The latest changes in the customer and the growth of the on-demand economy impacted profoundly in the supply chain evolution. There has certainly been a before and after of digital disruption in warehouses. Now, with the digital economy, customers expect personalized and faster services. As a result, 40% of logistics companies will deliver their orders in 2 hours for 2028. That means an excellent service for the final customer and the clients, but a big challenge for the logistics companies.
This near-future scenario is pushing logistics companies towards innovation projects, optimization programs, and a continuous process improvement philosophy. The goal is to gain effectiveness and profitability through more agile and smooth operations. Every player in the logistics industry agrees that the keys to overcoming these challenges are Purpose, Technology, and Methodology.
Four levers for process improvement in Warehouses
Although the horizon seems clear, the truth is that many logistics companies are still far from these expected lean operations and process improvements. 55% of logistics companies, based on a recent Zebra survey, are yet to follow non-efficient, manual, or paper-based workflows.
In the case of Warehousing operators, for example, it is not difficult to find warehouses with bad stock planning, lack of control over operations, poor workforce performance, inefficient layout, etc. but luckily, many warehouse operators, especially those that want to be competitive in the fierce market of logistics, are implementing several process improvement projects.
Use more data to measure performance
In the world of operations, there is a mantra that has been around for many years: "If you can't measure it, you can't improve it." So, the first step for any process improvement process starts by implementing the tools, resources, and strategies needed to start measuring what's going on and identifying what the KPIs we should take into consideration are. In warehouses, these measurements are significantly relevant to understand employees' performance, for example.
Leading Warehousing operators are masters on workforce performance monitoring, and they always keep innovating and looking for new ways to be more precise, predictive, and fast in monitoring how their teams are working. They tend to collect all data possible that can help them to have a better picture of what happened in each operation which then helps identify opportunities to improve performance.
But there are still many other Warehousing companies without a clear KPIs program. For them, this step is a must if they want to have a clue about how they can improve and where they have to focus on process improvement.
Many technologies can be beneficial for improving the supply chain processes, from handheld RFID scanners to sophisticated artificial intelligence solutions. WMS (Warehouse Management Systems) has become a crucial piece in th e warehouses IT, as it helps to streamline operations by managing pick lists, inventory, routes, etc. and tracking every operation. By having this system at the core of the warehouse intelligence, it's vital that any other technology that we integrate to improve our processes can be easily integrated with our WMS.
Automation is one of the most extended digitization trends. In warehousing, it is the lever for process improvement. The majority of warehouses are far away from the automation holy grail that Amazon warehouses enjoy, so that means a lot of room for improvement. A recent study from Boston Consulting Group estimates that in 2025, there will be 1.2 million robots in logistics companies in the US.
Optimize warehouse layout
Sometimes we can achieve a process improvement without changing any process but transforming the space. Warehouses are, among other things, storing areas where everything has distribution, an ideal location, and placement. This placement has a powerful impact on the movement we will need to do to perform a warehouse operation, which usually involves changing the placement of things from one point to another. That's the reason why reworking your warehouse layout would improve productivity.
Picking processes, for example, are still manual in many warehouses. Every day we can see new examples of companies improving the measurement of the time and resources involved in picking tasks; integrating new technologies to facilitate the picking operations planning and management; adapting the warehouse layout to optimize routes needed for picking processes or introducing some automation.
Towards an optimized Warehouse
There is a common mistake when we refer to warehouse optimization to focus mainly on cost reductions. Many experts even agree that for some years these strategies were successful. Now warehouses need to go one step further if they want to be genuinely competitive. The continuous pressure for cost reduction can be a barrier to bring growth to our company. Instead, we need to focus our process improvements to boost and increase operational efficiencies.
In that sense, there are no magic formulas, as every warehouse will need to identify the mix of strategies, tools, and resources they need to improve their processes.