Warehouse management: How to improve efficiency

Warehouse management

When you manage a complex supply chain, the efficiency within your warehouse is reflected in your bottom line. Here are five ways to improve your processes.

Nearly every warehouse operates with the same goal: process the largest amount of merchandise or supplies as quickly and efficiently as possible, while minimizing damage to products, risk to employees and operating costs.

“You should be thinking about how to right-size and right-locate inventory so you can optimize the value you bring to your customers.” –UPS’s Daryl Slaght

In this universal goal lies a universal challenge: every warehouse is organized with different needs, different processes and different employees.

In reality, how you achieve success will vary according to your products, customers and team. The best way to ensure the highest possible levels of optimization and efficiency – and keep your warehouse operating as smoothly and profitably as possible – is to use a warehouse management solution (WMS) that frees up your time so you can frequently re-evaluate your processes, technology and best practices.

Here are five ways to help optimize your warehouse logistics:

Revisit your processes frequently
As a warehouse grows and adapts to new products and systems, it’s inevitable that the number of processes you use will build up, too. Over time, less-efficient processes can win out over more-efficient ones simply because they were there first. And, that’s where a WMS provides an opportunity to optimize your warehouse logistics. As you organize and capture your processes during the implementation phase, you may become more able to look at your processes and determine which ones need to be updated or replaced.

For example, effective slotting practices could reduce costs for picking and replenishment, while optimizing staging areas could improve throughput to your customers. You also may find that a new receiving process increases productivity and brings a significant cost reduction for both you, your shipper and your customer. But you won’t know unless you look, and you won’t be able to look unless you have the extra time on your hands a WMS can bring. Implementing a warehouse management solution can give you the opportunity to evaluate processes up front and continue to monitor them so you can avoid cumbersome workarounds in accounts payable, shift scheduling, unloading, put-away and facilities management processes.

“A lot of people in this space are thinking about how they can reduce inventory,” says Daryl Slaght, global area manager of inventory solutions at UPS. “But really you should be thinking about how to right-size and right-locate inventory so you can optimize the value you bring to your customers.”

Identify key performance indicators (KPIs) tied to productivity and expenses
A warehouse management solution can help you to track the right things, such as metrics, directly linked to profitability and efficiency. It also can help you to quickly take a look at your most important KPIs and make sure each is tied to a tangible productivity or expense, like inventory accuracy and hours and days to customer. KPIs closely aligned with warehouse pain points – or possible future expenses, like energy efficiency factors – can make it easier to justify expenses and track improvements that really matter.

What is one of the most important KPIs to track?

“Inventory demand forecasting,” says Stuart McAvoy, global director of supply chain optimization and sustainability at UPS. “It is so important in the mid-size business space, because when you’re manufacturing a certain SKU or product, it’s more cost-effective to manufacture a lot of it. But on the inventory space side, you run out of room quickly.”

You have to closely monitor the right balance between all of these functions, and that’s exactly what a warehouse management solution can help you do.

Seek out creative cost-saving measures
It’s all too easy to rely on old spending habits simply because “it’s always been done that way.” Avoid falling into that trap by taking a fresh look at all of your expenses and embrace creative cost-saving measures.

Here are a few ideas you might uncover to keep you on the path of fiscal responsibility in your warehouse operations:

  • Deter theft with regular audits and an increased security presence consisting of both personnel and monitoring equipment.
  • Optimize and minimize recurring expenses like packaging, batteries and double-duty equipment.
  • Consider initiatives to encourage employees to take extra care in handling packages to reduce instances of damage.
  • Explore leasing specialized equipment instead of buying it.

Other creative cost-savings ideas can come from your warehouse management solution itself.

UPS uses a globally recognized supply chain modeling software that integrates with the UPS Ready® program support to let the company model and optimize supply chains and inventory management, says McAvoy. “This lets us dig deeper into helping planning and forecasting our clients’ warehouse inventories.”

Invest in your employees
Up to 50 percent of a warehouse's total operating expenses can come from labor costs, which is more than enough reason to pay careful attention to your recruiting, hiring and onboarding processes. More importantly, it forces you to focus on your labor budget to help reap the highest ROI. A WMS that integrates human resources data into your warehouse operations allows you to closely track your costs and identify opportunities for investment.

After all, every dollar you invest in training, recertification and cross-training can translate into investing in the most efficient and empowered version of your employees, which in turn can benefit your organization. The same goes for human resources concerns like retention, turnover and employee engagement. These directly impact your labor costs, so make sure your WMS can integrate your labor management practices.

Ask the right questions
Your team needs to have access to the right information in order to make good decisions, which is why a warehouse management solution is a critical tool for decision making. But having the data you need solves only the first piece of the puzzle. Leadership, shift managers and employees alike must also be trained to ask the right questions about the work they’re doing. When everyone on your team can understand the “why” of how your business operates, they’ll be free to think critically about the way they work and may make suggestions about adaptations that could reduce waste and create long-term efficiencies.

If everyone on your team is thinking critically about their work, then your team meetings can be more effective; when everyone is involved in brainstorming ideas for problem solving and cost savings, the likelihood of generating an idea that is truly helpful can skyrocket.

Engaging with an experienced transportation provider can help prepare your employees to ask the right questions by connecting them with the technology and resources they need. A provider with the technology, history and experience to optimize your warehouse logistics can elevate how your employees work.

Whether you’re trying to increase productivity or reduce costs, reevaluating and reconfiguring your warehouse operations with a WMS can go a long way toward helping you meet and exceed those goals and expectations. Consider whether these five approaches could help optimize your warehouse logistics today.

Related Resources:

UPS: 4 methods for optimizing inventory

UPS: Integratable technology including warehouse management systems


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