Combating Warehouse Inefficiencies
I’m not one of Wall Street’s financial wizards, but I do know a worthwhile business investment for the small-to-midsize distribution business: the warehouse. For distributors and manufacturers, the secret to succeeding in an increasingly competitive industry lies in combating warehouse inefficiencies.
Many businesses still manage warehouses with 20th century methods where manual oversight is king, and inefficiencies (even disarray), rule. Utilizing manual methods of warehouse oversight mean thousands of dollars, if not more, in wasted resources every year – a tough pill to swallow in an industry where every dollar matters.
Here’s an “unlucky 13” list of warehouse inefficiencies that we typically run across:
1. Bad Slotting/Labeling
Often, companies have no rhyme or reason as to why a product is where it is (or perhaps they simply have no idea where a product actually is). Looking through one of these warehouses is like trying to rummage through a closet for that lucky bowling ball. In addition, there’s no way to know how many of each item is in a bin. This leads to wasted time and money spent searching for a product when an order is placed. Once an item is finally found, pickers will often need to sift through a bin to ensure the right amount of a product is available since this isn’t immediately clear through either labeling and/or documentation.
2. Unclear Pick Path
Once a product is “discovered” in a warehouse, there’s no set of rules in place to fulfill, package, and ship an order. By having no logical path to follow when picking an order or multiple orders, the wheel is constantly being reinvented and items can easily be misplaced.
3. Manual Order Checking
By having a manual order-checking process in place, warehouse employees and sales staff constantly have to re-check an order. For example, a picker has to check against an order to find what item and how many they need to pick. Once an item arrives at the packing station, the order has to be re-checked to ensure the correct product has been picked, determine where it needs to be shipped, set up billing, etc…
4. Inventory Checks . . . by Sales?
When you don’t have a reliable way to ensure inventory accuracy, you’ll find salespeople wandering the warehouse aisles, looking for products BEFORE they place an order for a valuable client. If you can’t trust that your ERP has an accurate inventory count, then this kind of manual check becomes necessary to keep false promises from being made. This is wildly inefficient.
5. Delay Between Receiving and Putaway
Whether it’s due to poor resource planning or bad process management, many received goods just sit in the receiving area of a warehouse for days, if not weeks. Not only does this create a physical bottleneck at a warehouse’s entry point, but the warehouse is now in possession of goods not yet “available” for sale. If a sale can’t be processed due to a lack of inventory, this hinders a transaction and could possibly lead to lost business to a competitor (and conversely, if new inventory is ordered while returned inventory sits unchecked on the loading dock, then there is added cost to boot). In any case, this can result in a bad customer experience where repeat business could be lost. How’s that for dirty laundry?
6. Similar Items in Same Bin
When received goods are manually sorted, similar items can end up in the same bin through human error. For example, items of similar color might end up in the same bin (like a red scarf and a maroon scarf). These manual mistakes create picking errors, resulting in extra time spent sorting out the correct item for a sales order, unhappy customers and lost sales.
7. Manual Replenishment
Warehouse pickers often have set inventory-counting schedules. But if a large order is fulfilled at noon and stock isn’t reassessed until 9AM the next day, then bins are left empty. Replenishment needs to be an automated process; otherwise, you’re at risk for unnecessary backorders.
8. Bad Workflow Process
Without having proper insight into a warehouse’s processes, people manning material handling equipment may be out of sequence with the workflow. For example, if employees get backed up in one portion of a warehouse, it will create a domino effect, causing other employees down the process line to waste time waiting for the bottleneck to clear.
9. Bad Zone Assignments
Do you know which of your products are in demand this week and which aren’t? If you said “no”, you’re not alone. If you aren’t constantly reassessing the need for workers in high-activity areas of the warehouse, you’ll find pickers idling in their assigned zones with little or no activity (while in other zones, pickers are overloaded with orders and falling behind).
10. Small Staging/Shipping Area
Once picked orders are brought to the staging area, they can get mixed up with each other, especially if space is limited. If picked orders aren’t labeled or accounted for properly during the picking process, you can end up having to essentially re-pick orders entirely as a quality assurance measure.
11. Returns and Inbound Item Mix-up
Without a receiving process in place, returns and inbound items may get mixed up and processed in a similar fashion. Then salespeople have to waste hours locating products that were returned—are they on the shelf? Still in the returns pile? Already resold?
12. Manual PO Checking
Having employees manually enter receiving information for goods received results in inevitable discrepancies with a P.O. When this happens, employees must cross-reference information – wasting valuable time and delaying the item’s availability for picking.
13. No Clear Putaway Process
Without a clear putaway process, stock ends up staged in a warehouse’s aisles for putaway, but never actually make it to the picking bin. This clogs aisles and hinders all subsequent processes essential for warehouse management, including picking, cycle count planning, replenishment, etc.
How many of these efficiencies does your warehouse have?
They say that you can’t fix what you don’t understand. Identifying some, if not all, of these warehouse inefficiencies will lead to an almost immediate ROI. During these times where every customer counts, that’s a point that can’t be overlooked.
Rather like facing down a large debt, the hardest part of fixing an inefficient warehouse is taking the first step of assessing the problem. Once you understand exactly which inefficiencies are costing your warehouse business money, the next step of righting the problem is easier to take.
If you need help determining the ways in which your warehouse can improve processes, save money, and increase sales, contact PathGuide today. Our expert warehouse consultants can help you assess your current situation and provide automation solutions that improve business, workforce morale and customer satisfaction!
Eric Allais – President & CEO