Introduction
Warehouse optimization has become increasingly important in the modern world with the rise of e-commerce and the large number of complex processes involved in warehouse management, inventory management, and distribution of goods [1]. In recent years, many organizations have started using warehouse automation software and technologies to assist in their warehouse operations, solve problems, and increase efficiency and effectiveness [1]. The supply chain issues and labour shortages that have been ongoing since 2019 have exacerbated the need for “smart” warehouse management solutions. This is demonstrated in the high growth rate of the global warehouse management system market, which is expected to reach $2.74 billion in 2022, with a 14.8% compound annual growth rate (CAGR) [3]. Over the next four years, the market is predicted to grow rapidly (15% CAGR) as various industries and large organizations implement these high-tech solutions [3].
Increasing Effectiveness and Efficiency
Experts predict that warehouse-related supply chain issues will continue for the foreseeable future [2]. Furthermore, human resources issues like “job-hopping” and the Great Resignation are creating challenges for organizations seeking to optimize warehouse operations [2]. It is important for organizations today to implement modern software, technology, automation, and robotics solutions to boost their warehouse effectiveness/efficiency and increase revenue per worker.
One of the issues preventing organizations from optimizing their warehouses fully are supply chain bottlenecks [2]. Removing bottlenecks is a matter of ensuring that goods flow in and out of the warehouse smoothly. Accurate order picking is essential for warehouse optimization because it can account for over half of operational costs [2]. Every mispicked order frustrates customers and results in wasted productivity and capital [2].
Organizations can greatly increase order picking accuracy by using warehouse automation software and technology to continuously monitor their inventory [2]. This has a positive effect on overall productivity by improving workflows and minimizing manual labour and the time required for reshipping orders. It also improves KPIs like inventory turnover and inventory accuracy.
In addition, labour optimization can be accomplished by using technology that monitors the actions of warehouse workers and outputs data for analysis using special software [2]. It is important to understand the effectiveness and efficiency of individuals in a warehouse to plan for better workflows and manage human resources, ultimately creating a more labour-optimized space.
Lastly, the use of robots can greatly improve the effectiveness and efficiency of a warehouse. Robots can minimize manual labour by doing repetitive tasks, allowing workers to allocate their time better [5]. Also, robots can completely eliminate human errors like mispicking. The huge benefits of robots are part of the reason why large corporations like DHL are starting to transfer some warehouse tasks to robots [5].
Managing Operational Costs and Smaller Spaces
The popular just-in-time (JIT) inventory system is designed to minimize the required inventory on hand, thus allowing a warehouse to operate in a smaller space with lower operational costs [4]. Today, advanced warehouse software and technologies can automate inventory management and optimize the use of space in a warehouse [2]. ML/AI is able to accurately track the current/projected inventory levels and space available, which is a powerful tool for warehouse managers [2]. Also, the flow of goods to/from shelves and out of the warehouse for shipping is important for space optimization and reducing bottlenecks [2]. To optimize the flow of goods, the software can be used to calculate the most efficient paths for traversing a warehouse, which saves time and operational costs.
The Challenges
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As with any new technology, there are implementation challenges and many aspects that need to be considered before investing in warehouse technology, automation, software, or robotics. The selection and implementation of warehouse technology should be made by expert warehouse planners or consultants, as there are countless factors to consider for every individual warehouse. Warehouses vary in type, size, etc., so an industry professional can tailor the recommended tool(s) to the client. One of the major challenges that can be mitigated by experts in cybersecurity. As warehouse technology/software systems become more interconnected with the internet, they are exposed to cybercrime and hacking [6]. Furthermore, it is important to properly use and maintain the newly implemented technology to ensure the smooth operation of the warehouse. Warehouses with newly installed technology may benefit from additional worker training in the technology and from employing professionals for maintaining/troubleshooting equipment.
Conclusion
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The rapid growth trend of warehouse automation technology and software will continue as more and more organizations learn about the considerable benefits of these systems, including increased effectiveness/efficiency and reduced operational costs. Given the challenges described above, organizations seeking to extract the maximum benefits from and to properly implement such systems require the assistance of professional consultants and special tools like Arrow Logistics. Arrow Logistics evaluates thousands of data points, iteratively simulating available solutions, and creates recommendations that are optimal for the improvement of key warehouse operational metrics and KPIs. In addition, return on investment (ROI) is estimated for each solution. After data collection is complete, managers are provided with all of the following information in a report:
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I. Expected impact of optimal solutions on operational metrics and KPIs.
II. List of optimal solutions and sources for their procurement.
III. Comparison of achieved simulation results to optimization requirements.
IV. Categorized list of considered solutions based on the following categories:
a. Warehouse & Inventory Management Software
b. Warehouse Robotics
c. Worker Wearables
d. Packing
e. On-Demand Warehouse Space
f. Asset Tracking
g. Outsourced Warehouse & Fulfillment
V. For each solution, the following is provided:
a. Impact on Operational Metrics and KPIs
b. Expected Return on Investment
Arrow Logistics is a valuable tool that gives managers a clear and comprehensive picture of important activities, metrics, and KPIs in a warehouse and solutions to improve them.
References
[1] https://www.g2.com/articles/warehouse-automation-statistics#:~:text=The%20number%20of%20establishments%20in,in%20warehousing%20includ es%20human%20interaction.
[2] https://www.forbes.com/sites/forbesbusinesscouncil/2022/02/23/tips-for-reducing-warehouse-supply-chain-challenges/
[3] https://www.businesswire.com/news/home/20220725005528/en/4.8-Billion-Worldwide-Warehouse-Management-System-Industry-to-2031---Identify-Growth-Segments-for-Investments---ResearchAndMarkets.com
[4] https://www.thebalancesmb.com/just-in-time-jit-inventory-management-393301
[5] https://www.robotics247.com/article/automation_is_critical_in_meeting_supply_chain_challenges_say_reuters_conference_panelists/technologies
[6] https://www.ti-insight.com/briefs/the-challenges-of-smart-warehousing/