Pressure on today’s warehouse manager comes from many different directions. These are both internal and external pressures. In this post, we are going to analyze what the main challenges in warehouse management are according to Gwynne Richard, author of “Warehouse Management: a complete guide to improving efficiency and minimizing modern warehouse” and we will provide some recommendations to solve these challenges.
The author identifies the following main challenges in modern warehouse management:
- Pressure to reduce operating costs: companies are targeting the supply chain as an area where costs can be reduced further and as a result pressure is increasing on transport and warehouse managers to reduce costs whilst also increasing customer service. This has resulted in companies evaluating outsourcing options as well as reviewing their own logistics operations.
- Shorter order lead times and stock availability: order lead time is the length of time between the placing of an order and the receipt of the item by the customer. The most effective warehouses are those that have reduced lead times whilst maintaining quality at a reduced cost.
- Delivery through multiple channels: companies are increasingly delivering via multiple channels to reach customers more effectively. The pressure on the warehouse is brought about through having to present goods in a variety of different ways. These include direct delivery of single items to the end user, multiple SKU orders direct to store and bulk orders to retail distribution centres. Each has its own different pick requirement and is likely to rely on different equipment. Order lead times will also vary, as will the method of delivery.
- Smaller, more frequent orders: manufacturers and retailers are continually striving to reduce inventory whilst retail stores are looking to increase floor sales space and thus reduce the amount of inventory held in stock rooms. Just-in-time methods are resulting in smaller, more frequent orders. This again necessitates changes in warehouse operations, with a move away from full-pallet picking to carton and individual-item picks.
- Greater fluctuations in demand: the days of predictable sales are long gone, with consumers rather than manufacturers flexing their muscles in the marketplace. Companies have to be able to ramp up resources during the peak periods and have a much leaner operation during slower, quieter periods.
- Increases in stock-keeping units: the proliferation of product lines gives the consumer choice; however, it is a major challenge for warehouse managers in terms of having sufficient, cost-effective pick locations.
- Labour cost and availability: during periods of high employment many countries are seeing labour rates steadily increasing and coupled with the fact that a number of countries have an ageing population it is becoming harder to source experienced warehouse operatives. Additionally, working in a warehouse is not seen as being the most glamorous of occupations and this deters a number of young people from entering the industry.
- Environmental issues: warehouse managers are not only tasked with cost savings but also the reduction of the warehouse’s impact on the environment. This includes areas such as energy consumption, affecting areas such as lighting, mechanical handling equipment, cooling and heating.
- Data and information transfer: one of the warehouse manager’s greatest challenges is how to manage data. Today’s supply chain produces vast amounts of data and it is up to the warehouse manager among others to analyse this data and use it effectively. A further challenge is ensuring that data is transferred to the correct location.
How to solve these challenges?
Despite the complexity of modern warehouse management, we identified 2 main approaches to solve the above mentioned issues:
- Lean warehousing: The idea is to identify the activities within the warehouse that absorb resources but don’t create additional value. Waste can be found in many areas of the warehouse, none more so than in the use of space. Many managers will say they are running out of space and require additional storage facilities, yet when you walk around the warehouse you may see obvious signs of waste. Examples in the warehouse include the following:
- transportation (driving an empty forklift);
- inventories (congestion at the inbound and outbound areas);
- motion (interrupting movement such as staging product before put-away);
- waiting time (bottlenecks at pick locations);
- overproduction (holding too much inventory);
- overprocessing (performing unnecessary steps such as labelling and checking); and
- defects (time spent correcting errors such as misspicks);
- Warehousing 4.0: the idea is to use new technologies to support lean warehousing, introducting de facto the concept of Lean 4.0. Some examples of using new technologies applied to lean concepts (i.e. to reduce wastes) are:
- Discrete Event Simulations (DES): these are becoming more and more popular in industrial environment. Basically, DES are used to simulate the logistic flow within a factory to identify in advance bottlenecks and inefficiencies. In this way, we can avoid to drive empty forklifts, congestions, etc.
- Real Time Locating Systems (RTLS): they provide real-time and reliable data to feed DESs. Not only: assets geolocalization may halp to better estimate costs, waitings, buffering, WIP and to create a process mapping.
- ERP and MES: nowadays the border between duties of ERP and MES solutions are becoming more and more blurry. Essentially, both systems are used to share data (i.e. information) within the factory, both in orizontal and vertical direction.
- Wearables and AR: combined together, they are an exceptional tool to avoid mistakes (aka poka-yoke) during warehousing operations.
- EKanban: electronic Kanban are basically kanban solutions mostly integrated in ERP systems. They can easily manage orders within the factory or in the internal/external supply chain and inside the factory process flow.
- AGVs: Automated Guided Vehicles can be used to cadence a production line, especially if integrated with ekanban solutions previously mentioned. Moreover, AGV automate the transportation among different stations, therefore avoiding unnecessary variations.
- Cobots: Collaborative robots are also a strategic asset to minimize waste during the picking operations. Compared to traditional robots, their main benefit is that they can collaborate easily in the same working environments with operators. The main current limitation is probably the high cost/payload ratio.
- Big Data Analytics: once data are provided and/or collected through RTLS and ERP, alghoritms can be implemented to optimize the workflow, especially to reduce WIP.
How to start?
In this post we listed a number of challenges in warehouse management.
In fact, to stay competitive on the market, companies need to provide more customize products, therefore higher product variation, and deliver them throughout different channels, in the fastest, cheapest and most reliable way to the final consumer (B2B or B2C). For these reasons, warehousing operations are becoming more challenging than ever. Luckily, new technologies are helping organizations to satisfy demanding requirements.
In this sense, Accialini Training & Consulting is able to provide you the proper support to identify the best solutions to reduce wastes inside your warehouse. After a first Gemba walk, we analyze your requirements and we identify technology providers to achieve your targets (best trade off between budget available and system performance). For more details, please have a look at our special service Logistics 4.0.
If you want to learn more about new 4.0 technologies, we recommend the following online courses: