5 powerful ways to manage your warehouse more efficiently in 2017

January 17, 2017

Any warehouse managers must be fully aware of different product lines and their selling speed. Popular products should always be in stock but not overstocked, while unpopular products should be kept at the minimum quantity but need still be available if a purchase is made. Determining and maintaining this delicate balance in inventory is a headache-inducing job for warehouse managers. With the below 5 methods, carefully selected and researched, we hope to shine a light on how to manage your warehouse more efficiently in 2017.

 

1. Organization is king

Organization can start from something as simple as storing products of the same line in the same aisle. This will help save time for every warehouse staff and make sure that the correct item can be found quickly when needed. There are several methods of organization which can be applied to every warehouse to help improve efficiency.

 

 

ABC analysis is a method of categorizing inventory in order of importance, where A-category items are the highest priority while C items are the least valuable. This segmentation is based on different levels of profit contribution from different product lines and it allows managers to pay more attention to the most profitable ones. A-items need to have the tightest inventory control with more frequent restocking. Since these items are the best-selling, it is crucial to always have enough stocks in your warehouse. In contrast, sometimes, C-items are only restocked when a new order arrives. In between these two extremes, products in the B category have the potential to be moved either to A category or C category, thus their revenue level should be monitored carefully [1].


For this method to work, it is essential that a warehouse manager is able to calculate the impact of a specific product’s stockout. If the stockout of an item is expected to have a considerable negative effect on the company’s income, it should be classified as category A and its stock level should be kept sufficient. However, this method of categorization should not only depend on the overall income generated by a certain product, it should also take into account the cost of that product’s inventory. The resulting margin is the indicator which managers should use for this ABC analysis. This method will help you to efficiently organize a warehouse of numerous product lines.

 

2. Use the right Warehouse Management Software

A Warehouse Management Software (WMS) will help you control your inventory, labor, equipment maintenance, shipping and more  [2]. Individual Stock Keeping Units (SKUs) will be monitored in details (such as bar codes, dimensions…) and kept track of. It is also very important that a warehouse manager is fully aware of the schedule for incoming and outgoing inventory and staff rotation. Choosing the right WMS is an essential task in setting up a warehouse. For big corporations with a great quantity of products, tech enabled inventory tracking is a must-have tool for their numerous warehouses.

 

3. Forecast Inventory Demand
In order to effectively apply ABC analysis, a warehouse manager need to have accurate forecast of inventory demand. Only then will you be able to classify items correctly. Demand forecast is a little bit more complicated than sales forecast as it requires adjustment of sales history to take into account irregular factors such as a promotional event. “Planning inventory replenishment requires scrubbing the sales data of events that will not repeat. Likewise, it also necessitates the ability to buy inventory for future, new events” [3]. Accurate demand forecasting will allow warehouse managers to stay on top of inventory movements. In a warehouse, each square meter is money. “Stock levels should be maintained at optimum levels, ideally 1.5 times the average use to avoid blocking of working capital” [4]. The good news is that many Inventory Forecast software systems can do the calculations for you. Nonetheless, you should be extremely careful and clear about how each calculation tools define the data input details and formulas. Correct output numbers can only be resulted from your correct input data.

 

4. Automate your processes

With today’s technology, we can automate a lot of physical tasks to save labor cost and increase efficiency. In many factories, robotic arms are already taking the place of human workers to assemble complex products. Similarly, in many modern warehouses, we can already see packages being automatically unloaded, picked up, and put on shelves by machines. A conveyor belt can move items, as well as a multi-level pick tower can load items much quicker than a human staff can. In the long run, the automation of physical tasks will save businesses a lot of money.

 

5. Keep your warehouse safe

 

Workplace health and safety have always been important, and this fact will not change in 2017. Before the age of technology and machinery, a warehouse accident might have only involved the falling of packages from their shelves. Today, however, with so many new complex machines joining human workers in the warehouse, safety has taken on a whole new level. Apart from small autobots rolling along warehouse floors, there are also big machines such as forklifts moving about in a crowded space. It is not hard to imagine what kinds of accident these could cause. First of all, for staff who have been assigned the handling of a certain machine, it is absolutely crucial that these staff are well trained not only in operating the machines but also in reacting to potential mishaps. For workers who only interact with these machines and robots indirectly, there must also be in-depth training and safety measures in place. Warehouse accidents will cost companies a lot of money and skilled labor.

 

A modern warehouse is much more than shelves of physical packages. Today’s warehouse managers have to take in account many other factors, especially the integration of technology into everyday operation, in the form of non-human workers for example. Big corporations especially have to innovate in order to meet contemporary demands while staying cost-efficient. The year 2017 will continue to see old technology being improved upon and new technology invented in order to make the most of a warehouse.

 

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References

 

[1] https://www.lokad.com/abc-analysis-(inventory)-definition

[2] http://www.digitalistmag.com/lob/supply-chain/2014/12/29/warehouse-management-10-tips-smooth-operations-2015-01955276

[3] http://www.data-profits.com/resources/blog/differences-between-demand-forecasting-and-sales-forecasting-for-inventory-replenishment/

[4] https://www.contalog.com/blog/how-to-improve-warehouse-inventory/

 

 

 

 

 

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