Warehouse Optimization Tips To Enhance Your Revenue Stream
Traditional warehouses (or distribution centers) have faced the need for transformation and warehouse optimization due to two driving trends.
Firstly, there’s a shift in the nature of fulfillment and distribution: customers expect agile and highly responsive service. To meet the needs of sophisticated customers companies should optimize the collaboration of men and machines to create highly productive collaboration.
Secondly, warehouse management is experiencing the boom of technological innovation. So, to lead the market, companies should get acquainted with the warehouse optimization tips applying solutions empowered by IoT, AI, autonomous vehicles, collaborative robotics, and other trendy techs.
BusinessWire, a global leader in press releases distribution, estimated in 2021 that more than 80% of the warehouses have no automation at all. And 52% of respondent companies declared an expected increase in the investments for warehouse optimization. Reading this blog, you have a chance to be among the first companies, which are striving to reduce labour costs and start getting higher revenues.
For example, InboundLogistics platform calculated that labour expenses covered about 65% of most warehouse facilities’ operating budgets. The potential of warehouse optimization is about this issue as well: to reduce expenditures and increase efficiency.
Standing among the rows of the goods in the warehouse, it’s extremely important to answer the question, which will influence further strengthening of the company’s reputation, its capacity to fulfill customers’ orders or manage delays and returns. The question is whether business owners have optimized the warehouse to the extent the company was ready to cope with the current industry challenges.
What Is Warehouse Optimization And Why It’s Important?
Even a little inventory miscount or your WMS back-end issues are able to cause serious inconvenience throughout the whole supply chain of the business. In the blog, we’ll dive into the details of what is important in modern warehouse optimization.
Speed and accuracy are the two most important issues leading to faster processes and shipment time reduction.
Warehouse optimization deals with making the following issues more efficient: the use of time, space, and warehouse resources. The main objective of such an optimizing shift is to improve customers’ satisfaction and experience. This leads to the company’s revenue enhancement via more precise planning and processes automation.
Warehouse optimization is quite a complex and sophisticated process, especially for big corporations. Inventory management (IM) systems and software assist in providing necessary supplies right in time in accordance with the demand.
Companies use a variety of technologies and software to optimize their warehousing and address running out of stock or having excess stock, streamlining the ordering and tracking processes. Because each technology contributes to the creation of a productive and profitable environment in the warehouse:
- WMS (warehouse management system existing in the form of SCM applications) assists in taking the responsibility of the warehouse layout, inventory tracking, labor management, pick-and-pack stage, product receiving, and shipping;
- RFID (radio frequency identification technology) is tracking and managing inventory assets via encoding digital product information using smart labels;
- LiFi (light fidelity) technology is empowering data transmission due to the established WiFi communication between devices using light;
- Robotics solutions are effectively responding to volume growth and performing more tasks with less labor and at lower costs.
- Warehouse optimization practices are vital for your business to survive, compete, scale, and develop.
Optimizing warehouse running companies benefit from an increase in free space, efficiency, stock enhancements, supply and demand balancing. All these improvements lead to a revenue boost.
Modern Challenges in the Warehouse Optimization Companies Face While Gaining E-commerce Success
Forbes reported the last consumer survey: “two-thirds of consumers choose a vendor based on delivery options. And 54% of the clients noted that “fast shipping” had to take two days or fewer. Such expectations demand a modern warehouse to be smart. And the only way to create a really smart approach is to optimize the processing of the data, which sits behind moving things around premises.
Reflex Logistics Solutions, a Spanish provider of the solutions for warehouses, prepared a long list of the challenges companies to come across in warehouse optimization: every point sticks to the order processing issue (how to tag, pick, pack, and dispatch the necessary goods). We do agree that inventory operations are a substantial part of what stakeholders need to think of.
If a company hasn’t automated the warehouse yet, it could come across inventory inaccuracies, redundant processes, poor quality control, or even erratic demands. And each of the mentioned issues is a real challenge you need to address while optimizing warehouses for enhancing your revenue stream.
The Benefits of the Warehouse Optimization
A warehouse is one of the key components in the company’s supply chain. Stakeholders of the company face the necessity to maintain warehouse assets in such a way they will meet customers’ expectations as well as balance the company’s budget successfully.
With the right modern tools, it is possible to optimize warehouse space, manage proper employees engagement, reduce errors, and create more value for the company and potential investors. The way of warehouse optimization leads the company through the efficient integration of people, technologies, and processes.
Solutions, which companies utilize to improve the logistics, vary: from using third-party storage, additional trailers, renting additional floor space in another warehouse or simply outsourcing the development of customized warehouse management software.
This or that every company has an objective to save time and money dealing with its capacity bottlenecks. And due to warehouse optimization, they are able to gain the range of the benefits truly donating to business growth, scaling, and providing more profit and faster ROI.
Increased Employee Efficiency
Once you start warehouse optimization you are reviewing the processes regularly. FDM4 solutions emphasized that reviewing the warehouse’s layout and organization on a constant basis led to increased employees’ accuracy and efficiency.
Warehouse optimization assists in reaching high employees’ performance due to constant product tracking, data analysis, sufficient focus on employee training, engagement, and satisfaction. The optimization process contributes to warehouse automation, due to which more time is left for strategically important activities.
Improved Management and Workflow
It’s difficult to keep the warehouse well-organized until you store products in a chaotic way or your stock pallets are all in the same size (not optimized for the variety of goods). By optimizing your storage space, you gain the ability to perform product picking faster and smoothen the workflow throughout the warehouse.
Advanced warehouse management options not only improve the flow of the products but make a reputation shift for your vendors. Once they tour a well-organized warehouse with the ability to reach the stored products quickly and easily, they will more likely continue patronizing your business and establishing profitable connections.
Decreased Number of Missed Sales
Entrepreneur.com reports that 25% of the customers stop buying due to poor experiences they got while order processing or return. By improving your storage capacity, you have chances not to miss out on sales. With proper forecasting of what’s selling better and optimized storage space, your business is able to sell more.
The more right products fitting the potential orders you have in the warehouse, the more orders you will complete in time. Warehouse optimization leads to meeting customers’ expectations for order fulfillment and delivery time.
Creation of Safe Workplaces
Increased space and improved workflow mitigate any existing safety issues. With more space to work, employee injuries will decrease and productivity will be higher.
While warehouse optimization companies establish storage and organization standards, daily processing protocols, lockout (tagout) procedures providing sufficient digital tools for an employee to use. This leads to a safer standardized workplace and decreases administrative expenditures throughout the working process.
Getting More Returned Customers
Invesp, a platform for optimizing your website conversion rate, measured that once a company was able to optimize warehouse processes and eased the returns, customers were more likely to shop again there. 92% of the surveyed customers noted that they would buy again if a return process were smooth and free.
Successful warehouse optimization via robotics is helpful in reaching the infinite personalization and efficiency granted to the customers. For example, Alibaba robots perform an outstanding 70% of tasks. This leads to quick packaging and human errors elimination. So, they report “it’s really a game-changing number of satisfied customers due to robotics utilization and spare time for mission-critical activities”.
Ability to Plan and Forecast More Precisely
Today trendy technologies and solutions including WMS (warehouse management system) and EAM (enterprise asset management), sensors, RFID tags, AI-powered data analytics give unprecedented insights into the product shelf life in the warehouse.
Being optimized, a warehouse has become a sophisticated exchange station able to analyze and plan storage, tracking, delivery, customizing, and shipping the goods.
6 Tips of Warehouse Optimization
Forbes described intelligent warehousing as “the process shaped by the urgent necessities to be adaptive, evolving product and packages design, providing infinite personalization and efficiency performed by the robots”. That is a description able to reflect the objectives businesses have while speaking about warehouse optimization.
Let’s explore what can be helpful in arranging really smart warehouse optimization to take advantage of the warehouse optimization trends.
Human Errors Reduction
The more company automates the warehouse, the more efficient warehouse management is, and the lower costs they experience. It’s reasonable to start with staff training, but this or that you’ll come to the necessity of warehouse optimization via automation.
Inventory Count and Control
In managing a warehouse stakeholders usually come across three basic count and control processes:
- goods reception and disposal;
- goods preparation for the delivery (managing the route for order picking and packing, extracting the goods, and transportation to the dispatch area);
- expedition of the consolidated units.
Here WMS software like which we created for US Cold comes in handy to consolidate all the critical warehouse data into one user-friendly and easily accessible platform. Automated inventory count and control will grant you optimized warehouse layout, improved warehouse flexibility and responsiveness as well as the ability to implement an ongoing implementation strategy further.
Once you decide to optimize your warehouse and start with the inventory control issues, you can think of a customized WMS software to track real-time inventory information, monitor sales trends and forecast demand, identify and tackle inconsistencies asap, prevent stockouts, and save time on manual check-ins.
Knowing the warehouse layout and perfect stock management is OK to increase a company’s storage capacity. What else is important when it comes to ordering processing and completion is picking optimization tools.
Cyzerg, a provider of warehouse technologies, counted that “depending on the operation movement between pick locations can cover more than 50% of the whole picking process time”. It’s reasonable to consider picking routes optimization while introducing tech changes to your storage premises.
Concerning these issues there are following technologies and solutions:
- automated picking tools (e.g. voice automated picking or pick-to-light);
- automated guided vehicles (AGVs);
- a variety of picking methodologies are applied as the basis to your customized software (e.g. piece picking, cluster, or zone picking).
To ease order picking and packing companies apply barcode scanners (the technology error rate is 1 in 3 million) or wearable computers. Altogether the mentioned processes of inventory count and control, as well as picking issues, empower warehouse visibility.
Establishing Warehouse Visibility
It’s more convenient to manage the warehouse once you have easy access to any critical information about inbound shipments, inventory levels, or orders’ data (e.g. order status: received, picked, out of stock).
Inboundlogistics.com wisely named warehouse visibility “the world of possibilities” for warehouse optimization. They outlined visibility and SCEM (Supply Chain Event Management) tools as those having huge potential in assuring the quality of what’s happening in the warehouse.
While introducing the change in the field of warehouse visibility stakeholders deal with the following core process elements:
- monitoring (providing ongoing data of the inbound warehouse events);
- notifying (establish alert messaging to enhance real-time support in daily storage activities);
- controlling (giving the possibility to change previous decisions if it’s necessary);
- measuring (providing Key Performance Indicators or metrics for smart decision-making).
Robotics Technologies Utilization
Robotics247.com, an up-to-date resource about robotics in logistics, explained the term “material handling” as a trendy concept empowering warehouse optimization since it comprises controlling, moving, and protecting products of the storage territory.
If to compare manual and automated material handling systems, experts can see that robotics technologies grant the following pros:
- possibility to adjust warehouse operations and tune the processes (for humans it’s necessary to arrange pieces of training, which is costly and time-consuming sometimes);
- reduction of the injuries and accidents risks (hence, lower administrative costs);
- space can be optimized due to the machinery able to store goods in higher places;
- minimized errors number and improved order fulfillment quality.
DHL shared extremely vivid examples of how robotics is changing the process of warehouse optimization: Lokus Robotics performed self-guided vehicles autonomously moving bins with the orders around the premises; DHL’s robotic picking cell in Beringe, the Netherlands, uses machine vision technology able to process 600 boxes per hour.
Storage Space Slotting
Software is controlling and counting the inventory, robots perform repetitive manual tasks, but there’s still an important warehouse issue: how to develop suitable storage space slotting strategy.
It depends on the business type, product profile, and even on the characteristics of your customers. Storage space slotting concept can be based on a variety of criteria:
- product velocity;
- seasonal usage;
- picking types;
- product similarity.
This art of placing the products around the warehouse in the most efficient way possible makes productive space utilization serve the business smartly. Type of storage space slotting is considered in WMS prototyping as well.
To perform all the necessary changes for successful warehouse optimization, stakeholders need to know the company’s needs and profile perfectly well, map the processes they’re willing to automate, and forecast the benefits they’re going to obtain.
This is quite a complex collaborative research job, which is both time-consuming and full of controversial issues. To perform well you can have a consultation with the Innovecs expert team, because we’ve already got deep experience in assisting companies in managing tech changes and WMS optimization (like in the case below).
Warehouse optimization, if done correctly, provides a range of benefits alongside
- Minimized human errors
- Throughput increase
- Reduced operational costs
- Higher productivity
- Data accuracy
- Optimized layouts and routes
- Inventory loss decrease
- Improved warehouse navigation
- Better resource utilization
- Enhanced customer service
So, warehouse optimization is a powerful step toward overcoming the majority of the challenges (inventory fails, poor quality of the orders processing, errors in the inbound routes management).
To lead the eCommerce market and avoid missed sales, you can perform a substantial shift in warehouse management: apply trendy technologies for labor and warehouse management, utilize custom software solutions for inventory count and control.
As a digital transformation tech company with proven expertise in Supply Chain & Logistics, Innovecs can help you with warehouse optimization, be it the development and integration of a complex WMS, inventory system, or LMS.