What if you could focus your attention on one area of your facility and positively impact nearly every important metric in your business? From efficiency to schedule to margins and cash flow, making a few simple changes in one functional location could lead to significant positive outcomes.
As you have likely guessed, that location is the warehouse. A warehouse is a tricky operation. At first glance, it seems straightforward. You store products, parts, and materials on your shelves until they’re needed. At that time, a team member picks the required parts and prepares them either for use or for distribution. Pretty simple, right?
Without structure, your employees may perform redundant tasks, dragging down your efficiency.
However, if you’ve spent some time analyzing your warehouse, you may know how much more complicated the operation can be. The search for products can lead to a massive time suck for your team members. You may lack transparency into the inventory, leading to poor purchasing and production decisions. Without structure, your employees may perform redundant tasks, dragging down your efficiency.
The good news is that many warehouse problems can be solved with simple fixes. At Deufol, we manage more than 13 million square feet of warehousing space for our industrial customers. We’ve seen many of the problems industrial companies face with warehouse management. Below are three of the most common challenges, along with the most effective solutions.
Problem #1: Your labor costs are excessive for warehouse personnel.
Technology is rapidly changing the need for personnel in the warehouse. The most technologically advanced companies are experimenting with artificial intelligence for picking functions. However, most of us still rely on manual labor for shelving products and for picking.
Very often, that manual labor can become a drain on efficiency and margins. In reviewing the labor costs, you may notice that the hours for warehouse employees seem out of balance. The warehouse requires an inordinate amount of labor, but you can’t seem to pinpoint the exact reason why.
If your warehouse labor costs are too high, the problem likely lies in two key areas: the warehouse layout and the systems in place. The warehouse layout may not seem like an obvious factor on labor costs, but its impact can be sizable.
For example, you should make your high-volume parts and products the easiest to access. Similarly, place the products and parts that you need less often on the shelves or racks that are more difficult to reach. Additionally, categorize parts and products in some intuitive, logical fashion, making it easy for team members to track down a part.
Systems can also impact labor costs. Are you still using a manual system to manage your warehouse? That’s likely creating redundancies in your process. Software and technology can eliminate those repetitive tasks and help your team locate parts faster, reducing the need for labor hours.
Problem #2: You don’t know your inventory levels.
Inventory accuracy and transparency doesn’t just affect labor costs. It also impacts your working capital and your ability to serve customers. You may even understand this from experience.
Assume you have a part that’s needed to manufacture an important product. If inventory falls low and you’re slow to reorder, you may run out of the part. That could limit your ability to continue production.
With the right technological systems in place, you should be able to see all of your inventory levels in real time.
On the other hand, you could order the part before it’s needed, creating excess inventory in your warehouse. You have plenty available, but that excess inventory represents wasted capital. Instead of purchasing the unneeded inventory, you could have put those funds toward more pressing items.
Solution: High-tech systems
An inaccurate warehouse is largely a symptom of a deeper problem: a lack of systems. Warehouse technology has advanced to a point where this kind of inaccuracy shouldn’t happen. With the right technological systems in place, you should be able to see all of your inventory levels in real time.
For example, for our industrial warehouse customers, we use a barcode scanning system. When products or parts are added to the shelf, they’re immediately scanned. That scan is reflected in the inventory count in the system. Similarly, when inventory is pulled, it’s also scanned, reducing the inventory level.
That means you can see your real-time inventory with just a few clicks. That helps you gain transparency and inventory accuracy, and it eliminates incorrect purchasing or production decisions.
Problem #3: You’re running tight on space.
Space is a precious commodity in most industrial facilities. You need to maximize profit from every square foot. While the warehouse is important, it doesn’t drive revenue the way production lines do. To stay competitive, you’d likely prefer to allocate space toward production rather than warehousing.
Unfortunately, you may be in a situation where the warehouse is limiting your ability to expand in other areas. You’d like to allocate less space to the warehouse, but you also need room to store parts and products.
There are a few ways to solve a space limitation challenge in the warehouse. Some of the already-mentioned strategies, such as optimizing the layout or implementing technology, can have a big impact. An optimized, technologically-advanced warehouse is usually a lean warehouse, which often translates into a reduced need for space.
However, another option is to outsource your warehousing to a trusted partner. The partner stores your parts and products in their facility, packing and shipping them as needed. You leverage the partner’s team members, square footage, and technological capabilities.
Warehousing is a function that seems simple at first glance but can quickly become complex. If you’re struggling with excessive warehouse costs, limited capacity, or a lack of transparency, you may be better served with a partner who specializes in warehouse management.