The basic principles of warehouse management don’t change: Accurately, safely, and cost-effectively deliver what needs to go where. However, the demands made on warehouse managers and teams to fulfill these principles are increasing. Of the top five metrics identified in Warehousing Education and Research Council’s (WERC) Top Metrics from DC Measures 2017 report, two of them (peak warehouse capacity used and part-time workforce to total workforce) weren’t even on the top five in the past couple of years.
The retail sector and the explosion of omnichannel, “always on” shopping, are driving warehouse leaders’ newest challenges. Manufacturing is no longer the main warehouse consumer. It’s no surprise that the largest industry represented in WERC’s annual report was retail, followed by third party warehouses. Manufacturing showed up in third place. So what challenges does omnichannel have for warehouse management? Here are the top four.
More locations mean more headaches
The growing range of demand, fulfillment and return sources customers demand in an omnichannel world are adding more types of warehouse locations on the distribution network. Instead of operating from a few hub-style bulk facilities, more companies are integrating smaller, last mile warehouses to meet customers’ quick delivery expectations.
Retailers are also approaching their physical stores as warehouses in the supply chain that can be used to fulfill demand if that’s where the nearest inventory is located. There are also more hybrid facilities, part last-mile warehouse/ part retail space, where customers can pick up or return online orders.
The more warehouse locations to manage means more inventory in transit and more places inventory needs to be tracked. As the inventory storage and delivery flows get more complex, warehouse managers need accurate and current visibility into where all that inventory is. That includes inventory sitting in a warehouse and what inventory is in transit.
In response, warehouse managers need warehouse management systems (WMS) with comprehensive data collection capabilities within a cloud infrastructure so accurate information can be accessed by people at every node on the distribution network. Employees with mobile devices connected to the WMS can scan pickups and returns in real time, as can warehouse pickers. As the number of physical locations holding inventory increase, the necessity of employees, inventory and order systems to have accurate, real time data on inventory location increases as well. Without it, warehouse and delivery costs increase while accuracy and customer satisfaction go down.
This increasing physical complexity of the warehouse and distribution network also puts pressure on capacity management. More capacity management pressures come from wild inventory fluctuations and shorter product life cycles. According to the WERC report, managing average warehouse capacity used is the top metric concern, up from the second spot last year, and managing peak warehouse capacity used found its way into the top five for the first time.
Third party logistics operators and dynamic warehousing are becoming a larger part of the capacity mix that can be used to manage efficient capacity utilization. Of course, working with 3PLs requires accurate forecasting and real time visibility.
Automation becomes the baseline
Warehouses operating with paper-based processes are inherently unable to operate with the accuracy and efficiency that the omnichannel world requires. Any portion of a warehouse process or workflow that still depends on paper documentation or manual updates is slowing operations down and increasing costs.
Implementing technologies that streamline tasks, like handheld and vehicle-attached data collection devices, and removing redundancies, like real time updates instead of manual data entry into back-end systems to deliver information to other people who need it are the new baseline for 21st century warehouses.
Serving the consumer directly
The portion of a warehouse’s fulfillment activities directed towards the end-consumer is growing. Nearly 40% of WERC survey respondents say they now serve the end-consumer. Warehouse managers are now as responsible for customer service and satisfaction as any floor sales associate. Order picking accuracy is now the second most critical warehouse metric (up from the third spot in 2016), even more important than on-time delivery. Consumers have shown themselves happy for delivery to occur within a certain (short term) window or pick up online orders at a convenient location themselves. What the consumer won’t stand for is a wrong order.
The WERC report also found that 68% of warehouse facilities are picking cases, not pallets. Even partial pallet picking is going down. Warehouse employees are fulfilling more and smaller orders, which puts pressure on managers to achieve accuracy while maintaining efficiency and cost containment. Having the data and technology to determine the most effective and efficient ways to group tasks and design the warehouse layout is critical to achieving both goals.
Technologies like voice picking and forecasting analytics that can allocate labor and resources efficiently are two tools that can support warehouse managers in meeting this challenge.