Looking to Reduce Labor Costs? Try Improving Order Accuracy

Labor remains as a significant concern for supply chain leaders. In fact, an MHI and Deloitte study found that over half of supply chain organizations cite labor issues as their biggest supply chain challenge. But some of those issues around rising labor costs and talent shortages can be mitigated by simply getting the order right in the first place. Indeed, improving order accuracy is an invaluable tool that warehouse leaders can leverage to reduce labor costs, which delivers financial benefits beyond the warehouse, and to use as a vital metric in customer satisfaction. For businesses wrestling with labor challenges, a review of order accuracy statistics can highlight areas for potential improvement. 

The Impact of Improved Order Accuracy  

The benefits of improved order accuracy include much more than the correct fulfillment of customer orders. It’s more than just the right items, in correct quantities, delivered without errors. It's about enhancing the efficiency of the entire supply chain. Addressing inefficiencies in order picking, for instance, can substantially reduce labor costs. Studies show that up to half of the picking time in your warehouse can be attributed to travel time, which is a significant factor influencing labor expenses​​. Since labor costs are a significant portion of your warehouse's operational budget​​, improving order accuracy is an effective cost-saving strategy. 

In the era of e-commerce, where customer expectations are soaring, improving order accuracy is more crucial than ever. Customers today expect flawless deliveries, and any mistake can lead to dissatisfaction. As outlined in this Industry Week article, companies that prioritize efforts to improve order accuracy typically see a higher perfect order index, reflecting better customer satisfaction and operational efficiency​​. 

The Role of Visual Instructions 

Warehouse workers are most effective when they have tools that are intuitive and user-friendly. Visual instructions are a prime example. By replacing complex lists of item and bin numbers with clear visual cues, these tools help workers navigate and fulfill orders more efficiently. This simple shift to visual guidance can save five seconds per transaction, which in high-volume operations, translates to massive labor efficiency savings​​. This example illustrates the profound impact that small increments in order accuracy can have on a business' bottom line. 

Labor Cost Implications of Improved Order Accuracy 

Consider the cost of returns – they’re not just a draw on labor, they negatively impact order and operating margins as well as the overall health of the organization. While not all returns can be prevented, those caused by picking and shipping errors stand out as an avoidable burden on resources. Indeed, streamlined, automated processes that improve order accuracy represent a path to substantial cost reductions. 

However, improving order accuracy goes beyond labor costs and has financial implications that extend outside the warehouse. Order accuracy can be a factor in establishing a brand's reputation for reliability and efficiency, which are important industry metrics. As businesses strive to meet and exceed customer expectations, the focus on order accuracy becomes a key differentiator in a competitive landscape. 

Strategies for Achieving Perfect Order Performance 

Achieving perfect order performance is a complex endeavor but one that is entirely within reach with the right strategies. Central to this is the ongoing effort to improve order accuracy through optimizing operational processes, embracing digital transformation and upholding a commitment to meticulous accuracy. For sustained success and competitiveness, perfect order fulfillment, rooted in improved order accuracy, is not just an aspiration but a strategic necessity. 

For any supply chain leader facing labor issues, don’t overlook the hidden potential of improving order accuracy. It's a common blind spot that, when addressed, has a positive ripple effect on a business’ overall efficiency and reputation. It improves customer satisfaction and plays a crucial role in efficient labor management. In the ever-evolving landscape of warehousing and logistics, where customer demands and technology constantly shift, prioritizing order accuracy is essential for ongoing success and growth.