Labor management in warehousing is stressful.
If you are like most warehouse owners, you’d agree with me that getting and keeping qualified personnel is difficult.
In fact, Statista reported that 54% of surveyed supply chain professionals stated that they found hiring and retaining competent employees to be quite challenging. This greatly affects your operations.
Labor costs also form the bulk of your expenses.
You have to pay salaries, benefits, overtime and training charges. This significantly increases your operational costs.
What’s the solution?
You can adopt automation in your business. This sustainable warehouse practice helps you to significantly reduce your labor expenses. You no longer pay high salaries and benefits.
This technology also helps to minimize costly errors in your facility.
In this article we will look at five warehouse practices to implement for growth in 2024. I hope you are able to learn how these methods can transform your enterprise.
Let’s get started.
1. Real Time Inventory Tracking
Experiencing inventory shrinkage?
I know it is very frustrating for you as an entrepreneur when you cannot account for your goods. There are discrepancies between the records and the actual items in your business premises.
You even come to the shocking realization that some records are falsified to cover up theft.
Interestingly, according to Cargonet, $44 million worth of goods could not be traced in warehouses in the second quarter of 2023. This scenario is contributing to your rising operational costs.
You come to the realization that if you are able to address this loophole, you can considerably increase your profits.
Real time tracking is a sustainable warehouse practice you can adopt in curbing this issue.
This approach promotes transparency and traceability in your business.
To implement this you can incorporate barcode and RFID technology.
You first tag your products with RFID tags and barcodes. When goods are moved within your warehouse, devices such as motion sensors and RFID scanners are able to track these items.
The system is then able to instantaneously update stock levels. This is very convenient. In my opinion, a warehouse management software are the ones that allow you to instantaneously track your inventory.
Yunfu, a Chinese fashion company, was experiencing inconsistencies in their stock records.
By leveraging Avery Dennison’s inventory tracking solution, Yunfu was able to enhance transparency and traceability in its operations. They achieved this by making use of RFID technology to trail their products throughout their operations.
2. AI-Driven Demand Forecasting.
Finding it hard to predict demand?
You find the process of analyzing factors such as market conditions, seasonality and trends to predict customer behavior to be quite difficult.
Sometimes you overestimate the demand resulting in overstocks (more products than needed) and other times you come short leading to stockouts (less goods than demand).
Both of these scenarios are costly for your enterprise.
Infact, the IHL group reported that the cost of inventory imbalances was $1.77 trillion in 2023. Poor forecasting of consumer behavior significantly eats into your profits.
Stockouts lead to lost sales opportunities and the loss of loyal customers. Overstocks increase holding costs.
One of the sustainable warehousing practices you can adopt to curb this problem is the use of AI- driven demand forecasting.
This technique helps you accurately predict the optimal stock levels. You are therefore able to reduce instances of overestimating and underestimating the appeal of products.
It does this by first analyzing data such as past sales records, seasonality and market conditions. It then makes use of advanced statistical models to predict future consumer behavior.
With this information, you are able to acquire the right amount of goods. You no longer experience overstocks and stockouts.
Van Dal Mannenmode, a Dutch men’s fashion retailer, was regularly experiencing understocks in its 36 stores.
By utilizing Wair’s AI Replenisher, the fashion retailer was able to reduce stockouts by 90%. The AI system was able to accurately predict demand by studying the customer patterns and market conditions.
3. Just In Time Inventory Management
Warehousing lease rates are expensive.
They are not coming down any time soon either.
According to Colliers the leasing rates for warehouses are increasing at a rate of 20.6% yearly. This greatly raises your operational costs.
You are stuck in a dilemma. In your current situation, you store a lot of goods in your warehouse to effectively carry out your business. The downside is that you incur high storage costs.
If you decide to lower the products you store in your warehouse, you can actually reduce your storage costs but you risk losing customers.
How do you reduce storage costs while still maintaining your customers?
I recommend using just in time inventory management.
This sustainable warehouse practice enables you to lower your leasing rates while still satisfying your clients.
In this approach, you only order the goods and materials that you need for sales and production. You align your inventory to the customer demand.
Since the products are delivered just before they are sold, you do not need to occupy a large space. This helps you to lower the amount of rent you pay for the warehouse. Consequently, you incur less expenses on utilities, insurance and security.
Dell, a global technology company, was looking for ways of reducing its operational costs.
By leveraging JIT, Dell was able to lower its holding costs. The tech giant reduced its stock levels to align with the market demand. By doing this they were able to significantly reduce their storage costs.
4. Distributed Warehousing.
Order fulfillment delays frustrate customers.
You often get complaints from customers about long delivery times. Some are even returning the products and asking for refunds. This is stressing you out.
According to PwC, 32% of customers will stop buying products from a business after one bad experience. Keeping your clients waiting for long periods of time can make you lose them.
You are trying your best to increase the speed of delivery but you have many customers in different regions of the world. There are also factors that cause delays that are out of your control such as bad weather and hold ups at the ports.
How do you address this?
I recommend that you adopt distributed warehousing.
Utilizing this sustainable warehouse practice helps you move closer to your customers. This helps to reduce the delivery time.
To effectively adopt distributed warehousing, you first have to identify regions where you have a huge customer base. In these regions, select areas that are near major transportation hubs and set up your storage facilities there.
You are therefore able to make use of land based transportation modes which are more reliable. Air and sea are affected by factors such as weather.
Amazon, a global e-commerce company, wanted to reduce its shipping costs and lower delivery times.
By implementing Fulfillment by Amazon, a distributed warehousing model, the company has significantly reduced the cost and time of delivery. Amazon was able to achieve this by constructing warehouses near its client base.
5. Adopting Augmented Reality.
Experiencing picking errors?
You frequently get complaints from disgruntled customers who receive incorrect items from your firm.
According to Khoros, 65% of customers have switched to a different business after one bad experience. Picking errors can make you lose your customers hence reducing sales.
Mistakes in picking also increase your operational costs. You incur transportation and labor costs to facilitate returning of the products and sending over the correct items.
You also realize that the mistakes are also having a negative effect on productivity. Your team members spend time on fixing errors rather than focusing on new orders.
To address this issue, you can incorporate augmented reality into your business activities.
The AR systems usually guide pickers to the correct products. Your agents wear smart glasses that show arrows that direct them to the required items.
It also alerts your team members if they pick the wrong products.
This sustainable warehouse practice therefore improves your customer satisfaction because they get the items they ordered.
You also don’t incur reshipping expenses.
The productivity of your team is also enhanced because they spend less time on correcting errors and more time on processing new orders.
Peter Millar, an American omnichannel retailer, was experiencing picking errors due to high demand.
By adopting LogistiVIEW, an AR system, they were able to significantly reduce costly errors within 90 days of implementation. This was because the system had enhanced and streamlined their workflows.
Conclusion
Accidents are common in warehouses.
This is because of the presence of heavy machinery. If these equipment are not handled properly, they cause serious injuries. Unmarked hazards also cause slips and collisions
According to a study by Forbes, working in a warehouse is the third most dangerous job after firefighting and the police.
Ensuring a safe working environment can aid in reducing your staff turnover.
How can you achieve this?
Adopt clear labeling and signage.
Introduce signs on hazardous materials, wet floors, moving machinery, restricted rooms and emergency exits. You should also put labels that clearly indicate the load limits for each shelf to avoid collapsing.
These measures help to reduce injuries and potentially save the lives of your team and customers.
I hope this article on sustainable warehouse practices has opened your eyes to the incredible ways these methods can transform your business operations.
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