9 Warehouse Management Challenges and How to Overcome Them

Global e-commerce sales are exceeding US$6.3 trillion this year [1] alone. This figure is poised to see an even steeper uptick in the coming years, intensifying the need for third-party logistics (3PLs) providers with warehouses to manage inventory for brands, retailers, and distributors.

As warehouse operations are a critical component [2] of the supply chain, inefficiencies can have major consequences such as disruptions in delivery, compromised safety, and potential financial losses. A 3PL market research report [3] revealed that poor customer service (62%) is the primary cause of failed partnerships, with unmet expectations accounting for another 10%.

By identifying these hurdles in advance, 3PLs can proactively mitigate risks and ensure overall operational efficiency. In this blog, we’ll expand on the detailes of warehouse management and the challenges it poses. We will also share tangible solutions to enhance operational efficiency as well as improve customer experience — without scaling organizational expenses.  

What is Warehouse Management?

Before diving into the challenges that 3PLs face when managing warehouses, it’s crucial to have a basic understanding of what warehouse management involves. Warehouse management is the complete supervision of daily warehouse operations. This could be anything from overseeing to executing tasks such as receiving shipments, inventory management, storage, packing, and shipping the products out from warehouses. Given the scope of responsibilities and processes involved for 3PLs in regard to warehouse management, it’s not hard to imagine the complexities that appear. If these are not addressed effectively, it could affect the entire supply chain. In the next section, we’ll touch on the primary challenges 3PLs face in warehouse management and provide solutions for these setbacks.

Warehouse Management Problems and Solutions

 

1. Inventory inaccuracy

Inventory inaccuracy, a constant challenge for 3PLs, takes place when inventory records do not match what’s actually in the warehouse. This can be caused by operational inefficiencies, both manmade and system errors, leading to financial losses and operational disruptions for 3PLs. The complex nature of managing diverse product inventories calls for robust inventory control measures.

Solution:

• Employ an automated inventory management system: Systems that provide real-time inventory data can ensure that stock levels are maintained at an optimum level, preventing both overstocking and stockouts.
• Regular audits: Regular audits verify the accuracy of recorded inventory data, allowing 3PLs to spot and correct discrepancies early on.

 

2. Inefficient use of warehouse space

Optimal warehouse space utilization is critical for 3PL profitability but can be costly. Rising warehouse costs amplify the impact of wasted space, leading to increased expenses, reduced storage capacity, and slower order fulfillment. To overcome this, 3PLs must find more innovative ways to optimize storage and retrieval processes.

Solution:

• Consistently scrutinize space utilization: Digital tools can give 3PLs a comprehensive overview of their inventory for optimum product placement. This approach minimizes aisle congestion and maximizes warehouse space at the same time.
• Inventory analysis: Pay attention to which items are flying off the shelves and put them where they’re easily accessible to reduce picking time.

 

3. Multiple client-specific shipping needs

Handling multiple clients with varying shipping preferences can be difficult for 3PLs that do not have a unified platform that can integrate disparate carrier systems. To prevent slow communication and delays in order processing, 3PLs need to ensure timely and accurate order fulfillment.

Solution:

• Leverage a Warehouse Management System (WMS): With a WMS that automates integration with last-mile carriers, automated data exchange and order transfers can be initiated. This will reduce errors and speed up order fulfillment.

 

4. Poor resource management

Poor resource management is one of the most common problems in warehouse management for 3PLs. It means not having enough staff, not giving them proper training, or not organizing their work effectively. Consequently, this can lead to various problems like delays in processing orders, mistakes while picking and packing, or even accidents due to fatigue or lack of training.

Solution:

• Invest in training programs: Organize easy-to-follow training sessions for warehouse staff. These should cover safety rules, how to use equipment, and specific steps for picking and packing.
• Implement workforce management software: Invest in software that helps manage the team better. This can help with scheduling shifts, assigning tasks, and keeping an eye on performance analytics.

 

5. Substandard order-picking process

Order picking is when warehouse staff (pickers) collect items from shelves to fulfill customer orders. Picking processes can become a challenge when they take too long and lead to incorrect or incomplete inventory picking. Manual processes complicate inventory picking, 3PLs need to look into more efficient ways to manage this warehouse operation.

Solution:

• Use smarter picking methods: Group similar orders to save time. Look into batch picking or zone picking to make the entire process simpler and faster.
• Use smart order routes: With the help of a warehouse management system, 3PLs can ensure they get the most of their staff. The software uses inventory mapping technology to guide pickers via the fastest route to the relevant inventory. Moreover, during a single picking trip, they will be put on a picking route based on which inventory needs to be picked for the day and their proximity to those items in the warehouse.

 

6. Difficulty adapting to seasonal demand variations

Some products have a steady demand throughout the year, while others are more popular during certain seasons or special sales seasons such as Christmas or Black Friday. Unpredictable product demand makes it harder for 3PLs to efficiently manage inventory levels and warehouse capacity. Here are some ways 3PLs can ensure processes are in place when dealing with seasonal spikes:

Solution:

• Utilize demand forecasting: Use demand forecasting to figure out which products sell faster during each season.
• Workforce management: Match staffing levels to the demand spikes for optimal productivity.

 

7. Lax workplace safety

3PLs must prioritize warehouse safety to protect employees and prevent costly operational disruptions. However, constrained budgets can hinder 3PLs’ ability to fully implement safety measures. Instead, start with these cost-effective safety measures:

Solution:

• Provide regular safety training: Teach proper lifting techniques, how to use equipment safely, how to handle inventory carefully, and what to do in the case of an emergency.
• Safety equipment: Provide safety gear like helmets, gloves, and vests to all your employees.

 

8. High Order Volumes

A common challenge for 3PLs is striking the right balance between rapid and high-volume order fulfillment. For example, during special sales periods like 9.9, 11.11, Black, Friday, Holiday Sales, etc. Accurately processing bulk orders while meeting tight deadlines is possible to achieve, but will require a comprehensive order management system.

Solution:

• Use an order management system: With one in place, 3PLs can automatically collect their client’s orders on a centralized platform. These can then be fulfilled based on priority, requirements, and stock available. Ensuring this technology can scale and support sudden increase in orders to process is equally vital.
• Leverage modular warehouse management technology: A modular and user-friendly warehouse management system, accessible on both PDAs and desktops, can greatly enhance operational efficiency. This is especially valuable when hiring temporary workers during peak sales seasons, as it enables rapid onboarding and minimizes training time, allowing them to contribute productively right away.

 

9.Integrating new and legacy systems

Mixing new tech with old systems can cause issues, like incompatibility between different technology solutions or problematic data transfers. Plus it can be a little costly and time-consuming to teach the staff how to use the new systems.

Solution:

• Strategic integration planning: Check existing systems to see how new technology can fit in plus pick technology that works well with what already exists to avoid problems. 3PLs can also join hands with vendors and IT experts to understand how to integrate new technology seamlessly.

 

Conclusion

Managing diverse client needs across multiple warehouses can be a tall order for 3PLs. To address these operational bottlenecks, 3PLs must look toward the power of software and technology. Anchanto’s Warehose Management System, for instance, gives better control over e-commerce fulfillment. By breaking down fulfillment silos, Anchanto’s multi-channel integration eliminates sales platform hurdles, optimizes inventory management, reduces fulfillment costs, and guarantees a seamless customer experience irrespective of seasonal fluctuations. Contact us today to optimize your multi-warehouse operations for smooth order fulfillment.

FAQs

1. Why is warehouse management important?

Warehouse management is important because it ensures efficient operations and accurate inventory records, helping keep customers happy and boosting business success.

2. How does warehouse space efficiency impact operations?

Warehouse space efficiency improves operations by maximizing storage and speeding up retrieval times, leading to faster order fulfillment and lower costs.

3. What are common issues with labor management?

Common issues with labor management include not having enough staff, messy schedules, and workers not being trained and equipped properly, which can slow down operations and cause mistakes. Fixing these problems means planning better and making sure everyone knows what they’re doing.   References – [1] Statista.com – E-commerce worldwide – statistics & facts [2] Researchgate.net – Warehouse Operations: An Examination of Traditional and Automated Approaches in Supply Chain Management [3] Inboundlogistics.com – 2022 Inbound Logistics Perspectives: 3PL Market Research Report