The consistent flow of the entire supply chain hinges on proper warehouse management. Any little glitch or hiccup can create challenges that have a ripple effect. Learning how to avoid and overcome obstacles is the key to ongoing and long-term success.
Third-party logistics (3PL) warehouse management is a juggling act at best. It involves organizing, managing, and maintaining a multitude of processes that occur on a daily basis in a warehouse. To keep the 3PL warehouse functioning, all processes must run smoothly for maximum efficiency.
Most warehouse managers have embraced automation and warehouse management system (WMS) software to run virtually error free, but no system is without problems. Mistakes and challenges can frequently occur.
In a report carried out by McKinsey & Company, it was found that around $385 billion was spent worldwide in warehouse costs, which does not include the added expense of mistakes and errors.
Warehouse problems throw a wrench in the speed, productivity, and efficiency of operations, which then impact the entire supply chain process. Unfortunately, the errors that occur often take place after it's too late and the damage has already occurred.
Prior knowledge of the potential stumbling blocks can help you run reconnaissance to prevent the problems before they happen. As Benjamin Franklin famously said,“an ounce of prevention is worth a pound of cure.”
1. Dangers of Accidental Redundancy in the Warehouse
Clearly, taking steps to avoid problems helps ensure that the 3PL warehouse continues to function well to ensure satisfied customers and consumers.
No one has a crystal ball and can successfully predict the future. However, a successful Extensiv 3PL Warehouse Manager strives to run damage control before problems occur by familiarizing themselves with the most common problems faced by the supply chain and how to avoid them.
With proper warehouse functions, eliminating redundancy is the name of the game. To function effectively, everything must flow smoothly like a well-oiled machine. If a problem occurs, then a warehouse manager expects to notice it immediately; after all, the squeaky wheel gets the grease! However, what if the problem occurs as a result of accidental redundancy?
Warehouses perform a huge magnitude of operations for each item. All of the processes are strung together to create efficient workflows. If a problem occurs in the supply chain, then operations can become duplicated. The redundancies impact labor costs and take a toll on a 3PL's bottom line.
Redundancy mistakes occur most frequently in large warehouses during order picking. Products are picked from the warehouse storage location to fulfill the order. In big warehouses, the same order is often managed by more than one person, which leads to the likelihood of problems such as picking more than one of the same product.
Investing in a warehouse management system helps to automate processes and reduce the incidences of redundancies. With order picking, the use of barcode technology that scans the products that are picked to fulfill the orders notifies the user if there are any duplicates that accidentally occur.
2. Warehouse Space Efficiency
Storage costs continue to increase and as the burgeoning demand for ecommerce grows, the dilemma of warehouse space takes center stage. Despite the best of efforts, storage space often remains underutilized.
Logistics Management carried out a survey that found that the warehouse capacity being used by manufacturers hovers at only around 68% in many situations. Running out of storage space due to ineffective planning has become an all-too-common pain point.
Focusing on mapping out an effective warehouse layout can often solve problems by maximizing floor space and focusing on vertical space. Ideally, employees should easily pass through the warehouse without encountering roadblocks.
The use of automation along with modern equipment will lower labor costs and improve accessibility throughout the warehouse. An effective warehouse management system improves the categorization of inventory, so it is stored easily and within accessible reach.
Tips on optimizing warehouse spaces includes:
- Examine the technology needed to organize the layout of the warehouse such as using a WMS. Many WMS software companies offer a 3D model where you can provide dimensions and measurements of the warehouse along with inventory.
- Automate the putaway and picking processes with automated storage and retrieval systems (AS/RS), which are made up of a network of computer-controlled pieces of equipment.
- Improve speed and warehouse processes to help save wasted floor space.
Warehouse managers who are not ready to upgrade technology can instead try to improve the warehouse inventory so it can be placed in a more accessible location for easier picking at a later date.
As the business grows, such a lax process can actually cause more problems than it solves and send the manager scrambling for an innovative WMS solution to overcome the obstacles and problems.
Many are surprised that warehouse layout is so important, but the correct or incorrect design can truly make or break a 3PL. There is no ‘perfect’ design for every warehouse. The pattern that fits one 3PL might fail to meet the needs of another. Product type matters when mapping out an effective warehouse system.
The most popular items should be located at the front with easy accessibility to facilitate rapid picking and shipping. Forklifts should never have to travel to the far areas of a facility to reach the most in-demand items. Accessibility hinges on types such as pallets, cartons, batch numbers, and other factors that vary depending on the industry served.
Complex categorizations of inventory usually need voice direct systems or radio frequency to instantly obtain data and reduce the frequency of errors while improving product delivery.
3. Poor Inventory Management
Subpar inventory management leads to a lot of problems such as the following issues:
- Misplacing products by thinking they should be in one location but are actually in another area of the warehouse.
- Not having enough stock to fulfill an order or being out of stock, which causes the need for a backorder and increases your lead time.
- Cancelling an order because you don’t think you have it in stock but later find the item in the warehouse.
- Losing an item after putting away the product.
- Delayed shipping because items are not actually in stock.
- Miscalculations that occur during the inventory checking processes which can happen during manual methods.
If a 3PL warehouse experiences any of the above problems, then the management has failed to maintain an accurate record of inventory in real-time. Warehouse management often doesn’t track inventory correctly, or they use an error-prone manual method.
Poor inventory management occurs when things are managed incorrectly with manual processes or outdated software. The best way to overcome the challenges is with updated warehouse management software. Ensure that the new software offers real-time management features.
Extensiv 3PL Warehouse Manager is a cloud-based WMS system that offers complete inventory management, task automation, and delivery visibility to customers, so problems are reduced.
4. Failing to Be Prepared for Seasonal Demands
Depending on the time of year, there are seasonal demands. Some products are needed more frequently during the summer months and others during the winter, not to mention the high demand for ecommerce products during the holidays. 3PL warehouse management that fails to be prepared during the year’s different seasons can quickly sustain a great deal of financial damage.
Common problems that occur are:
- Failing to have sufficient stock of needed items.
- Misplacing items.
- Inability to locate the needed products on short notice.
Preparing to meet seasonal demand is a necessity. Warehouse staff have to effectively manage their stock levels.
Tips to prepare for seasonal demands include:
- Remain in contact with distributors, retailers, manufacturers, transporters, and other sources.
- Maintain accurate information so that every aspect of the supply chain is ready to meet the demand fluctuations and can work together seamlessly.
- Use forecasting techniques to determine the effective methods needed to figure out seasonal inventory levels.
- Organize and arrange warehouse products to help rapidly push seasonal products.
- Place items in convenient locations throughout the warehouse to easily put away and pick orders.
- Use warehouse equipment and automation tools such as forklifts, AS/RS, and pallet flow rack systems to process the flow in a better and quicker way.
5. Poor Time Management
Failing to manage time correctly impacts picking and location of the inventory, which causes significant delays throughout the whole supply chain.
Automation tools such as RFID labels, barcode technology, order authorization, and WMS solutions all work together to manage processes in real time so repeated tasks are avoided and execution times significantly reduced to improve time management.
6. Problems with Order Management
Order management is a cornerstone of any 3PL warehouse and is often one of the most common areas where errors occur. The process of order management starts from the second the order is received through the picking, packing, and shipping process until the order reaches the consumer. Additionally, a 3PL usually oversees the post-sales processes such as refunds and returns when needed.
A single mistake in the order management process can cause everything to collapse like a house of cards, and the entire workflow to come to a standstill.
Steps will often have to be conducted again from the beginning, which causes time loss, chisels away at profitability, and impacts the reputation of not only the 3PL but also the ecommerce customers that partner with the logistics provider.
Using an order management system (OMS) helps keep orders running smoothly by optimizing order management and fulfillment processes such as shipping, inventory management, and customer notifications. Warehouse managers can save time, achieve higher order accuracy rates and benefit with greater profitability.
A study carried out by AMR Research showed that order rates of 80 percent or higher experienced a profitability rate that was three times more profitable than warehouse with an order rate of only 60 percent.
7. Spending Too Much on Labor
Laborers carry out a multitude of tasks within a warehouse such as cleaning, material handling, receiving, shipping, forklift operation, stock clerking, warehouse management, product picking, and loading.
Many warehouse owners mistakenly believe that automation and equipment account for a sizable amount of operating expenses, but manual labor is also expensive. Many warehouses spent over 50% of their budget on labor alone.
Conducting a complete review of the diverse types of labor being performed in the warehouse helps create solutions and systems that can curtail expenses. Increasing automation often lowers the costs and labor expenses, which saves on the budget.
8. Carrying Out Too Many Procedures
Extra operations, reprocessing, rework, and unnecessary handling that are carried out from overproduction, shortage, or defects cost the 3PL time and money. Overcoming unnecessary steps can streamline the warehouse process so it becomes more agile and faster, which promotes an improved customer and consumer experience while enlarging the company’s profit margins.
9. Traceability and Connectivity Problems
Software allows complete traceability throughout the supply chain. Relying on manual processes or outdated software can quickly lead to traceability and connectivity issues. Any loss of control over inventory and issues with the continuity of the supply chain can cause problems for everyone involved with the process.
WMS software provides the tools needed to maximize a 3PL’s processes and create transparency to overcome any traceability or connectivity issues.
10. Ongoing Damage Problems
With any warehouse, large or small, inventory and heavy equipment can sustain damage. Warehouse management cannot always avoid these mishaps, but they can take steps to reduce the number of incidences.
Measures to take to reduce damage to inventory and equipment and protect against accidents:
- Install protective pallet rack protectors on gears
- Use special nets for racks
- Install anti-slip tape and guard rails
- Hang low clearance warning bars
- Utilize lockout systems
- Implement an accumulation of conveyor systems
Conducting frequent inspections of the warehouse helps catch any early signs of damage to vehicles, equipment, and warehouse storage units. Look over storage shelves and pallets to catch cracks, indications of breakage, or overloading. It is also imperative to stay vigilant for any signs of structural issues that could lead to water damage in the warehouse or pest infiltration, which would easily destroy and taint storage items.
11. Gathering Delays
Entering SKUs manually slows the entire process, leading to gathering delays and human errors. To optimize gathering, you’ll want to invest in a leading WMS that both helps you plan efficient gathering routes to provide a short response time as well as substantially increases employee productivity.
With Extensiv’s leading WMS solutions, warehouse managers can better meet the needs of their customers through full integration. With our REST API platform, our cloud-based WMS effortlessly connects to systems to provide accuracy with mobile scanning, print labels, integrate shopping carts and marketplaces, manage custom integrations, and more.
Warehouse Management Best Practices
The warehouse is an crucial component of any supply chain. If warehouse operations fail, then the entire 3PL could conceivably start to crumble. A WMS is imperative to ensure an optimum customer and consumer experience every step of the way. Below you’ll find several recommendations on warehouse operation and administration.
- Focus on designing a complete supplier fulfillment program that improves the relationship that exists between companies and suppliers. The program should outline product handling information and transport times.
- Implement an electronic notification program for labor that streamlines all warehouse operations, client satisfaction, and labor planning.
- Regularly perform stock audit cycles that check inventories so you can better control your supplies and avoid any interruptions or holdups in operations.
- Rely on cross-docking techniques to effectively move goods from the supplier’s location to the customer without needing to always store them. Such a process can better optimize fulfillment speed.
- Utilize slotting to change the location of products to meet demand.
Every company will have its own requirements with logistics. Automation is a great asset when solving challenges in the warehouse. An effective WMS will also help you manage all necessary operations.
Conduct continuous improvement techniques to avoid or correct mistakes before they become major problems. Whenever a problem arises, warehouse managers should instantly try to investigate what, where, when, and why the incident happened so they can take the steps needed to fix the problem or avoid the issue in the future.
Carrying out necessary modifications helps avoid mistakes that can prove costly or damage customer relationships.
Relying on Technology to Reduce Warehouse Management Errors
Even common warehouse errors take their toll on profitability. 3PLs that rely on manual processes and fail to incorporate technology into day-to-day operations are usually the ones that experience the most frequent problems. A WMS is easy to implement and accessible to logistics companies of all sizes.
Embracing technology might seem like a natural step for forward-thinking warehouse managers, but many continue to cling to manual processes coupled with stacks of paperwork.
Manual inventory management systems rely on humans to track all products and then take the time to enter the information into the computer accurately and quickly. The entire process is rife with human error that can occur at multiple stages. Any time an employee interacts with a product or carries out inventory processes manually, there is a substantial risk of mistakes.
A paper inventory system is inefficient and vulnerable to expensive errors. Manually conducting anything also takes up excessive employee time, which drives up labor costs.
The biggest step that a warehouse manager can take to increase efficiency, reduce workforce cost, and speed up processes is to embrace technology. A WMS can practically wipe out shipping, receiving, picking, and packing mistakes.
A WMS is designed for many functions that help a 3PL manager ensure that their warehouse is operating efficiently.
A few examples include:
- Tracking products from the minute they are received at the warehouse until they are delivered to consumers
- Monitoring all productivity
- Checking for accuracy
- Planning routes for operators
- Picking products to fulfill orders
- Automating all billing
- Sending invoices in seconds
- Integrating with accounting solutions and ERPs
- Providing flexible Extensiv 3PL Warehouse Manager pricing
- Rapidly calculating charges for storage
- Tracking all items via the cloud
- Automating orders
- Creating scalable workflows
- Utilizing directed putaway to store inventory
A WMS helps 3PLs oversee more orders, integrate their systems, and manage workflows. They can effectively grow orders by 22% while offering value-added services.
Using a WMS to Its Full Potential
In some cases, a 3PL might have a WMS in place, but they fail to use the system to its fullest potential. One of the most underutilized aspects of a WMS is the system’s ability to perform regular cycle counts of the warehouse inventory.
The act of performing regular counts helps staff recognize discrepancies and patterns that could show a problem with the inventory and help reduce incorrect counts.
Studies have shown that employee theft accounts for 44% of inventory disappearance, so overcoming the problem helps expand the bottom line and create a more stable work environment.
A report released by the National Retail Security Survey showed that employee theft caused $34.5 billion worth of loss. A WMS utilized to the program’s fullest potential helps lower the incidences of stealing, supplier fraud, and administrative errors to help increase a 3PL's profitability.
The WMS offered by 3PL Central, an Extensiv Company, was designed specifically for 3PL warehouses. The software is trusted by over 12,000 3PL operations professionals to effectively grow their business and overcome warehouse challenges. Using an innovative WMS solution lets warehouse managers focus on operations, customer satisfaction, and business growth.
Whether you are looking to avoid costly warehouse mistakes, meet future challenges, reach more clients, or manage day-to-day operations, you’ll want to try Extensiv’s cloud-based WMS solution.
Contact Extensiv to schedule a demo.