In the internet era, customers expect businesses to fulfill orders and deliver goods quickly. To keep pace with such demand, many businesses employ “continuous operations” in their warehouses so that order fulfillment and manufacturing operations work around the clock. But getting a 24/7 warehouse operation up and running — and keeping it running — comes with challenges and costs that some businesses may not be able to justify.
What Are Continuous Operations?
A continuous operation refers to any business operation that is always running and that generally experiences downtime only during scheduled repairs and routine maintenance. Companies tend to rely on overnight shifts and automation to make this happen. Some businesses go a step further by investing in redundant or backup systems to prevent business disruption even during periods of scheduled maintenance, leading to a truly continuous operation with no breaks in service.
The extent to which a company operates continuously depends on its business model. For example, data processing centers and telecommunications services tend to rely on redundant systems and continuity plans to ensure 24/7 functionality, even in the face of outages, natural disasters or planned repairs. Continuous warehouse operations, on the other hand, can be used to support nonstop order fulfillment and manufacturing cycles so as to meet customer demand but also allow planned downtime for maintenance, cleaning or inventory audits. This article focuses on the latter.
- Continuous operations allow a business to continue its workflow without interruption.
- Some businesses might allow for downtime during periods of scheduled repair and maintenance. Others rely on backup systems to genuinely operate 24/7/365.
- Continuous operations in a warehouse can increase efficiency and reduce costs per order — but only if customer demand justifies the investment.
- To maintain a 24/7 workflow, continuous warehouse operations often rely on overnight crews or automated technology.
Continuous Operations Explained
In a warehouse setting, the main goal of continuous operations is to meet customer demand by processing more orders — or supporting the production of more goods — in one 24-hour period. A round-the-clock operation can lower the cost per good because fixed monthly costs, like rent or insurance, generally won’t increase as well, as hours of operation climb.
For example, if warehouse rent is fixed at $12,000 per week, then rent costs equate to $300 per work-hour, based on a standard 40-hour work week ($12,000/40 hours). If that same warehouse were to schedule a second and third shift in order to operate 24/7, rent costs drop to about $71 per work-hour ($12,000/168 hours) — a 76% decrease. And, by increasing hours of operation, the business can process and ship more orders in a shorter period, thereby cutting fulfillment times and increasing customer satisfaction. It’s important to note, however, that variable costs like utilities and labor will likely increase along with the extended hours of operation, so a business should make sure it actually has sufficient demand to make continuous operations worth any additional costs.
To maintain a 24-hour workday, warehouses would need to hire an overnight labor force, invest in automation or employ a combination of the two. Overnight scheduling, also known as the “third” or “graveyard” shift, allows workers to continually process orders all night long, preventing any breaks in workflow. Automation, such as picking robots, can cut labor costs. But even with automation, continuous warehouse operations likely will require a cadre of workers on-site 24/7 to ensure that machines work properly, to make repairs when necessary and to check that orders don’t pile up beyond the capacity of the warehouse’s staging area.
Why Businesses Need 24/7 Business Activities
Customer expectations have changed greatly over the past few decades, especially with regard to at-home shopping. “Please allow four to six weeks for shipping and handling” disclaimers have become “two-day shipping” guarantees, and the pressure to stay competitive by quickly fulfilling orders has only increased. According to a June 2022 Santa Clara University Retail Management Institute survey of almost 2,400 ecommerce shoppers, 90% of customers said delivery should take fewer than five days, with 62% saying fewer than three.
If a customer places an order after their typical 9-to-5 workday is over, and the retailer’s workday is also over, order processing won’t start until the next business day — making it more challenging to meet ever-rising customer expectations. But by implementing a continuous operation, the business could begin processing orders as soon as they come in, regardless of the time of day. Consequently, orders can be shipped faster and arrive on the consumer’s doorstep sooner — and quick, reliable delivery times often make the difference between gaining a repeat customer or losing them to a speedier competitor.
Advantages and Drawbacks of Continuous Operations
Continuous operations can be advantageous, but a business must have reasons to support a round-the-clock warehouse schedule. For example, a small business specializing in artisan furniture might have raw materials and completed inventory stored in its warehouse, but its niche customer base may not justify the cost needed to implement a 24/7 workforce. A standard eight-hour workday, or even a double shift, is likely sufficient — especially when considering that a preference for handmade goods doesn’t usually conform with “same-day shipping” expectations.
But for businesses that would benefit from a continuous warehouse operation, some expected advantages can include:
- Faster order fulfillment: With a continuous warehouse operation, the order fulfillment process has less — if any — downtime, making it possible to process more orders in less time. Assuming customer demand scales in step with the business’s increased output, greater fulfillment capacity can yield greater profits.
- More control over the supply chain: With continuous operations, a business can exert more control over its role in the supply chain. In a 24/7 warehouse, for instance, incoming deliveries and outgoing shipments can be scheduled for any time of day, minimizing processing delays and potential bottlenecks. “Always on” operations can also diversify a company’s logistics needs. If a company is choosing between two logistics service providers — for example, one with a cheaper day-shift rate and another with a cheaper night-shift rate — a continually operating warehouse can draw up contracts with both, capitalizing on their lowest prices to save money while enabling a 24/7 outflow of goods or materials.
- Lower cost per order: The capacity for higher output over the course of one 24-hour period can lead to lower costs per order. This allows a business to sell the same products at the same prices while increasing its profit margins, but only if customer demand is high enough to justify continuous operations. If not, businesses may be left with deadstock and their associated carrying costs — not to mention superfluous labor costs.
- Increased customer satisfaction: Continuously operating warehouses are poised to meet customer demand more effectively. Without the need to accommodate downtime, processing can begin as soon as orders come in. Those orders can then be shipped sooner, ensuring that goods reach their destinations faster than non-continuously operating competitors can achieve — giving the 24/7 business an edge in today’s fast-paced marketplace.
But with those advantages may come some disadvantages:
- Higher overhead costs: Running and maintaining a continuously operating warehouse can be expensive. For instance, creating a second or third shift of workers can double or triple labor costs. Utility costs are also likely to rise, and businesses that must purchase additional equipment and technology to manage continuous operations — such as autonomous robots and warehouse management systems — should be prepared for the initial investment. Further, if demand slows, even if only during a seasonal lull, the costs of continuous operations are unlikely to follow suit; business liabilities, like worker salaries or equipment loans, could quickly outpace revenue.
- Increased workforce pressure: At businesses about to switch to continuous operations, current staff may not be willing to work the graveyard shift, and those who do may risk burnout. According to a 2020 National Library of Medicine study of over 4,000 workers, night-shift workers experienced higher risks of health issues, including sleep problems, depression and hypertension. Additionally, those health issues led to a productivity loss of 7.7%. A business that implements continuous operations without sufficient staff to support the change may encounter lower employee retention and a less satisfied — and less healthy — labor force.
- Harder to fill positions: More working hours means more positions to fill. Even under optimal hiring conditions, quickly expanding a workforce can present challenges. It can be harder to find overnight workers, leaving businesses understaffed and grinding the “continuous” operation to a halt before it takes off. And although businesses aren’t required to pay overnight workers more than day workers, it has become a fairly common practice, intended to help make these positions more enticing — but also potentially rendering the endeavor more expensive.
- Not ideal for all business models: The up-front and ongoing investments required to implement continuous operations presuppose a business model that will truly benefit from working around the clock. As mentioned above, a growing company that hand-makes goods, for example, might not need to start producing and fulfilling orders at such a rapid and continuous pace.
Advantages and Drawbacks of Continuous Operations
|Continuous Warehouse Operations|
|Faster order fulfillment.||Higher overall costs.|
|More control within supply chain.||Increased workforce pressure.|
|Lower cost per order.||Harder to fill positions.|
|Increased customer satisfaction.||Not ideal for all business models.|
Implementations to Improve Continuous Operations
Although every business will implement an individualized strategy for operating its warehouse continuously, certain metrics and technologies that can help manage a 24/7 workflow more efficiently are worth considering and evaluating beforehand.
Operational Metrics and Key Performance Indicators
A company might expect continuous operations to be an easy way to get more juice out of the squeeze, but that’s not always the case. It’s important to avoid “setting and forgetting” ongoing operations — doing so hinders a business’s ability to spot not only potential problems but opportunities to make improvements. Collecting and analyzing performance data, such as operational metrics and key performance indicators (KPIs), can help a business track whether its warehouse operations are working as effectively as possible and take action accordingly.
For example, measuring and analyzing inventory turnover ratio — or how quickly inventory is sold and replenished over a specific length of time — can provide a blueprint for which operations are worth operating continuously. For example, if the KPI shows the warehouse is stocking more goods than are being sold, workers could be left with little to do. To prevent labor costs and carrying costs from eating away at profits, the company would need to make some changes, whether by adjusting its pricing strategy, rethinking forecasting models or even pausing the continuous operation.
Operational reporting can help business leaders track and analyze a company’s day-to-day warehouse operations, with the specific intent of finding ways to boost efficiency — perhaps by identifying strategies to reduce inventory carrying costs or to manage labor more efficiently. Operational reports are presented visually, with drill-down data that makes it easier for managers to make better-informed decisions about minimizing operating costs — a critical value for maintaining an efficient continuous operation.
In a continuously operating warehouse, for example, operational reports can help managers identify which products are most responsible for high carrying costs. This data, alongside other operational metrics like on-hand inventory levels, can provide a detailed look at where costs are accruing and where cost-cutting improvements can be found. In such cases, reducing inventory of expensive-to-store items and increasing levels of more cost-effective products can raise the bottom line and avoid the need to open a second warehouse.
For businesses that maintain multiple physical warehouse locations, unifying data, such as inventory levels from multiple warehouses, into one “virtual warehouse” can speed up the order fulfillment process . For example, being able to track inventory of all warehouses in real time, under one digital management program, makes it easy to identify which warehouse or order fulfillment center is closest to a given customer, ultimately shortening transportation times.
Similarly, unified control of warehouse operations can help businesses maintain continuous operations in the event of emergency downtime. If a hurricane strikes and shuts down a coastal warehouse, the company can shift order fulfillment to an inland location, for example.
A chatbot is an artificial intelligence program that emulates human speech through voice or text. Chatbots often appear on websites to help customers get answers to simple questions, but AI chatbots can also provide much of the real-time information warehouse staff need to keep operations running smoothly. For example, chatbots can devise floor plans, monitor inventory levels, locate inventory and track orders and shipments — all of which can boost warehouse productivity by allowing staff to focus on more pressing tasks, such as prepping a shipment of orders.
Most modern companies rely on a large amount of data and need regular access to it. Businesses using on-premises warehouse management systems (WMS) or enterprise resource planning (ERP) solutions, for example, risk not being able to access necessary data if local hard drives fail. Worse, failure could lead to permanent disk damage and lost data. With cloud-based operations, businesses can store their data off-site but keep it accessible from anywhere, at any time. Even if one staff computer gets blocked, the company’s data can still be instantly accessed via another computer, tablet or mobile device. And if the warehouse’s internet connection goes down, cloud systems can be accessed from elsewhere — via cellular network, for instance. This redundancy ensures that workers always have real-time access to item locations, order status, inventory levels, estimated pickup times and whatever else might be needed to maintain efficient continuous operations.
Businesses utilizing a cloud-based WMS, ERP or similar software-as-a-service platform get the added benefit of being able to outsource IT maintenance and updates to a third-party provider, freeing up warehouse management and staff. What’s more, many cloud platforms allow businesses to integrate data across the organization: Sales, manufacturing operations, management and financial metrics can all be accessed from one cohesive source.
For businesses relying on on-premises warehouse management systems, it’s wise to have a secondary server that automatically backs up all data. This way, if the primary server goes down — perhaps due to routine maintenance, an outage, tech failure or a malicious attack — all data is safe on the secondary server. The secondary server can then be used to prevent a disruption of service. If one server goes down during an automated night shift, for example, the other server could maintain operations until the IT team returns in the morning to troubleshoot — all without affecting the warehouse’s productivity or output.
Continuous Operations Examples
Let’s look at a hypothetical third-party logistics service provider (3PL) that specializes in warehousing and shipping goods for multiple clients. The company’s managers want to grow the business by expanding their client base, but they can barely keep up with orders as is. The business’s decision-makers must decide between two options: open a second warehouse or extend operating hours.
Instead of investing in a costly new warehouse and team of additional workers, the company decides to try operating continuously. To do so, it schedules a third shift. But to keep labor costs down, the company also invests in a few automated picking and sorting robots. During the first two shifts of the day, staff can conduct quality-control checks and meet hands-on packaging needs. Meanwhile, the automated machines pick orders and bring them to the packing department. During the third shift, the robots continue picking and sorting, with a few workers available to maintain the robots and ensure smooth operations. Thanks to the robots and the overnight crew, the morning shift isn’t left scrambling to make up for after-hours orders or leftover tasks from the previous day.
Let’s look at another example: Ambassador Foods, a wholesale food and beverage distributor, used to run its operations with an on-premises software system. But in 2017, damage caused by Hurricane Irma shut down Ambassador’s system and disrupted operations for two weeks. By upgrading to a cloud-based system, Ambassador is now able to reliably access the data it needs to operate, in real time, 24/7. Additionally, this added reliability allows Ambassador to quickly and accurately calculate optimal pricing structures that help the company improve its profit margins while providing customers with the best deals.
Managing Your Warehouse Cycle Has Never Been Easier
Maintaining up-to-date and accurate data can seem like a daunting task. With NetSuite Warehouse Management, businesses can optimize their warehouse operations and integrate data across multiple locations through automation and a suite of connected applications. For example, accurate inventory data is updated in real time and accessible from anywhere, helping to prevent operational delays from miscommunications, natural disasters or unexpected stockouts.
From procurement or planning through final delivery, NetSuite’s business solution provides companies with the tools they need to manage and boost productivity at every step of their operation. Continuous operations and increased order fulfillment efficiency can be made possible through the features included with NetSuite’s advanced enterprise resource planning (ERP) system, such as mobile-device connectivity to enhance worker productivity, efficiency-increasing warehouse strategies for picking and putaway, seamless item- and order-tracking, and more.
A warehouse that operates around the clock can maximize its overall productivity, but continuous operations require financial justification. Customer demand, for example, must be high enough to warrant an “always-on” warehouse. Though continuous operations may not fit every business model, when implemented properly, they can enable a company to ship orders, manufacture goods or simply stock shelves more efficiently — making it easier to keep pace with high customer demand and, ultimately, boost profitability.
Continuous Operations FAQs
What are ongoing operations in project management?
In project management, ongoing operations refer to long-term procedures or processes that are permanently executed. For example, a company might plan a project to launch a new product. A budget is set to conduct the required R&D and create the go-to-market strategy. Once these tasks are completed, they aren’t repeated. Manufacturing the product, however, is an ongoing operation with a repetitive output. Instead of adhering to a budget, production has the end goal of continually earning the business money.
What is continuous process in management?
A continuous process can refer to any business operation that runs indefinitely. In food production, for example, some products are processed continuously, meaning there’s no break in operations. Raw materials are constantly fed into the production cycle, with a steady flow of finished products put out. This differs from batch processes, for example, that focus on completing one “batch” at a time. The necessary raw materials needed to produce a batch are fed in at the beginning of the process, and there are no further inputs needed until the batch is completed and it’s time to produce a new batch.
What are the characteristics of a continuous process?
In manufacturing, a continuous process involves a never-ending stream of raw materials being fed into the production cycle, with a continuous flow of goods being completed. Compared to a batch process, continuous processes are more efficient, experience less downtime and can produce a higher output — but continuous processes are not as flexible as batch processes and can require greater initial investment.
A continuous process can also refer to a business operation that is always running, experiencing downtime or business disruption only during repairs and routine maintenance. This can increase productivity and boost overall output but requires a business to have redundant backup equipment that can be used if other equipment experiences downtime.
What is continuous operation in DevOps?
DevOps combines the work of software development teams, who write new code, and operations teams, who actually deploy the code and ensure that it functions properly. DevOps teams combine the two to continuously plan, code, build, test, release, deploy, operate and monitor software releases — in an infinite loop. In this context, continuous operations aim to create a 24/7 process that delivers software updates and bug fixes to end users with minimal disruption.
What is a continuous operation clause?
A continuous operation clause is a provision included in a commercial lease. It outlines terms and conditions under which a business must operate in an effort to prevent the tenant from “going dark,” or ceasing operations. Specific terms are set by the landlord, but might include the number of days per week or an overall length of time that the business must operate.
Continuous operation clauses can also be used in other contexts, such as in a business that plans to change ownership or control. The clause might be part of contracts between a company and its employees or suppliers, and it outlines the responsibilities required in the event of such a change. In this case, the clause is designed to provide business stability and continuity while ownership or control is transferred.
How can the goal of continuous operations be achieved?
Achieving continuous operations depends on the business and its needs. A warehouse, for example, might add an overnight shift of workers, allowing production to continue 24/7. Some companies might blend automation with an additional labor force to help balance costs with promised deliverables. True continuous operations can be challenging, as even constantly operating warehouses may need to occasionally take a day to deep clean, audit inventory or repair equipment.
Beyond warehouses, continuous operations are often achieved by implementing different types of “always-on” systems throughout an organization. IT systems might use backup servers and generators to ensure ceaseless connectivity, for example, while software developers might deploy automation to build, test and monitor code in an effort to fix bugs and security gaps without interrupting service for end users.
What is Process type in operations management?
A “process type” refers to the method a business uses to produce goods or conduct operations. Five common process types include:
- Job shop processes, typically used to produce low-volume, customer-specific and variable orders, such as jewelry.
- Batch processes, used to produce goods in smaller batches, usually just to meet customer demand.
- Repetitive processes, typically used to mass produce uniform goods, such as cars or electronics. Repetitive processes do not operate continuously — there may be downtime.
- Continuous processes, which are similar to repetitive processes in that they’re typically used to mass produce goods, but they generally run 24/7. A power plant or a 24-hour TV network might also rely on a continuous process, even though neither produces goods.
- Project processes, used to deliver one unique and specific project, such as a movie studio producing a film, a band recording an album or a construction company building a home. Project processes end upon completion.