According to a report by McKinsey & Company in 2019, many companies' warehousing costs are dramatically higher than they could be. Common problems, such as inaccurate inventory records, poor layout, or data duplication can result in delayed shipments, wrong picks, and wasted labor. At the end of the day, all 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! This article will discuss how you can address the most common warehousing issues and cut costs using ERP software.

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. Duplicate or incorrect data entry, as well as missing records, are one of the major problems leading to wasted time and increased expenses.

Many of these issues are a result of unoptimized manual processes that produce inaccurate data in the system. Automation is a key factor in solving those problems — it helps keep records clean and use data to review inventory.

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.

Ineffective picking

Time spent by pickers moving between orders and fetching products is one of the most significant resource consumers in warehouses. On the contrary, effective picking minimizes time and movement while maximizing units picked per hour.

The basic principle which helps optimize operations is to keep the items you pick most often in the most accessible locations to eliminate picking delays. A simple way to improve picking efficiency is using a warehouse management system (WMS) or an ERP system with a strong warehouse management module. This software suggests the best routes and methods for picking or put-away based on data.

Poor order management

Order management covers a bunch of processes, from receiving an order, picking and packing to shipping the products to the right customer, as well as handling refunds and returns if needed. A single mistake in any one of these processes can collapse the entire workflow, which means wasted time, labor, and money.

Improving and optimizing order management is a complex task. You may need to audit and automate your workflows, improve labor efficiency, determine bottlenecks, and somehow deal with them. 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.

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 and the fluctuations in demand for the products you supply so that you're 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 — from dubious records and redundant stocks to ineffective space utilization and delayed orders due to seasonal change in demand. Warehouse and Inventory Management Software can help you address most of the issues that blunt your warehouse effectiveness by optimizing layout and picking routes, streamlining records handling, and automating order management.