Effective warehouse management is a critical aspect of logistics and supply chain management, and an efficiently managed warehouse facilitates the timely and accurate movement of products, leading to happy customers and a successful business. Just ask the folks at Amazon – mastering the shipping and warehousing systems have made Jeff Bezos the richest man in history.
For the rest of us, our warehousing operations face new challenges everyday – rapidly evolving technology, increasing competition domestically and overseas, and freight challenges all threaten the bottom line of every warehousing operation. Smart warehouse managers understand the constant need to adapt to these challenges, increase efficiency, and do more with less. Here are three practices that you can adopt to increase warehouse efficiency, according to Definitive Technology Group.
Leverage the 80/20 Rule to Organize Inventory
Can you name the best-selling items in your warehouse? The most-picked items? Can you identify items that are frequently purchased together? Warehouses that keep detailed inventory logs and purchase records understand the patterns that develop, but they’re doing something extra with that information that allows orders to be picked more accurately and in less time.
The 80/20 rule says that 20% of your inventory is probably included in 80% of your orders – some items are far more popular than others. Successful warehouse managers are organizing inventory so that the most commonly ordered items are also the most accessible and closest to the shipping and receiving docks. This means that the most-handled items in the facility take the least time to stock and the least time to pick, and that adds up to huge time savings.
Items that are frequently ordered together should also be stored together to minimize picking and put-away times.
Optimize Labor Efficiency with New Technology
Labor makes up a huge proportion of costs for most warehousing operations, and it’s difficult to cut labor costs without sacrificing your capacity to get work done. Still, warehouses can increase labor efficiency by adopting new technologies that help workers perform their jobs more efficiently.
Industrial Computer Workstations in the warehouse environment are a great example – these mobile workstations are easily pushed around the warehouse by workers and can be configured with bar-code scanners and label printers, allowing workers to put away new inventory and pick orders without walking back and forth to a stationary workstation.
Replacing stationary computers with mobile workstations reduces the number of walking steps for workers, leading to huge productivity gains as each worker is empowered to pick and put away more items per hour.
Minimize Receiving and Shipping Errors
Every warehouse company wants to increase revenue, but with the average warehouse operating at a profit margin of around 11%, cost reduction is probably a better strategy for increasing profits. Shipping errors can cost a warehouse $200-300 per incident, and many warehouses make mistakes on 2-3% of orders – that adds up to a lot of lost profit per year.
Accurate shipping starts with accurate receiving – new inventory needs to be labeled and sorted correctly to ensure that it can be found in the right place when it’s time to fill an order. Mobile workstations allow new inventory to be received, counted, labeled, and sorted in one location, without the in-between steps that lead to inevitable distractions and invariably result in mislabeled inventory and shipping errors.
Accurate receiving also minimizes lost inventory and allows warehouses to carry less safety stock – that’s putting money right back in your pockets.
For warehousing operations looking to survive in a highly competitive and changing environment, increasing efficiency through business process improvement should be a priority. Streamlining processes to reduce errors, investing in technology to enhance worker productivity, and organizing inventory to better access key items are all important steps to reducing costs and increasing profits in any warehouse.
Patrick is Vice President at Definitive Technology Group. His career started in the US Air Force where he served as a Combat Medic. After his military service, he earned multiple undergraduate degrees along with two masters, including an MBA. As co-founder of Definitive Technology Group, he has great passion for developing products that improve process and workflow efficiency.