Warehouse management involves organizing, managing, and maintaining all the processes that occur in a warehouse, so that they run as smoothly and efficiently as possible. Even though some of these processes are automated and seem error-free, every warehouse operation is prone to mistakes and challenges. According to a report by McKinsey & Company in 2019, about £300 billion (approximately $385 billion) is spent each year, worldwide, on overall warehousing costs. And that amount doesn’t include the additional costs of correcting errors and mistakes.
Warehouse problems can affect the speed, efficiency, and productivity of either one particular warehouse operation or the entire chain of processes that are linked with it. In most cases, these errors are only identified after the process has begun or even after it has been completed. And by then, it’s usually too late to prevent the error—it may even be too late to reduce the amount of damage done. But with prior knowledge about the potential challenges that could occur in your warehouse operation, you can predict them beforehand and stop the damage before it starts.
In this article, we will be covering some of the most common problems faced in warehouse management and what you can do to stay clear of them.
Most warehouses perform multiple operations on each item, and those operations are strung together to create workflows. But if a workflow isn’t well organized, you may find that the same operation is being accidentally performed more than once. These redundancies increase your labor costs and take up extra time when you have to go back and reverse the mistake. This happens more often in large warehouses than in smaller ones, since there’s more space and more inventory to deal with.
Redundancy is often noticed in order picking, which is when products are picked from their storage locations in a warehouse to fulfil an order. In smaller warehouses, order picking is a one-person job which leaves little room for error. But in a larger warehouse, multiple people work together to pick products from different parts of the warehouse to fulfill a single order. Since the same order is passed around to multiple people, there’s a bigger chance for mistakes, like picking too many of the same products.
A solution is to invest in technology, such as a modern warehouse execution system (WES), that will help you automate the processes that are prone to redundancy in your warehouse. For instance, to help reduce redundancy in order picking, you could use barcode technology to scan the products that have been picked for the order and have the system notify the user of any duplicates.
Messy warehouse layout
Over the years, rising storage costs have pushed warehouse managers into making more efficient use of their warehouse space. But a survey conducted by Logistics Management back in 2018 suggests that it doesn’t always work—the average warehouse capacity utilized by manufacturers was only around 68%. Not having enough storage because of ineffective use of space is still a common pain point in warehouses.
Putting together an optimal warehouse layout can solve this problem. This includes maximizing use of the floor space and vertical space while leaving enough room for warehouse employees to pass through. It also means looking into ways to use automation and equipment to reduce labor and labor costs, improving the accessibility of products in the warehouse, categorizing inventory in a systematized way, and ensuring that inventory is stored safely.
To start optimizing your use of warehouse space:
Look into the technology that can help you organise your warehouse’s layout, such as a warehouse management system (WMS). Some WMSs can offer you a 3D model of the most optimal arrangement, if given the dimensions and measurements of your warehouse and inventory. You can also consider an automated storage and retrieval system (AS/RS), which is a network of several computer-controlled pieces of equipment that automates your putaway and picking processes. Besides improving the speed and efficiency of your processes, an AS/RS can save a huge amount of otherwise wasted warehouse floor space.
If you’re not ready to upgrade your technology, you can always start simple instead. Use your existing solution for managing your inventory and sales to figure out what items from your inventory sell the quickest. Then make sure that you’re storing those items in the most easily accessible locations, so that they can be picked and put away faster.
Bad inventory management
Have you been experiencing any of these issues?
Expecting to find a product in a certain location, but realizing that it’s actually placed somewhere else.
Accepting an order on the assumption that you have enough stock to fulfill it, and only later finding out that you don’t. Now you have to place a backorder, which significantly extends your order lead time.
Denying an order after assuming that you don’t have enough stock to fulfill it, but then finding out that you do.
Trying to put away stock that you’ve received but having trouble finding where to place it.
Any of these problems can indicate that you haven’t been maintaining accurate records of your inventory and updating them consistently. According to a study conducted by Wasp Barcode Technologies, 43% of small businesses either don’t track inventory or use a manual method. Another survey by Peoplevox, found that 34% of businesses have delayed shipping because the products mentioned in the order were not actually in stock. Miscalculations can easily happen when inventory checking processes are done manually, since this leaves plenty of room for human error. Sometimes they can also happen when using outdated software.
One way to overcome these warehouse challenges is by switching to a newer solution. This could either be a system that’s specific to inventory management or an overall warehouse management software that includes real-time inventory management features. A typical system first collects your inventory data through a handheld or fixed device such as a barcode scanner. This information is then sent to your software solution, which catalogues and tracks your inventory.
Poor preparedness for seasonal demands
Certain types of products experience the same amount of demand all year round, whereas others are more popular during specific times of the year. Sudden influxes of demand that take you by surprise can do a lot of damage, as your warehouse might not be prepared to take on the orders. This could be because you don’t have enough products in stock, or because you don’t know where to store them on such short notice. It’s important to be aware of the current market trends and the fluctuations in demand for the products that you work with, so that you’re ready to manage your changing stock levels.
Here is how you can prepare for seasonal demands:
Stay in contact with your manufacturers, distributors, retailers, transporters, and any other sources you have from your industry. This way, every part of the supply chain can have the same information about demand fluctuations and can work together to respond accordingly.
You can also use demand forecasting techniques to figure out what products you need in your inventory for the season.
Arrange and organize your products to help push out your seasonal products faster. This means placing them in the most convenient spaces in your warehouses, so that they can be easily put away and picked for orders.
Consider warehouse equipment and automation tools such as pallet flow rack systems, forklift trucks, and AS/RS to help your processes flow better and quicker.
Unsatisfactory order management
Even though order management is one of the most important operations in a warehouse, it is also the one that reports the most errors. Order management consist of all the processes that start the minute an order is received, from accepting the order to picking, packing, and shipping the right products to the right customer, and handling post-sales processes like refunds and returns if needed. A mistake in any one of these processes can collapse the entire workflow, which means redoing all the steps from the start. This is clearly a huge waste of time and money, and will mean that your customer will be getting their order later than expected.
To help keep their orders running smoothly, a lot of businesses choose to use an order management system. This can help you manage your overall order management and fulfillment processes, including shipping, customer notifications, and depending on the type of solution you choose, even inventory management.
In addition to saving time, high order fulfillment accuracy rates can also help your profitability. A study by AMR Research found that business with excellent order rates of 80 percent or higher are three times more profitable than those with order rates of 60 percent.
Excessive spending on labor
There are several types of tasks in a warehouse that labor workers are employed to handle such as general labor like cleaning, forklift operator, material handler, shipping and receiving monitor, shipping specialist, loader, product picking, stock clerk, and overall warehouse manager. With all the technology available today, most warehouses are looking for ways to invest in it. There’s a common notion that only automation and equipment is expensive. But what several warehouse managers fail to realise is that manual labour doesn’t come cheap either. According to Kane Logistics, labor is one of this biggest expenses some warehouses spend on, ranging from 50-70% of the overall warehousing budget.
Therefore, start by reviewing all the different labor work that is done in your warehouse, then look at the solutions and systems that you are already using. See if you can increase their usage by automating more tasks. An alternative that small businesses choose to do is to consolidate their warehouses with a partnering business to save warehouse space, and use the leftover money on automating more of their tasks. This prominently reduces labor costs. Only once you feel like you’re using all of your current solutions to the maximum of their potential, and you have just enough employees to take care of tasks that can only be done manually, is it time for you to consider adding more automation tools or even hiring more labor staff is necessary.
Poor damage control
Damage is unfortunately a common issue in warehouses, especially ones that deal with a large amount of inventory and heavy-duty equipment. While it’s difficult to completely avoid damage, you can always work on ways to reduce it.
Install protective gear like pallet rack protectors, special nets for racks, guard rails, anti-slip tape, lockout systems, low clearance warning bars, and accumulation conveyor systems. Also make sure your pathways are well lit and wide enough to comfortably move around products. These measures will help you protect your employees, equipment, and inventory and alos prevent accidents in the workplace.
Conduct regular inspections throughout your warehouse to look for early signs of damage to your equipment, storage units, or transportation vehicles. For instance, check out your storage shelves and pallets for overloading, cracks, and breakage. In addition to this, look for other types of damage as well, that can eventually cause problems, such as water damage or even pests.
Warehouse management is one of the most essential processes that happen in a warehouse, and it’s definitely not one where you can afford to mess up. Since most tasks involved in warehouse management are linked in some way, a problem in one can lead to costly errors in the others as well. Accidental redundancy, having a messy warehouse, bad inventory management, poor preparedness for seasonal demands, unsatisfactory order management, excessive spending on labor, and poor damage control can cost you money and derail your warehouse operations. By educating yourself about the potential warehouse challenges your warehouse may face and their solutions, you can reduce the amount of damage caused by these errors or even prevent them from happening at all.