Opening a new warehouse and managing it is a high risk investment and complex process that needs a dynamic and scalable planning process.
Warehouse Management involves a wide variety of processes to plan, organize and maintain inventory in a warehouse and optimize operations and inventory to meet demand while maximizing performance.
The more your business grows, the more resources you require to meet demand, hence more time and money is spent on warehouse management. If a warehouse is not managed well, it can lead to delays in orders, high operating costs, lack of returns on products and a sinking bottom line. Approximately $385 billion is spent each year, worldwide, on overall warehousing costs. That is, excluding the costs that arise due to various errors and disruptions.
MAJOR WAREHOUSE MANAGEMENT CHALLENGES
Redundancies and the huge scale of warehouse management make it tricky for businesses to get a good grip on efficiently managing their warehouses. Understanding some of the challenges that arise is the first step in optimizing your warehouse management process.
- Inaccurate Inventory
Warehouses facing inaccurate inventory as a regular challenge struggle to meet demand efficiently. What does efficiency have to do with meeting demand?
Well, the lack of accurate inventory available in a warehouse has a direct impact on how much you spend on fulfilling demand. Since demand is not being met, you are likely to lose out on opportunities and customers to competitors. In trying to fulfill order, you spend additional money on reordering, storage costs, logistical costs and labor costs.
Delayed shipping is an expensive affair. So, even when you fulfill said order, your margins are negligible, and your cash flow is negatively affected.
Inaccurate inventory always arises from a lack of proper understanding of demand. Without an accurate Demand Forecasting process and an effective Inventory Management Software, the problem won’t go away.
- Redundant processes
The scope of warehouse management is huge. Effectively keeping track of inventory and making sure inventory levels are balanced is tricky and full of redundant processes that slow you down and drive costs. You have to also account for human error that affects efficiency in inventory management in warehouses.
Redundancies also increase labour costs and any errors made will spiral costs in unexpected ways. In today’s hyper competitive market, speedy delivery is an essential, and your warehouse operations have to be streamlined and fast enough to keep up with ever changing demand.
Automation technologies like an Automated Inventory Management software automates the inventory management processes like replenishment, demand forecasting, keeping track of inventory, while removing redundancies and human error out of the equation.
- Lack of effective Storage space utilization
Inefficient use of storage space can have a direct negative impact on profits. Lack of storage space means, in-demand products have no place to be stored, thereby losing the ability to fulfill demand. The optimal layout should maximize the use of equipment, layout and space and accessibility to all items, especially quick and easy access to high demand products.
- Delayed and Inaccurate Replenishment/ Order Generation
If your order generation process is manual or inaccurate, you are slowing down your order fulfillment by a considerable amount of time. Your replenishment process should be quick to keep up with the erratic demand. A lack of speedy and accurate replenishment process can lead to losses in terms of lost sales opportunities and build up of unwanted excess inventory.
Using automated replenishment tools and inventory management softwares can make your purchase orders not only quick but a lot more accurate, increasing efficiency and profitability.
- Erratic Demand and Disruptions
Demand can be seasonal, and unexpected events like the pandemic will impact demand and make it more volatile. Effective Warehouse Management requires a good understanding of current and future demand, whilst also having an accurate visibility of inventory. Information gaps can limit your ability to streamline operations and increase costs.
Using Inventory Management Software for effective Warehouse Management
An inventory management software automates the inventory management process to streamline operations and grow your business by monitoring and optimizing stock levels across your supply chain, whilst also tracking sales, lead times, trends and other factors and using techniques such as inventory forecasting and replenishment planning to plan ahead and prepare for any demand.
Inventory Management Software not only automates a lot of the redundant process in a warehouse, but also uses technologies like AI and ML for accuracy. Using a warehouse inventory management software is necessary not only with keeping up with erratic demand, but also to scale your operations with ease.
A good Warehouse Inventory Management Software will help you with:
An AI enabled warehouse Inventory Management Software like Crest automates replenishment and automatically creates/calculates dynamic safety stock for all your SKUs to give you enough inventory buffer to meet demand during high demand periods, and reduces inventory levels in your warehouse when demand is low.
Excess inventory bleeds capital, and can even end up turning obsolete which is an even bigger loss. A common strategy that we see among businesses that do not have a streamline inventory management process is to simply hold additional inventory to avoid stockouts. But, this is not a feasible strategy as excess inventory drains capital and expensive storage space.
Since the warehouse management process has to be dynamic to reflect and keep up with the dynamic and volatile nature of demand, a useful warehouse Inventory Management Software will implement AI technology and Dynamic Planning to enable you to know exactly how much to stock, helping you reduce wastage and grow your bottom line.
A warehouse inventory management software can also function as a Inventory tracking system which helps track inventory throughout its lifecycle and can help you in identifying slow-moving stock in the warehouse that is more likely to become obsolete.
With the right metrics, you can make decisions to eliminate dead stock, such as discontinuing specific items, selling them at a discount, or bundling them with other products and running promotions to sell slow moving stock before it becomes obsolete.
Inventory Forecasting is fundamental to the warehouse inventory management process. Without having an accurate picture of your future demand, it is impossible to plan inventory efficiently.
Demand can be volatile, and relying on historical sales performance is not enough to accurately predict demand. Predicting future demand for inventory with traditional methods of Forecasting such as Excel can be time consuming and affected by human bias, lack of visibility, and lack of agile adjustment of demand.
Without any manual intervention, Crest dynamically predicts demand for all your inventory, taking into account real time market signals, trends, seasonality and stock availability to ensure your warehouse is sufficiently stocked for any market volatility.
- Removing Redundancies and streamline operations
Warehouse Inventory management entails constantly tracking inventory levels, tracking its lifecycle, forecasting demand, calculating safety stock levels, lead times, turnover rates, and much more in order to keep stock levels balanced.
Since the scope of inventory management is huge , it also includes a lot of repetitive tasks, which can slow you down and deplete your resources and drive up costs.
Crest warehouse inventory management software automates inventory management and optimize inventory levels across all channels, allowing you to streamline warehouse operations.