automation. Studies have shown that automation not only increases inventory accuracy up to 99% and higher but also substantially decreases shipment errors. When automation includes built-in checks and balances such as visual cues and voice confirmation you have both automation and validation. Wow!

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