Warehouses face significant business challenges as they continue to adapt to evolving consumer trends and the rapid acceleration of eCommerce globally.
As a result, it’s critical that warehouse managers know how to identify crucial red flags that may indicate that their warehouse operations are not as healthy as they could be.
Current warehousing challenges
Jason Wu, Business Development Manager for AutoStore Australia and New Zealand, underpins four key issues that your business may be facing:
- Growing demand for direct-to-consumer (DTC) and click-and-collect fulfilment: “Warehouses are under increasing pressure to deliver higher volumes and a wider variety of products – all at faster speeds,” explains Wu.
- Global supply chain challenges and disruptions: “Post COVID-19, manufacturers and retailers continue to be negatively affected by challenges and disruptions. Various political and socio-economic factors remain at play, such as the Ukraine war or shortages of raw materials like steel,” notes Wu.
- Labour shortages and increasing labour costs: As of February 2023, the Australian Bureau of Statistics reported that vacancies were 92.4% higher than they were in February 2020, before the COVID-19 pandemic. “While the portion of warehouse businesses reporting vacancies has declined from 20% in February 2021 to 16% in February this year, this percentage is still alarmingly high,” comments Wu.
- Rising energy costs: The Australian Energy Regulator’s draft determination, announced in March, indicated that small business will see energy price increases of between 14.7% and 25.5% in the near future. “Businesses must implement energy efficient solutions. In fact, 55% of the warehousing business leaders that we surveyed late last year cite energy efficiency as their top priority”.
- Pressure to go green: Governments worldwide have committed to meeting the UN’s Sustainable Development Goals (SDGs), and have prioritised ESG policies. “Manufacturers and retailers around the globe are aligning their processes to these policies. In addition, the fast-rising cost of energy is further prompting them to implement energy-efficient solutions in their businesses,” says Wu. “And let’s not forget that consumers – especially Gen Z – are driving the trend towards sustainability by choosing to support businesses with green values”.
- Rising costs of warehouse space: “Warehouse owners are faced with a dilemma around storage space in the warehouse. By increasing their footprint, they incur further costs. “Today, it’s all about creatively optimising the space they do have available, without compromising other functions or operations,” comments Wu.
Four warehousing red flags and their remedies
1. Space issues. Perhaps a space is under-utilised, or insufficient and it creates bottlenecks. Either way, it affects the business bottom-line. “Cube storage optimises the warehouse footprint, without limiting access to inventory. Coupled with automated retrieval technology, it facilitates efficient inventory management too,” says Wu.
2. Too much (or not enough) stock. This is a sign that inventory management is failing and can be costly. “Storage of even a few inactive stock items can become expensive over time. Automated inventory management solutions take the pain out of this function, with some systems enabling the manager to predict stock shortages timeously, for example,” says Wu.
3. Picking, packing or fulfilment errors. These disappoint customers and suppliers, as well as result in lost profits for the business. “These errors are far less common in warehouses with an automated management system that ensures the correct items are picked, packed and dispatched. The data generated by these systems is also useful to the business, offering insight into seasonal trends, consumer preferences, and so on,” states Wu.
4. Clumsy ergonomics, product damages and accidents. “Forklift accidents and worker strains or sprains slow productivity and result in financial losses to the business. Automation and robotics reduce reliance on human workers, enhancing safe operations and boosting efficiency and productivity,” says Wu.
For the best outcome, partner with experts
Identifying these red flags, and finding the ideal resolution, isn’t always straightforward. “It’s important to partner with a specialist who has experience, understands your requirements and your goals, and can recommend solutions that will deliver ROI. AutoStore, with its global network of experts and class-leading technology, is well-positioned to guide local businesses,” says Wu.
Testament to this is AutoStore’s recent system implementation for Japanese logistics specialist, Yusen Logistics. Seeking to improve its storage efficiency, lower labour costs and achieve accurate order fulfilment, Yusen Logistics installed an AutoStore system in its warehouse in Tuas, Singapore in 2019. “In so doing, they revolutionised their warehouse. No longer dependent on labour-intensive processes, the warehouse is now powered by AutoStore Robots,” explains Wu.
Thanks to the implementation of the AutoStore system comprising 22 Robots, 40,600 Bins and 11 Picking Stations, Yusen Logistics has reduced its labour headcount by 60%, reduced their order fulfilment time and eliminated time-consuming manual picking. “They doubled the storage volume of their warehouse to 3, 500 cubic metres. They also increased their throughput eighteen-fold,” adds Wu.
The implementation of warehouse automation technology may be daunting, especially for smaller businesses. However, automation delivers significant benefits including cost savings, streamlined and efficient operations as well as benefits to staff. “In an increasingly competitive global economy, warehouse managers cannot afford to ignore the red flags which indicate a need for smart solutions – namely automation and robotics,” concludes Wu.