According to a report by McKinsey & Company in 2019, many companies' warehousing costs are dramatically higher than they could be.

Common Problems in Warehousing

Some of the common problems that contribute to high costs include:

  • Inaccurate inventory records

  • Poor layout

  • Data duplication

These issues can result in:

  • Delayed shipments

  • Wrong picks

  • Wasted labor

At the end of the day, all of this leads to customer dissatisfaction and financial losses.

The good news is that potential savings from efficiency analysis and processes optimization can amount to 20 percent! 

Addressing Warehousing Issues with ERP Software

This article will discuss how you can address the most common warehousing issues and cut costs using ERP software.

1. Messed up inventory records

When businesses don't have complete visibility of their inventory, they can either run out of stock at the wrong time or carry too much stock. 

Common Causes:

  • Duplicate or incorrect data entry

  • Missing records

Many of these issues are a result of unoptimized manual processes that produce inaccurate data in the system.

Solution:

Automation is key to resolving these problems. It helps keep records clean and enables data-driven inventory reviews.

2. Unoptimized multiple warehouse utilization

Suppose the company has more than one warehouse located in different areas, cities, or even regions. In that case, it might be tricky to consolidate the data and implement transparent procurement and effective utilization. Knowing the situation in every warehouse and being able to switch among locations in one system is crucial for fast and data-driven capacity management and procurement.

3. Ineffective picking

Inefficient picking processes can significantly consume resources in warehouses.

Key Points:

  • Time spent by pickers moving between orders affects productivity.

  • Effective picking minimizes movement while maximizing units picked per hour.

Optimization Principle:

Keep frequently picked items in the most accessible locations to eliminate delays.

Tools for Improvement:

Using a Warehouse Management System (WMS) or an ERP system with a robust warehouse module can:

  • Suggest optimal routes for picking

  • Improve put-away methods based on data analysis

4. Poor order management

Order management encompasses several processes, including:

  • Receiving an order

  • Picking and packing

  • Shipping products to customers

  • Handling refunds and returns

A single mistake in any one of these processes can collapse the entire workflow, which means wasted time, labor, and money.

Improvement Strategies:

  • Audit and automate workflows

  • Enhance labor efficiency

  • Identify and address bottlenecks

It could be a good idea to start with understanding the basic product flow and documenting the activities being conducted in the warehouse. With this information on hand, you can use best practices to optimize and standardize them. Implementing warehouse management software can simplify these processes significantly.

5. Seasonal fluctuations of demand

Seasonal fluctuations in demand can become a serious challenge since your warehouse might not be prepared to take on the orders. To avoid product shortages, it's essential to:

  • Keep up with current market trends

  • Monitor fluctuations in demand for the products you supply

This way, you'll be ready to quickly adjust your stock levels.

You can also use various demand forecasting methods to find out what products and how many of them you need in your inventory for the season.

Rearranging the products so that the most popular goods are the most accessible helps minimize the negative impacts of seasonal influxes of demand. You can also consider getting additional equipment and automation tools such as pallet flow rack systems, forklift trucks, and automated storage and retrieval system (AS/RS).

Final thoughts

Problems facing manufacturers and resellers are numerous, including:

  • Dubious records

  • Redundant stocks

  • Ineffective space utilization

  • Delayed orders due to seasonal changes in demand

Warehouse and Inventory Management Software can help you address most of these issues that blunt your warehouse effectiveness by:

  • Optimizing layout and picking routes

  • Streamlining records handling

  • Automating order management