How Can Industrial Companies Solve the Biggest Problems in Warehouse Operations?
If asked what would be the biggest problem any business will encounter in their warehouse operations, it could be summarized into one word – inefficiency.
If employees were asked to identify which element in their business that can have a direct impact on the performance of the rest of their operations as a whole, many would most likely point to the supply chain or the warehouse. The warehouse may seem straightforward since in its most basic sense, it is a location where you store parts or goods for processing, assembly or distribution.
But many business owners would attest that the warehouse is much more complicated than that. It is the location where inventory is stored and is where other sections in the business get materials and assets used to perform their operations or fulfill a job or purchase order. Without a proper system that oversees how these inventories are handled, a barrage of issues and problems will come surging forth and affect the rest of the operations.
No doubt, the value of warehouse management is brought into the limelight with the growing number of warehouses starting operations yearly. This is driven by advances in eCommerce and an omnichannel approach to marketing, sparking the growing consumer need for faster and more reliable order fulfillment and delivery.
Efficient warehouse operation is a must and a lifeline to doing business in this ever-changing and fast-paced marketplace environment. It is key to ensuring unhindered and efficient flow of products to cater to the demands of consumers.
But despite advances in warehouse management systems, many businesses still find their daily warehousing operations a struggle, beset with a myriad array of problems that would often lead to shortages in raw materials for operations or holdups in fulfilling orders and deliveries.
These issues, however, can still be addressed head-on and corrected. The following provides an overview of how industrial companies can implement innovative solutions and plans of actions that can help their businesses overcome the biggest challenges in their warehouse operations.
Warehouse Problems in Numbers
If asked what would be the biggest problem any business will encounter in their warehouse operations, it could be summarized into one word – inefficiency. And like any other inefficient operations, that particular division of the business will incur additional costs that will be detrimental to the continued success and profitability of the business.
On top of compounding costs, an inefficient logistics and warehousing system would hinder the proper flow and utilization of valuable capital, particularly with tied-up capital associated with non-moving inventory. This is such a common problem among businesses that in the US alone tied-up capital peaked to as much as $1.1 trillion because of non-moving inventory.
Why is this so? The answer lies in the fact that many businesses lack effective and efficient warehouse management and inventory tracking system. Up to 46% of small and medium enterprises still rely on manual systems for their inventory and warehousing operations. So, it would be of no wonder why these businesses lack productivity and plagued with a warehouse-full load of warehousing problems.
Problems and Solutions to Warehouse Operations
Those who have taken a stand and had a change in mindset successfully implemented a high-performance supply chain management system. The result of such change? Up to 79% of these companies reported gaining revenue growth that is above average. More and more businesses are following their lead and have invested in new and efficient Warehouse and Inventory Management solutions and implemented the following measures to address their biggest problems in warehouse operations.
Facility Layout is Poor and In Disarray
One of the most primary reasons why a warehouse operation is inefficient is because their facility layout is poor, and in many cases, in total disarray. Inventory managers and even order pickers will find it a hard time to locate an item or a product they need in a poorly-laid out warehouse facility. It would take as much as 50% of a picker's time to walk around the warehouse to look for inventories.
What would this imply? Such inefficiencies in warehouse operations can cause businesses to lose as much as hundreds of millions or even billions in dollars in revenue losses and incurred costs. On top of that, delays or failures in deliveries, as well as damages to items or products, would result in disgruntled and unhappy customers that will create an irreparable strain in the business-customer relationship.
One of the keys to an efficient warehouse operations is to have an optimal design and layout in your facilities. Here are the key factors that you should consider when designing your warehouse layout:
- Logical Flow – Setting up your layout should be based on a logical location of inventories based on your operational workflow. Most operations follow a logical sequence, so materials, equipment, tools, and other items should be placed following this sequence.
- Ease of Accessibility – This applies to in-house warehouse facilities and more so with offsite warehouses that are located outside of the main operations’ geographical influence. Such facilities should have easy-to-access loading and unloading docks, adequate facilities for receiving and shipping, and accessible by all forms of transport, whether air, land, rail, or sea.
- Optimum Use of Space – Space is one of the most precious commodities in any warehouse operations, and optimal use of space can create a big impact on the bottom line. Make optimum use not only of your horizontal space but of your vertical spaces as well. New systems and technologies for racks and bins now make it convenient to locate and retrieve items and materials even on higher vertical locations.
- Optimum Throughput – Not only should your warehouse be designed for an optimum workflow, but you should also take into consideration generating an optimum throughput as well. This includes the efficiency of moving a certain volume of materials and items from one point in the operations to another. In more complex and specialized operations, this will entail the use of the latest warehouse technologies including pallet inverters, conveyors, stretch wrap machines, secured loading pallets and many more.
While having an optimum layout in your warehouse facility is critical; the optimum location of your inventory is crucial as well to ensure the efficient flow of your business operations. Many warehouses encounter problems in the location of their inventories, particularly in more dynamic businesses that have new products and items introduced almost every month or even less. Failure to find optimum locations for these inventories will impose great limitations in your warehouse operations, which eventually affect the efficient flow of your business operations as well.
When reorganizing or optimizing your layout, you should also take into consideration the integration of an efficient Inventory Management Solution (IMS) to allow you to gain real-time processing and monitoring of your inventories. Such IMS systems provide good levels of automation and analytics, allowing you to gain better insights into locating high-traffic SKUs in your list.
The way you place your inventories in your bins and racks, as well as how you label both locations and items would be a big factor as well. Poorly managed and manual labeling systems will not cut it anymore, and will eventually lead to errors in inventories and worst, errors in deliveries. Take advantage of new technologies like RFIDs, intuitive scanners, and innovative LED light indicator offered by SoluM ESL solutions that will make it easier and more accurate to locate inventories at the shortest possible picking time.
Poor Labeling Systems Can’t Keep Up with Fast-paced Warehouse Operations
The old paper or sticker type of labeling for items, tools, equipment, bins, and racks will not be effective in a highly dynamic marketplace and equally demanding warehouse operations. The problems with such labels, aside from physical loss or damages to the labels themselves, is the accuracy of the information written, which will often lead to grievous mistakes in deliveries and inventories.
Discard your manual, paper-based labeling system, and embrace technology with innovative automation facilities like the advanced Electronic Shelf Label systems such as the ESL Solutions provided by leaders in the industry like SoluM. Use these advanced labeling systems with other automation improvements, including but not limited to RFIDs, barcode scanners, Internet of Things (IoT), and Warehouse Management Systems (WMS), among others.
Seasonality and Fluctuations in Demand
One of the biggest challenges with warehouse operations is on how they can keep up or cope with drastic fluctuations and seasonality in demand for items and products. In a bid to keep up with these changes, many businesses resort to stockpiling multiple SKUs in their inventories and increasing the number or volume they have at their warehouses at any given time. This would be ideal with sudden increases in demand for such items, but sudden dips in demand will have the business end up with a stockpile of inventories they could not move nor sell. Overstocking is a main pain point by as much as 83% of retailers and companies with warehouses and inventories.
Seasonality and sudden fluctuations in demand can be addressed by having a deeper and more insightful look into the market. This would entail the integration of automated systems coupled with innovative analytics and monitoring systems that will give you a real-time outlook of your operations, and accurate look into the flow and throughput of certain SKUs, and the optimum positioning and levels of these items. Doing so will give you a warehouse that is flexible enough to address upsurges and downsides in demand, as well as keep the negative impact of such changes to a bare minimum.
High Warehouse Labor Costs
The less efficient a warehouse operation is, the more labor and personnel it will require to keep up with the demands of their operations. This is a reality that many warehouse managers face daily, given the fact that up to 70% of their warehousing costs are attributed to labor. Such costs would balloon up even more, particularly with inefficient warehouse operations, particularly those that are heavily driven by manual processes.
The key to reducing labor costs is to implement the use of automation and innovative software systems and technologies. You can make use of such technologies for repetitive workflows or those requiring higher accuracies while relegating the workforce to tasks that require a more human touch to be more effective.
Inventory is Not Accurate
An inefficient inventory management system is a nightmare for many warehouse managers, resulting in greater loss and negative perceptions of customers. In fact, inventory management is accurate at only 63% of the time, as many retailers encounter first hand. The more inefficient or manually-driven the system is, the higher its negative effects on the business, susceptibility to human error, and inaccurate inventories that will be detrimental to the success and sustainability of the business.
Invest in efficient Warehouse Management Systems with higher degrees of automation, data and information flow and feedback in real-time, and integration to a highly-connected network that is accessible anytime from anywhere. Implementing a more automated and more integrated system for your inventory management can increase your overall warehouse productivity by as much as 25%. Take advantage of other technologies as well, such as the use of mobile devices, innovative ESL Solutions that feature intuitive displays, advanced RFID, Pick-by-Light and Light-Directed Picking systems to increase productivity and warehouse efficient much, much more.
The Take Away
Warehouse operations have changed drastically in recent periods, particularly with the rise of internet technologies, eCommerce, and other advancements in systems and processes. But with these changes in the marketplace and warehouse environment come an array of problems and issues that if left unaddressed, will cause even bigger problems with the business that will affect the bottom line.
The key to addressing the biggest problems in your warehouse operations is to implement a more streamlined and more efficient warehousing workflow that enables you to establish a more reliable supply chain, warehouse, and inventory system and workflow that will ensure continued business success in the coming periods.
Make your warehouse operations efficient by equipping your shelves with the most advanced ESL in the market, SOLUM. Contact us today to learn more.