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How to Determine Pick and Pack Warehousing Rates

Pick and Pack Warehousing Rates Intro gphc.3

E-commerce is now one of the driving forces in the warehousing industry. From storage and product packaging to fulfillment, the rapid digitization of all processes is pushing distribution centers across the globe to be faster and more efficient with their methods, including pick and pack warehousing services. How can you determine which outsource fulfillment center has the best pick and pack rates for your business? Here are the top pick and pack strategies and how to determine pick and pack rates.

What is order fulfillment?

Order fulfillment is a service offered by an order fulfillment provider and typically includes warehousing and distribution. When orders are received from customers, the fulfillment providers will pick the ordered item from their location in the warehouse, and pack them into containers to be shipped. Functions of the order fulfillment process include, but are not limited to receiving/processing orders, preparing the picking sequence, updating the inventory system, preparing and labeling packages, and staging for the carrier.

What is pick and pack warehousing?

Pick and pack warehousing is the process in which fulfillment companies choose products from various shipments for customer orders, while also re-packaging them for shipping. Items are stored and entered in an inventory management system for tracking and processing when shipments are received by the warehouse.

Picking refers to choosing accurate quantities of product from the storage facility. Packing in a warehouse, on the other hand, happens when the picked products are placed in distribution areas with the appropriate warehouse packaging materials. These boxes are labeled, documented, and shipped throughout the United States and abroad.

How to Determine Pick and Pack Warehousing Rates 

What are the different pick and pack strategies?

Warehouses that offer pick and pack services use these four common methods for picking goods:

1. Piece picking

Piece picking is a straightforward method where employees handpick each item for orders as they are received. This can be an inefficient model for larger facilities but remains a popular option for smaller companies.

2. Batch picking

As the name implies, orders are picked in batches, or multiple items, instead of individually. This is similar to piece picking, but in a more efficient manner for those who have a higher order volume.

3. Zone picking

In this approach, areas in a warehouse are divided into zones and employees are assigned to these areas. Items are then picked from these assigned areas and passed to another zone if the order requires items from multiple zones. This process can be automated or worked by hand and is much faster than the two methods above.

4. Wave picking

A combination of batch picking and zone picking, this method involves employees staying in a designated area but picking orders in batches within those zones. 

How to Determine Pick and Pack Warehousing Rates

Determining cost of pick and pack services

Order fulfillment fees are total fees paid for all services associated with fulfilling a single order and factors both variable costs (pick and pack) and fixed costs (inventory storage and account management fees). These costs associated with pick and pack services may vary based on the type of product, the amount of warehousing space available, expectation of high volume, and time to fulfill orders.

  • Costs included on individual items (Unit-based costs can include per pallet, per unit or product, or per hour).
    • Per cubic foot of warehousing (inventory storage)
    • Per shipment (receiving costs)
    • Per kit (kitting costs)
    • Per order (pick & pack costs)

These pricing models may also include other fees that impact fulfillment pricing as well:

  • Storage fees
  • Setup fees
  • Pick and Pack fees
  • Intake fees
  • Other fees
    • Account management fees, return fees, shipping and receiving fees, etc.

Below are some common pricing guides that give an idea how much different pricing models charge.

How to Determine Pick and Pack Warehousing Rates

Questions for finding a fulfillment partner

One cannot expect that the first fulfillment partner that they find while conducting a search will be the right fit for them, even if they do match your budget. In order to be more selective about your choice of partner, ask yourself these questions:

  • How are they improving their pick efficiency?
  • How are they reducing labor costs?
  • Is their warehouse management system up to date?
  • Are they well acquainted with your industry?
  • How willing are they to adapt to your system?

Every fulfillment and distribution center will have different pricing options for their various services. Asking questions are critical for finding the right fulfillment partner for your business, especially if you are looking for product packaging services to be included as well. Finding how various companies charge will inform you on the method of how your product should picked and packed, which will have a tremendous effect on your inventory flow, positive or negative. It is essential for businesses to be transparent about their operations for their clients, so that innovation in the market can continue to advance.

How to Determine Pick and Pack Warehousing Rates

We understand that your packaging needs are specific and require an “out of the box” approach. That’s why NewStream Enterprises’ product packaging logistics solutions are customizable with value added services and are made with your specific needs in mind, every single time. Even if you feel your packaging needs are already being met, consider taking time to talk to one of our packaging experts to learn how NewStream can exceed your current KPIs for on-time delivery, fill rate, and inventory accuracy—ultimately, improve YOUR bottom line. 

Contact us today!

How to Determine Pick and Pack Warehousing Rates

Tagged: Single Product Packaging

Jul 14, 2021 2:31:00 PM

Written by Jacob Harris

Jacob is currently the Sales and Marketing Intern at NewStream Enterprises, LLC. He is a Film and Marketing major at Evangel University (EU). Jacob is also the PR Director for the EU Activities Board, and was previously the Chief Editor for the 2021 EU film, “Witness.” Jacob is experienced in advertising and videography as he has helped several local businesses in creating advertisements and promotional videos in his spare time. In his role, Jacob assists our Sales and Marketing department in content creation and visual production.