Warehouse operations play a central role in the outcomes of inventory-based businesses, and impact everything from the customer experience to revenue. When warehouses are inefficient, inventory can be mismanaged, customers might experience delays, and technological solutions will likely be outdated, leading to backlogs and inaccuracies. However, by taking steps to improve warehouse productivity, inventory-based businesses can streamline inventory management, optimize their physical layout and design, seamlessly adopt technological solutions, and embrace continuous improvement strategies.
Here’s everything you need to know about warehouse productivity improvement, including why it matters and execution methods.
Does Your Warehouse Productivity Need Improving?
Many factors impact organizational outcomes for inventory-based businesses, including supply chain efficiency, employee training and productivity, and even the products you’re distributing. What makes warehouse productivity improvement a priority, especially if the current status quo is acceptable?
The truth is that your warehouse operations are like the bedrock for the rest of your business’ functionality. If your warehouse is not operating efficiently, it will be nearly impossible for your business to operate efficiently.
Also, remember that your warehouse doesn’t need to be in dire straits for productivity improvement to make a difference. Even high-functioning warehouses might benefit from updating technologies, launching new staff training, or maximizing warehouse space, for example.
Keep in mind that new supply chain technologies and strategies are constantly becoming available, and that customer expectations are always changing. What this all means is that the supply chain landscape is evolving, and if a warehouse doesn’t regularly update its practices and strategies, it’s likely to get left behind.
6 Methods for Warehouse Productivity Improvement
Warehouse productivity improvement involves looking at your warehouse with a tactical lens, identifying areas that can be targeted, and deploying strategies and systems for change. While the precise methods for warehouse productivity improvement depend on the current state of your organization, here are some general methods to consider, and areas of your warehouse you can focus on to optimize operations.
1. Streamline inventory management
Inventory management has come a long way in just the past few years alone, and there are many new technologies and processes you can use to improve the way your warehouse handles inventory. Streamlining inventory management means refining your systems, correcting any bottlenecks or inefficiencies, and improving speed and ease.
Firstly, look for ways to improve inventory visibility, which is paramount to speed and accuracy. When you can see exactly where your inventory is and how it’s moving, you can answer mission-critical questions. For example, you’ll always know what you’re out of, what hasn’t shipped/sold, and how much stock you need, and you can make quick corrective decisions.
Also, use systems and technology that help you avoid strenuous scenarios, such as overstocks and stockouts, which can create pressure for both your warehouse and customers. For example, advanced forecasting models can help ensure you’re always ordering the right amount of inventory, and that you’re alerted to any unfavorable scenarios as early as possible.
When you properly manage your inventory, the benefits can be significant. For example, research shows that reducing stockouts and overstocks can lower inventory costs by 10%.
2. Leverage inventory analytics
Inventory analytics are a treasure trove of data that allow you to improve your overall inventory management efficiency while reducing operational costs. With inventory management tools and analytics, you get immediate insights into things such as stockouts, excess, dead inventory, and backorders. You’ll also be able to track new items (and determine if they’re doing well or not) and even monitor inventory with a short shelf life, or that’s dated.
Essentially, inventory management and analytics tools are all-encompassing. They allow you to monitor inventory effectively, therefore improving warehouse productivity. Consider the alternative: manually tracking and monitoring inventory, which is not only time-consuming but also ineffective. Without proper inventory systems in place, you won’t know when you’re experiencing stockouts or excess, you’re far more likely to hold onto dead inventory, and you might lose track of when inventory expires.
3. Optimize warehouse layout and design
The layout and design of your warehouse are other factors to consider for warehouse productivity improvement. When warehouse space is not well-designed, it can lead to congestion, the ineffective flow of goods, limited visibility, and even a lack of resilience to dynamic, unexpected scenarios.
To execute warehouse productivity improvement, consider the role that your warehouse design plays in your business. Are there often slowdowns in certain parts of your warehouse, or areas where problems frequently occur? Are your picking, packing, and shipping processes smooth, speedy, and efficient, or is there room for improvement?
If you’re not sure of how to best optimize your warehouse space, you can turn to your warehouse software for assistance. For example, if it has replenishment planning features, you can use them to optimize your overall inventory management process and monitor supplier performance. You can also use metrics and KPIs to measure warehouse performance and identify areas for improvement. Relevant metrics might include carrying costs, backorder rates, inventory accuracy, order processing speeds, and inventory accuracy.
4. Focus on your team
Your warehouse employees are the ones responsible for ensuring your warehouse runs like a well-oiled machine, and they must be engaged, well-trained, and up-to-date on protocols and systems. First, make sure that everyone has all of the relevant base skills and competencies necessary for their roles. These might be technical skills (such as with any software or equipment), soft skills (such as relationship management with vendors), and safety training.
Next, use regular performance evaluations to monitor performance, and use feedback systems to share and receive feedback from your team. Keep in mind that your team members are an excellent source of information regarding skills and sentiment.
Additionally, embrace and foster an environment of continuous improvement. Even if your team is working effectively now, skills can quickly become obsolete, especially when it comes to technical skills. Studies show that technical skills lose half of their value in just 2.5 years. By continuously monitoring warehouse and employee performance, and offering continuous learning opportunities, you can ensure your team stays skillful and engaged, and that they contribute to warehouse productivity improvement.
5. Improve your demand forecasts
Demand forecasting is a powerful asset for warehouses: these forecasts predict how much inventory you’ll need to order, and when. And today’s demand forecasts are incredibly advanced: they use next-generation algorithms to provide you with accurate insights.
For example, instead of only relying on historical data, advanced demand forecasts take special events into account, such as sales and natural disasters, which can help you arrive at more accurate forecasts. These demand forecasting tools also allow you to use different forecasting models, so you can choose the model that works best for your business needs.
To improve your demand forecasts, you’ll likely need to lean on advanced forecasting tools.
6. Adopt warehouse technology solutions
There are many ways warehouse technology can contribute to warehouse productivity improvement. For example, an enterprise resource planning (ERP) solution can facilitate seamless accounting and business practices, all while supporting your warehouse needs. Similarly, many warehouses choose to use a warehouse management system (WMS) to help navigate warehouse tasks involving goods, such as shipping and distribution.
Alongside these two solutions, you can also deploy a supply chain planning suite, which is a tool specifically designed for inventory-based businesses such as manufacturers and distributors. These solutions go beyond day-to-day warehouse tasks and business functionality, and supplement your operations with robust insights and intelligent data. For example, you’ll have access to features that facilitate demand forecasting, replenishment, inventory analytics, supplier tracking, promotion analysis, and SIOP support. They also typically integrate seamlessly with the major ERP and WMS options.
Ultimately, warehouse productivity improvement can help businesses improve their functionality, profitability, and customer satisfaction. By taking steps to overhaul your warehouse, you’re taking strategic steps to support the success of your operations.
Facilitate Warehouse Improvement with StockIQ
Improving your warehouse is no small feat, and it requires data, strategy, and visibility. If you’re eager to leverage your warehouse for success, StockIQ is here to help. StockIQ is an intelligent supply chain planning suite that improves your inventory efficiency through enhanced visibility. You’ll improve turns and service levels while reducing stockouts and excess.
Contact us today to find out how StockIQ can help you improve your warehouse.
