Conquering costs, complexity, and customer demands with warehouse management
Rising costs, increasing complexity, growing customer demands, and global supply shortages brought on by the COVID-19 pandemic are all intrinsically linked challenges that manufacturers and distributors are facing on a daily basis. Meanwhile, expanding omni-channel markets and fast-growing e-commerce volumes are forcing manufacturers and distributors to not only change how they sell to customers, but also redefine who their customers even are. And customers are exerting even further pressure with requests for customization and personalization of products.
Unprecedented supply chain disruption resulting from decades of global expansion adds to the challenge of maintaining visibility into inventory, shipping, and tracking—often across borders, continents, and oceans. In addition to making sophisticated warehouse operations even more complex, this all makes it difficult for manufacturers and distributors to remain competitive, keep costs down, and maintain profitability. Ineffective order management, excessive labor costs, and inefficient asset use just add to the problem. To tackle these challenges, manufacturers and distributors must reconsider how their warehouse management practices, processes, and systems need to change in order to improve warehouse productivity, visibility, and costs.
Turning challenges into opportunities
While many companies continue to use to processes, practices, and systems that perpetuate many of the warehouse management problems mentioned here, some companies recognize these challenges as opportunities to strengthen their competitive market positions. They are taking warehouse management to new levels by adopting advanced solutions that help them deliver the perfect order, reduce labor costs, and maximize the use of space and equipment.
These solutions enhance warehouse operations with next-level capabilities, such as inventory management, work and task management, radio frequency (RF) and voice direction, labor management, slotting, and kitting and light assembly. Moving beyond the limitations of enterprise resource planning (ERP) systems, advanced warehouse management solutions position firms to operationally excel and drive profitable growth in today’s hypercompetitive markets.
Market drivers
Over the last decade, customers have grown more powerful, requiring more from manufacturers. Customers want orders delivered more quickly, more accurately, and specifically tailored to their needs—all at lower cost. Manufacturers and distributors are expected to turn around orders on shorter notice than in the past. According to Capgemini:
“The rise of next, same-day, and few-hours delivery has created a standard of demand that puts a new kind of pressure on businesses. Because of this increase in expectations on the demand side, the entire supply chain is rapidly evolving from having a functional orientation to a global and interconnected network of data and processes."
Companies can even be punished with fines and chargebacks if orders are improperly labeled, packaged, or delivered. More elaborate packaging has become common as retailers require more in terms of boxing and delivery formats. Unfortunately, heavy competition and big-box retail power mean that suppliers are unable to pass on the added costs associated with these added demands. To add further complication, the exact definition of these customers is also rapidly changing.
Manufacturers and distributors are scrambling to keep up with expanding reaches to markets they might not have previously served, such as online, counter sales, mobile apps, crossindustry, electronic data interchange (EDI), and even business-to-consumer (B2C).
Meanwhile, supply chain management has grown more challenging as companies source products, components, and materials on a global scale. Manufacturers that once sourced their materials regionally or nationally, now turn to Asia, Latin America, Eastern Europe, and other overseas locations. Similarly, companies are distributing their goods more globally as they seek to penetrate new and growing markets. That means products must travel far greater distances and be stored in more locations, increasing the challenges of visibility and threatening “perfect order” delivery. This has been exacerbated further by the challenges caused by the pandemic.
Regulatory challenges also loom. With high-profile recalls on everything from toys to dog food to peanut butter, manufacturers are clearly under growing pressure to track their products with even greater precision. They must have immediate access to data on everything from lots to serial numbers to shipping locations if they are to avoid crushing costs—and legal penalties, in the case of a recall. Lengthening supply chains further contribute to the risk of expensive recalls.
Given these factors, manufacturers and distributors are faced with escalating costs and complexity, which drive demand for greater productivity in warehouse operations. For these companies to remain competitive and profitable, they must find ways to increase warehouse performance to new levels. However, their existing ERP systems often lack the automated capabilities necessary to increase visibility into operations, enhance market agility, and boost warehouse productivity.
Business challenges
The limitations of many companies’ warehouse operations often come from these three factors: orders, labor, and the warehouse assets themselves. To drive performance and productivity gains in warehouse operations, manufacturers and distributors must confront the inadequacies of how these issues are handled.
Companies must enhance warehouse productivity and visibility if they are to remain competitive, protect their profitability, and position themselves for continuing growth.
Business solution: advanced warehouse management
By investing in advanced warehouse management solutions, manufacturers and distributors can maximize product placement strategies, prioritize tasks, implement productivity standards, and increase logistics efficiency. These warehouse management solutions use criteria such as item, location, quantity, and order information to manage stock.
While conventional warehouse management systems typically concentrate on merely locating inventory, advanced systems manage the whole process of material flow: receiving, put-away, cycle counting, picking, replacement, packing, and shipping. These advanced warehouse management solutions can help manufacturers and distributors reach new levels of warehouse visibility, agility, and productivity. Key capabilities of an advanced warehouse management solution include:
As customer demands rise and supply chains grow increasingly global, companies need to drive gains in warehouse productivity and performance to avoid excessive.
Multiple benefits
Manufacturers and distributors can reduce costs, protect profitability, and enhance overall market competitiveness by remaining focused on the KPIs that drive warehouse performance. Through the implementation of an advanced warehouse management solution, companies can:
- Strengthen Order Management: With customers now expecting the perfect order, manufacturers and distributors can take advantage of advanced solutions to reach higher order completeness, order on-time rates, and order accuracy
- Increase labor productivity: With labor cost pressures rising in relation to new demand and supply changes, companies with advanced warehouse management capabilities can enhance workforce performance and accomplish more with less. Labor cost increases—which otherwise would have risen heavily—will be minimal or non-existent.
- Maximize asset use: Rather than investing more capital in equipment and warehouse space, companies can rely on their advanced warehouse management systems to fully deploy their existing warehouse assets.
- Reduce inventory costs: With most ERP and legacy warehouse management systems, inventory identification is possible only by location. Advanced warehouse management solutions allow users to make inventory buying decisions based on visibility into inventory throughout the entire network, and help them make intelligent decisions on intra-facility movement of that inventory relative to buying more. Since inventory is a tremendous cost burden, companies can drive clear and compelling return on investment by addressing this area.
Advanced warehouse management solutions can reduce operating costs and increase overall revenue
Technology enablers
By integrating warehouse management, labor management, transportation management, and third-party logistics (3PL) billing into a unified solution, manufacturers and distributors gain end-to-end supply chain visibility and an efficient execution system that can help them make better decisions and execute those decisions more quickly and profitably.
Today's advanced warehouse management solutions are fully available in the cloud and take advantage of a number of key technologies that can help companies improve operational efficiencies and reduce costs.
These technologies may include:
Winning in hypercompetitive markets
Enormous gains in warehouse performance can be realized through the implementation of an advanced warehouse management system. Manufacturers and distributors that invest in an advanced warehouse management solution can strengthen order management, increase labor productivity, and maximize their use of warehouse assets.
As customer demands rise and supply chains grow increasingly global, companies need to drive gains in warehouse productivity and performance to avoid excessive costs. These investments also provide a greater ROI in terms of greater warehouse visibility, agility, and productivity. They lay the foundation for profitable growth and market success in the hypercompetitive markets of today and tomorrow.
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