What is Warehouse Management? Processes, Performance & Solutions
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What is warehouse management?
Warehouse management involves the daily oversight of all warehouse operations. A comprehensive, integrated warehouse management solution utilizes industry best practices and embraces all the essential elements that make an effective operation work. These elements span distribution and inventory management, warehousing workforce management, and business support services. Additionally, a broad range of services, provided internally or in conjunction with a services provider, might include logistics; shipping and receiving; safety processes and procedures including staff training and formalized practices that are communicated throughout the operation; environmental stewardship; warehousing and packaging; distribution and storage; quality control; technology, and equipment management.
What are key warehouse processes?
The fundamental warehouse processes comprise receiving, putaway, inventory management, product slotting, picking, packing, kitting, and shipping. Optimizing these processes will allow you to streamline your warehouse operation, enhance product flow, reduce cost and errors, and achieve a higher perfect order rate.
Benefits of an effective approach to warehouse management
There are at least 10 key benefits of an effective warehouse management system. These include:
- Optimized space
- Lower operating expenses
- Inventory visibility
- Effective labor
- Increased transparency of chain of custody
- Optimized supply chain
- Ongoing improvements via automation
- Enhanced shipment management providing better customer service
- Continuous process improvement and innovation
- Improved safety culture
To achieve these and other benefits solely through internal management is a significant challenge. For this reason, many retail and manufacturing warehouse operations choose to engage the services of a warehouse management outsourcing provider. The goal is for the provider to focus on delivering as many of these benefits as possible, while enabling the retail or manufacturing company to focus more time and resources on its core areas of expertise.
Who needs a warehouse management solution?
The short answer is that virtually every business with inventory that is moving through a warehouse needs a holistic warehouse management solution that spans people, process and technology. This includes businesses for which warehouse management is not a core competence as well as organizations that are expanding or not happy with the current state of their operation. A comprehensive, integrated solution goes significantly beyond defining warehouse management as traditional shipping and receiving activities. It also enables you to more precisely track where inventory is located and helps ensure that information is up to date and accurate at all times. Effective warehouse management is one of the most important parts of conducting business in any number of industries. If a company’s warehouses are poorly run, products may be more difficult to move through the supply chain, pushing delivery dates back. As a result, profits could be impacted, and customers disgruntled, leading to other negative consequences down the line. Also, as volumes and market conditions change the ability to ramp up and down to support the business can be critical for many warehouse operations. A comprehensive warehouse management solution helps meet this goal as well.
Why use warehouse management outsourcing?
The right outsourcing partner can provide a holistic approach to warehouse services that includes focusing on four key aspects of good warehouse management: a highly trained staff, proven inventory processes based on industry best practices, technology, and automation. As an example, with its stable of safety-trained, full-time warehouse employees, Canon removes the burden of hiring, managing, training, and developing staff. By identifying a company’s key challenges, Canon can effectively leverage its own teams (not temporary employees) in operations, human resources, safety, IT, and procurement to identify the right talent to drive performance and results. In today’s challenging warehouse environment, a reputable managed services provider can help businesses significantly enhance their warehouse operational efficiency while freeing up time and resources that allow them to focus on what they do best.
What is a warehouse staffing agency?
Warehouse staffing agencies connect warehouse operations with local workers in a wide range of positions. Such positions might include pickers, packers, stockers, shippers, and more. Typically, these workers are tapped to provide support when warehouses need to staff up for busy seasons and special projects. As opposed to other types of integrated warehouse management partners, staffing agencies focus on temporary labor and do not offer any technology or process improvement. Another consideration is training. Typically, temporary workers are not trained to the level that warehouse management experts like Canon provide in deploying more highly trained, permanent staff.
What services do 3PLs provide?
3PLs usually own their own warehouses and invite other organizations into their facility to follow their standardized processes. Their services include receiving, storing, packing, shipping, inventory management, kitting, and light assembly. Additionally, most 3PLs offer services outside of strict warehouse management — transportation, brokerage, public warehousing etc. One important consideration is that warehousing operations often must retrofit their processes to the requirements of the 3PL, which means giving up control. Consequently, 3PLs are not specifically focused on offering a tailored solution that can be delivered onsite at their client’s warehouse location.
Assessing your warehouse inventory management
Warehouse inventory assessment includes benchmarking the desired flow and storage of inventory. From Canon’s point of view, however, an effective, comprehensive assessment goes beyond inventory considerations to comprise such key elements as: people, safety, processes, technology, and strategic growth.
To accurately define an optimized warehouse, we must consider unique business characteristics like location, market condition, customer needs, supplier profile, and stakeholder vision. In general, an optimized warehouse has reached the highest levels of operational efficiency when it comes to driving productivity and accuracy as well as in utilizing space, labor, technology, and inventory. There are at least two areas in which many warehouses lack optimization, leading to challenges and short falls. One is delayed and inaccurate orders, often driven by unpredictable demand schedules, unacceptable levels of employee absence, and poor inventory control. The other is excessive financial burden, often caused by sub-par performance, poor management systems, and outdated processes and technology.
Considering warehouse automation
One key question addressed by an effective warehouse assessment is: “Within my operation, how do I automate as many key areas as possible?” The answer could be as simple as utilizing hand-held units to pick product and record inventory transactions or as complex as implementing AGVs (automated guided vehicles) to automate labor-intensive movements. An important point to remember is that not all warehouse operations are ready for automation, particularly those that have not yet implemented standardized processes and procedures along with best practices and a stable business model. Achieving this level of consistency is a critical prelude to successfully automating a warehouse operation. Once standardization has been achieved, automation can become a critical driver of operational success for the warehouse.
Measuring warehouse performance
Many warehouse operations do not have access to, or properly utilize, the right metrics for benchmarking and continuously monitoring performance in a way that is meaningful to their specific business. This includes using generic metrics that may not be helping the operation improve to its maximum potential. Understanding what metrics your operation needs, what metrics are available, and what technology can enable you to obtain those relevant metrics is key to effective performance management. Without this understanding, a warehouse will have no baseline for implementing short- and long-term improvements. How can a warehouse operation know if it is measuring the right things? One answer is to institute an assessment with the aid of an experienced partner like Canon that can provide valuable, objective insight based on results.
With ecommerce continually on the rise, additional warehouse space will be needed to meet the demand. By the end of 2021, ecommerce sales are projected to grow by 14%, intensifying the need for 330 million additional square feet of warehouse space by 2025. The ecommerce boom and the global pandemic have also brought along a new set of challenges: supply chain disruptions and labor constraints. In 2021, there are growing concerns of increased supply chain risk. According to a Logistics Management magazine survey, 39% of respondents said they had a plan to tackle that risk in 2021, compared to 52% the year prior. Additionally, the labor gap continues to grow as warehouses grasp to retain and attract top talent. Warehousing employment has reached its highest level ever recorded in 2021, totaling nearly 1.5 million jobs. Fifty percent of warehouse operators cited labor constraints as their biggest pain point while they try to incentivize current employees to stay and reduce turnover. Warehouse operators find that they have to pay employees higher wages in order to stay competitive with other operators and major retailers who have also increased wages for employees.