Managing a warehouse isn't a piece of cake. It takes meticulous planning, execution, and monitoring to stay on the right track. However, notwithstanding good intentions, there are some common warehouse management mistakes that we, as managers, end up committing without ever realizing that we are.
This blog goes over five top warehouse management mistakes and how you can avoid making them.
1. Inefficient Inventory Management
Shortage of inventory, excess inventory, and storing obsolete inventory are three very common scenarios in warehouses. While many warehouses may believe in following JIT (just-in-time) replenishment, some over-preparing themselves for hikes in demand. Both situations can make you incur additional operational costs and customer dissatisfaction.
As for the problem of storing obsolete stock, it just eats up the precious space for no good reason.
Another ailment is that of not performing periodic cycle counts and physical inventory. Even if you are assured of 99% accuracy since you are using a WMS, the one percent may still catch up with you in the long run.
How to Avoid:
A WMS can help you avoid many of the headaches associated with managing and updating your inventory. In the most basic form, the WMS should allow you to track all the cargo that comes in and out of the warehouse, its location, and its status and associate each cargo to a unique identifier (package ID) within the WMS.
The WMS should allow you to track the exact storage location for each piece by creating a link between the Bay ID (location) and the package ID.
It is highly recommended that package IDs are attached to cargo in the form of barcode labels and that Bay IDs are also identified by barcode labels on each location. This allows that as each piece is received, stored, and shipped and that its status and the inventory are automatically updated.
Having this capability will allow you to track all your inventory almost in real-time, perform cycle and physical counts very efficiently, have the status (Putting Away, Storage, Picking, etc.) for each piece of cargo reflected, and have a clear view of obsolete cargo at the click of a mouse.
The right WMS will help you maintain the optimum inventory at any given time and determine the optimum stock level, especially in case of seasonal demand hikes.
Finally, take a physical inventory, and cycle counts every three weeks to two months, depending on the size of the warehouse and throughput. Also, don’t just stop at correcting the inaccuracy (if found) — go deeper to investigate its origin so that it can be rooted out.
The State of Small Business Report by Wasp Barcode says that
46% of SMBs either don’t track inventory or use a manual method.
2. Unwise Space Utilization
It is very likely that the space needs of your warehouse will change as your customer base becomes more diverse (some customers send you full pallets, others half pallets, and other packages), and/or your business grows.
If you are facing a shortage of space without any of these developments, you have been making the mistake of sticking to a static storage layout or have failed to understand the statistical distribution of cargo dimensions (average dimensions that you process) that is now resulting in under-utilization of storage space, for example, half-pallets being stored in full-pallet bays.
How to Avoid:
Review the layout of your warehouse periodically. Also, review the warehouse stock composition because improving the warehouse layout also requires reallocation according to the product mix. Do this at least annually.
Make sure that you pay special attention to racking in order to utilize the entire height, length, and width of the space. For this, it is highly recommended that you run a report of all the cargo that you have processed within at least one year and group it by dimension.
This will give you a clear idea of the required rack configuration and storage distribution setup. Odds are that you are facing poor warehouse space optimization rather than a shortage of space.
If measuring the dimensions of cargo is causing or will cause additional overhead, you can automate this process by implementing a dimensioning system for pallets and packages.
Warehouse space often makes 15% to 20% of the cost per order.
3. Ignoring Technology as It Passes You By
Are you one of those warehouses that is still managing cargo and inventory with pen and paper? If so, you are committing the same common warehouse management mistakes most small- and mid-sized warehouses are making.
Thinking that a warehouse of your size doesn’t need the latest warehouse technology is certainly a mistake. Failing to adopt technology and to collect and analyze data is not only causing you unnecessary inefficiencies but is also making the business less competitive as it cannot detect trends and adjust and respond in a timely manner to market changes and customer shifts.
How to Avoid:
Basic tools such as a warehouse management system, wearable computers, business intelligence dashboards, diverters & conveyors, barcode scanners, mobile printers, and dimensioning systems can help you immensely in digitizing your warehouse, achieving efficiency, and automating warehouse operations.
Even if we consider the ROI on these simple tools, it will far exceed the costs that you end up incurring in the absence of technology and having to rely on manual labor.
Remember, you don’t need to go from zero to 100, but you owe it to the business, yourself, and your team to start modernizing and automating your warehouse operations.
4. Taking Safety for Granted
Are there frequent slips and trips in your warehouse? Is your pedestrian traffic safe from forklifts? Are your forklift drivers or clerks who are working at heights trained to do their jobs? If not, you are certainly making a huge mistake. The truth is that most warehouses take the safety and health of their workers for granted, and they pay for it in terms of increased contingent costs and litigation.
How to Avoid:
Regular risk assessment, followed by preemptive and corrective measures, is the definitive answer. It is extremely important to follow health and safety guidelines for warehouse workers, thus not only preventing accidents but also avoiding the costs and litigation arising thereby. Here is a great guide you can refer to – OSHA Warehouse Safety Pocket Guide.
According to the U.S. Department of Labor,
Slips, trips, and falls account for up to 65% of lost workdays each year.
5. Forgetting to Measure
A remarkable number of warehouses fail at establishing Key Performance Indicators (KPIs) and measuring their operations. And that is where they are bound to get stuck in the cycle of committing errors, not able to differentiate good from bad and never knowing where and how to improve – you need to know where you are before you can move forward.
Only 30% of American warehouses are efficient yet.
Are you aware of how much it costs you to perform standard warehousing operations such as receiving, put-away, pick & pack, and shipping? Do you know the average execution time for each of these operations? What about who are the most productive and unproductive employees? Or the rate of return? If you have no clue yet, it is highly recommended that you track these and other important metrics.
How to Avoid:
It is imperative that you measure your warehouse processes and operations. In today’s technological environment, tracking each of these parameters is not a thing of the future anymore.
The simplest WMS comes equipped with a database that stores all the data and can be connected to a business intelligence dashboard or predictive analytics engine to provide all these metrics in real-time.
In the case of a predictive analytics engine, it can even help you predict the future through various statistical models built into the system – all you need to do is select the view or model you desire.
Here is a list of top KPIs that you must track continuously to ensure that your warehouse is doing well.
Avoiding these common warehouse management mistakes can not only lead you to better warehouse efficiency and productivity, but also to better customer satisfaction in the long run. Remember, a stitch in time does save nine.
As always, if there is anything else that you would like to know about this topic, or if you need some tips for improving your warehouse operations, do not hesitate to comment or contact us.