Costs for Shipping Warehouse???

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Costs for Shipping Warehouse???

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MacRP

posts: 7

May 02, 2009 7:59 PM ET Quote Report Abuse

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Greetings,

Please, I am wondering how many warehouse employees I will need for my business.

I will be shipping in year /week:

Y1 ~2.3k items
Y2 ~9k
Y3 ~36k
Y4 ~146k
Y5 ~600k

These will average say 5 items with a generic size of say a 12 oz. can of soda.

How many loose items from different pallets/shelves can an employee box and ship out per day? I am thinking to start, and as we get better at shipping, and as we improve shipping processes, improve equipment over time, etc.

What I am thinking is:

Y1 ~500/day/emp Base with limited tools, lines, what ever.
Y2 ~750 Improved tools like battery carts, basic lines.
Y3 ~1000 Significantly improved process, tools.
Y4 ~1200 Work it.
Y5 ~1700 Improved and more tools, more automation, etc.

Note: Yr 1 will only be about 3 months of sales and will provide some learning and improving time. Yr 2 will significantly grow.

Who ever does some decent sized shipping I would love to know how much you do per week. Like avg products per box shipped.

Also, wondering how much a year 2 and year 5 upgrade in process and tools and such might cost. Nebulous I know :)

Thanks
Peace and Blessings

nevadascul

posts: 651

May 03, 2009 1:16 PM ET Quote Report Abuse

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Hi MacRp,

First, you forgot to include time for employees to receive and put away stock. This can be as time consuming as pulling and packaging orders.

I use to work in several large distribution centers. I also ran several small warehousing operations. At one of the distribution centers, we shipped out an average of four truck loads of freight per day. We had a crew of five to handle receiving, shipping and customer returns.

We were able to pull and put away stock fairly fast though because of our inventory program. It broke locations down into high and low shelfing locations. It then printed out all the low locations per order on one pick ticket and high locations on another ticket. This allowed for more efficient use of equipment. We had two men with pallet jacks pulling all the low shelving locations. And two using cherry picker forklifts to pull the high shelving locations.

One person did the receiving. And, the warehouse manager consolidated the orders. He did the quality control inspections at the same time. All this activity was done in the morning.

Then we moved three people to the packing and manifesting line after lunch. Each packing station had overhead bins for "pop corn" packing material. Each station also had several different types of tape dispenser and paper dispenser.

There was a manual conveyor belt that ran down one side of the packing line. It terminated at the manifesting station. Usually the warehouse manager or a warehouseman ran the manifesting station.

The person doing the manifesting also loaded packages onto pre-assigned pallets. Once the pallets were done, they were moved to a shrink wrap station a short distance away. This station was near the loading dock.

I should mention that our corporate headquarters allot a total of eight employees for this distribution center. This was to accommodate people taking off sick or vacation leaves. The warehouse manager chose not to hire the additional people because he received a large bonus for bringing the warehouse in under budget each year. But, he also ran the risk of loosing productivity by running a skeleton crew. His plan called on nobody being sick, on vacation or quitting.

As far as training, it took an average of 2.5 months to train a new employee. We cross trained in every job function because we were short handed.

Since you are just starting out, you might also want to consider a 3rd party (3P) warehousing operation. These companies handle all your warehousing needs and you supply the product. It`s cost affective from the stand point you don`t have to lease a warehouse or maintain it. Also, you share the labor cost with other companies that are using the same 3P warehouse.

Another option is to lease a warehouse. You then contract out the operation to another company. Like hiring contract security, there are contract warehousing companies. For a fee, they supply the staff and management. You supply product and a building.

You can also speed things up and reduce cost by cross docking some items. The items are received in one door and go directly out to the load dock after being received in and labeled.

You can find out by going to InBound Logistics. This is a wonderful site if you are looking for information on warehousing. They also make a magazine.

Hope this helps.

-------------------------

The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.

MacRP

posts: 7

May 05, 2009 9:53 PM ET Quote Report Abuse

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Greetings,

Excellent help there and much appreciated. I will be taking stock from a significant number of business partners. But low volume to start. The first year will just be 3 months of sales/shipping action, maybe a little more, before we start advertising and such. But it is going to explode after that.

So you painted a picture of how many employees but I am not sure of your product.

My sales will be an average of 2 to 5 12 oz to 20 oz items per order. So 2500 or so items per week for the final 3 months of year 1 divided by an average of 3 products per order would be ~835 shipments per day.

I am guessing 3 people for this. 1 to receive and come over and help ship at a later hour. 2 @ about 265 packages per day.

3 items average
~88 seconds work flow (get box, get 3 items, inspect-box-seal, label-inspect, to holding, loading)

I am looking at about 6.5 work hours out of a warehouse employee per day or 23,400 seconds. I am trying to leave a buffer in there. So ~265 packages per day per emp. And then with experience, better placement, improved work flow, etc. I can get that boosted up. But I want to be careful in fulfilling order to start. That is my main priority. Happy customers.

I could contract this out. I am a bit of a control freak. But if the cost savings were there??? But I could not do that to start. I would want to learn it some so that should we ever need to take it back over, etc. Also, this could become a colossal shipping situation. I mean, if everything goes well it will have no choice but to. And it could be a bit of breakables so I want to keep that under control as well.

But that is why I am doggedly putting the Business Plan together so that I can get the investors. Been a lot of fun thus far!

Kind regards, and thanks.

Peace and Blessings

nevadascul

posts: 651

May 07, 2009 12:37 PM ET Quote Report Abuse

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Our distribution center shipped anything you would see in a hotel. From soap to office supplies and vacuum cleaners and television sets.

-------------------------

The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.

MacRP

posts: 7

May 09, 2009 1:55 PM ET Quote Report Abuse

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Cool. Well, with some help from here, and 20 hours of massaging excel data and smoothing it out I think I have come to a realistic place and was FINALLY able to complete my Exp/Rev spread sheets for my Battle, er.... Business Plan.

Now to finish up the last 1/3 of my business plan. Arrrrrrrrgg!

Then to a lawyer for help with NDA`s for individuals and Corps. I have a really good one pager NDA but I have to make sure I cover my needs 100%.

Then it is Investor Time.

And then, right before I start my business, the world will probably end or something. gahhh!

Thanks and Peace and Blessings

JBSurfs

posts: 30

Jun 04, 2009 3:05 PM ET Quote Report Abuse

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I have several years of experience in lean distribution operations. You probably need to practice the entire route for you and then back off the time you are able to do it in. You have motive, they don`t.

Anyway, you are not mentioning any type of space filling in the boxes and time to tape. Tape gun or tape machine? You may only need 3 workers, but you will need some administrative people as well. Those that print the labels and/orders for you. Depending on how you are shipping, you will need "dock" workers as well.

Also, depending on how many skus you have I think 5 and how they are sent to you, you`ll have to open the containers and put in line for the pickers. And a way for the pickers to know how many and which to pick - is that a paper or scanner or pick to light system?

I like where you are right now definitely. You probably just need your walk-thru to make sure it all makes sense and find out where the holes are initially.

Good luck.

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