Accelerated growth and expansion of your portfolio are often considered factors of success for your business. Yet, this success is not exempt from growing pains, especially as it pertains to your warehousing and product distribution. If not properly analyzed and corrected, these pain points can proliferate and result in larger issues for your business such as less cash on hand, increased costs and lower service levels. Let’s take a closer look at four major warehouse woes potentially affecting your current operations.
While demand forecasts may drive how much inventory you have in stock, focusing too much on forecast accuracy can actually detract from your inventory accuracy. For example, if your company’s domestic operations are covered by multiple, disparate warehouses across the U.S., forecasting at the warehouse level would provide more visibility into your stock levels and inventory accuracy at each location. Forecasting at a network or company level may prove to be too broad, as inventory may exist in your network yet in suboptimal locations (which in turn results in excessive transportation costs between network locations to fulfill orders). Investing in a robust warehouse management system, performing regular cycle counts and investigating root causes behind stockouts or poor forecast numbers can help to solve the mysteries around your inventory accuracy.
Warehouse capacity and utilization
The space within your warehouse (and how it is occupied) can either hurt or help you; if the space is underutilized, you may be headed towards a state of overcapacity. On the other hand, using proper optimization techniques within your warehouse allows for the existing space to be maximized. Taking a good look at your facility layout can prove to be a beneficial exercise. Identifying areas where the layout impedes a smooth flow through the warehouse, along with reducing potential bottlenecks, can help alleviate the stress brought on by a suboptimal design. Warehouse tools such as slotting software can improve pick paths, while reducing congestion and providing for potential value adds as pickers make their way through the warehouse.
A strong understanding of warehouse science, your inventory and their demand profiles also helps to optimize your space. Items that turn the fastest and require the most picks should be strategically placed to avoid congestion and reduce pick paths in the warehouse.
Inbound material visibility
One of the biggest pain points for a warehouse’s operations actually begins outside of its four walls and originates with an organization’s relationship with their manufacturers, external suppliers and carriers. Visibility around your inbound shipments is crucial not only for setting inventory levels and for forecasting, but also for accurately staffing the warehouse and developing operations plans. Unexpected (or unplanned) fluctuations in inbound shipments can cause delays in the dock-to-stock process if the warehouse is understaffed. Lack of advanced shipping notifications (ASN’s) or carrier tracking updates can also reduce visibility around what’s to be received. Furthermore, once product arrives at the dock, missing packing slips and unreadable barcodes (or lack thereof) can create additional bottlenecks. Ensuring compliance to ASNs, proper case labeling and barcoding, and on-time delivery tracking metrics promote fluidity around the inbound receiving process in your facility. Developing a strong supplier management program with constant and accurate communication channels improves clarity around inbound shipments. Establishing business reviews on a regular cadence with your suppliers provides a formal platform for discussion around any issues or concerns originating on either end.
Many times, issues originating at the operational and tactical levels propagate through the supply chain and end up impacting the business to a much larger extent. For example, consistent slow-downs in putaway or picking processes can result in shipments not making it out the door, causing delayed shipments to customers. These delayed shipments can result in fines, chargebacks, and compromised customer relations as your business deviates from the contractual service-level agreements (SLA’s). Taking the time to make sure the right metrics are driving the right behavior within your warehouse can save a tremendous amount of time, effort, and money across multiple divisions. Properly staggering orders and focusing on order quality and correctness can help streamline picking and outbound operations. Developing a strong understanding of customer demand and service levels allows you to prioritize putaway and picking processes.
Are these inefficiencies causing a slowdown in your warehouse operations? If you are struggling to meet demand, optimize space or improve your operational metrics, it may be time to call in the experts. Seeking an outside, unbiased assessment from professionals possessing extensive experience in pinpointing warehouse inefficiencies and driving effective, fact-based solutions can help your organization improve operations.
Jacqueline Quirk is a Consultant in the Supply Chain Operations competency at Chainalytics with expertise in warehouse operations. She has a BS in Industrial Engineering from the Georgia Institute of Technology, with a concentration in Supply Chain.