In manufacturing and retail organizations, a warehouse plays an important role in managing inventory stock and consistently maintaining it at an optimum level. It all depends on the organization to ensure smooth operations within the warehouse by paying attention to smaller details and aim at automating warehouse management operations.
An ill managed warehouse can hurt the organization tremendously and impact goods movement, production and drain precious cash. Let us look at the top warehouse management challenges manufacturers and retailers face.
Inventory Location & Warehouse Layout
In manufacturing and retail, moving inventory from the warehouse to the production floor/retail floor in the least possible time is very crucial as it impacts the product’s delivery time. This requires them to access the right inventory at the right time.
This means that parts, sub-assemblies, and raw materials need to be arranged based on their demand. High demand SKUs should be easily accessible followed by seasonal stock, and dead stock. This depends on how the shelves are arranged within the warehouse, what equipment is used to store and retrieve the goods, what bins are allocated to which SKUs and in what order they are stored. Most of all, is there a software that helps maintain end-to-end inventory information and consumption? Based on the production requirements, organizations should design the layout where they can easily retrieve the necessary parts in the shortest possible time and improve cycle counts.
Inventory Movement & Traceability
Manufacturers and retailers are in a serious problem when they cannot trace their inventory and its movement across and outside their organization. Due to inadequate personnel training, incorrect tagging of purchase orders with the SKUs, the newly procured or remnant materials are not stored in its designated location/bin. Personnel spend more time trying to find the material when needed. Also, manual recording techniques, lack of verification and personnel training leads to data inaccuracy, missing information and materials etc.
Manual Warehouse Management
The biggest hurdle to an efficient warehouse management is the lack of a proper ERP or WMS software rather, maintaining critical data in spreadsheets, and notepads. This seems fine if the organization is new but as it grows, material procurement and SKU list increases thereby increasing the need for an efficient, automated system. There are high chances of data recorded in spreadsheets and notepads to get misplaced and lost leading to total chaos on the floor. There is little visibility of materials procured from suppliers, where it has been stored, what purchase orders and invoices are associated with the SKUs, to what sales orders they have been assigned to etc.
Order Picking Issues
Lack of a proper technology that records incoming and outgoing inventory, manages bin assignment, and maintains extensive SKU list, makes it difficult for personnel to locate the materials and put back remnant materials to respective bins. This results in total chaos as materials land late on the shop floor leading to production and shipment delay, materials are misplaced in the warehouse thereby inconveniencing personnel and affecting further orders. The organization is forever reliant on people to remember where they have kept the respective materials.
Lack of Communication
Lack of communication between personnel and respective departments paralyses day to day operational efficiency. This arises due to lack of proper technology that provides real-time data visibility across the enterprise. If the procurement and warehouse department don’t know when fresh inventory batch is set to arrive, the shop floor cannot plan its production thereby affecting production and shipment. The entire supply chain gets impacted leading to resulting chaos.
Lack of Quality Control
In small and medium manufacturing enterprises, personnel are responsible for many activities. A person managing warehouse operations can also be responsible for ensuring quality control of inventory and suppliers. In cases where order in-flow is high and shipment needs to be delivered at the earliest, he/she can bypass critical quality checks on inventory and proceed to dispatch them to the shop floor leading to quality issues in the final product.
Improper and manual documentation leads to goods developing defects over time and passing their expiry date too. If undetected, these go into the shop floor leading to defective end-products.
Inventory Planning
Inventory planning is where many manufacturers struggle. If they do not have complete visibility of their existing inventory stock, fast moving SKUs, expired or soon-to-be-expired SKUs, pending sales orders, and required materials, they wouldn’t know how much to procure at what time from which supplier.
If warehouse operations are efficient, manufacturers can balance their inventory stocks efficiently. They would know the rate at which materials are being consumed on the shop floor and what, when and how much to procure. They can plan their production by monitoring in-hand inventory levels, safety stock and minimize wastage, scrap and expiration. All this can happen, if warehouse operations are automated and manufacturers have complete operational visibility.
Conclusion
We have seen the challenges that manufacturers and retailers face with respect to efficiently managing their warehouse operations. Stay tuned for our next blog that will highlight steps on how to solve these challenges.
