The Pitfalls of Traditional Warehouses

03-09-2021 16:26:47 Comment(s) By Abir

The recent boom of the e-commerce sector has propelled warehousing to the centre stage. It has exposed the loopholes that existed within the industry's fabric and perpetuated the need for digital transformation. The following article tries to throw light on these shortcomings ang how they can be overcome with the help of tech-enabled support systems.

With the exponential rise of the e-commerce platforms in recent years, the importance of warehouses has taken the centre stage in the supply chain network. From a layman’s perspective, a warehouse is nothing but a space where products and raw materials are stored before they are finally dispatched to manufacturers or consumers. However, those who are insiders in the industry know how warehouse is that significant cog in the wheel of the supply chain that keeps the balls rolling. Unless there is an optimized, efficient warehouse at the helm, the whole process of manufacturing and distribution would receive flak. The whole supply chain is dependent on the efficacy of warehouse that demands special attention in the 21st century.


Since the sales velocity and the operational complexity have increased and multiple layers have been added to the supply chain network, warehouses across the world have gone for a digital overhauling. Warehouse management systems that monitor the end-to-end operations of warehouses, coupled with measures taken in favor of automation have changed the face of warehousing for good. However, there are managers who are either still cynical or nonchalant about strengthening their operations. This is mainly because either their business is too small to afford the digital boon or they are skeptical about the expenses they would incur. It must be noted that the fear of expenditure is nothing but a myth as properly implemented digital transformation always leads to handsome ROI in the due course of time and because of that even the small and medium business organizations are also taking the baton forward. Hence, in this article, we would try to highlight the limitations that a traditional warehouse would have that can be easily overcome with the sensible adaptation of digitalization.


1.  Accidents and Mishaps: Warehousing is a heavily labor-intensive process. A lot of workers serve the warehouse floor and they are susceptible to accidents. They need to handle items of various sizes in copious amounts. If they handle it manually, a lot of physical strain occurs that can dwindle their productivity. Additionally, the mental strain of recalling the exact locations of all items and pick-paths and accomplishing multiple targets in a stipulated deadline can be strenuous mentally. Moreover, improper handling of forklifts can be disastrous for the workers and can lead to fatal injuries. Warehouses that resort to automation processes employ AI/ML that can perform plenty of tasks at a greater speed with little or no human intervention, causing little threat of unfortunate occurrences.


2.  Problem of Space: Warehouse is an expensive space and every inch of it counts. Since traditional warehousing is intensely manned, a lot of errors can crop up in the course of operations. One of them is faulty space utilization. Due to the miscalculations on the part of the executives, many times items are stashed wrongly which leads to stockpiling at one place and stock-out at another. Warehouse management system is a software solution that efficiently deals with this problem of space and helps in the seamlessness of operations.


3.  Wastage of Time: Traditional warehouses do not leverage resources and picking options optimally. Resultantly executives run extra distance empty-handed and a lot of fallow time creeps into operations. Warehouse management system generates the most useful pick-path for the workers and introduces various picking options like wave picking and batch picking. Additionally, through features such as task-interleaving, various operations are yoked together so that optimum results can be achieved. Workers just have to follow the instructions given by WMS and it frees them from the hassle of registering all the routes and locations mentally. The operational time that is freed up can be sensibly utilized in other constructive work such as getting trained and upgraded. Traditional warehouses with human planners have a tough time routing and re-routing paths that get completely eliminated in tech-savvy distribution centres.


4.  The Rut of Documentation: Warehousing is a process that entails a lot of documentation. Most of these documents are manually registered and maintained. This huge pile of documents can easily get misplaced or can be manhandled. The misplacement can not only lead to delays and demurrage, but also pilferage that can incur huge losses for the companies. Again a lot of useful time and resources get grossly wasted in locating the exact documents from the heaps of papers. Furthermore, an overt dependence on paper-based work can be detrimental to the sustainability missions of the companies. And it is a proven fact that the organizations that have clear eco-friendly objectives earn goodwill in the contemporary markets.


5.  Issues Related to Scanning: Most of the traditional warehouses do not have scanners to single out items and that can cost workers a lot of mental and physical strain. Even those warehouses that have barcode scanning systems harbor their own set of problems. Barcode scanners cannot scan items that are placed at a particular distance or have any other object hindering their view. Moreover, these scanners cannot scan multiple items at the same time and takes a lot of time in scanning all the consignments collectively. This wastage of precious working hours can be eradicated entirely with the smart application of Radio Frequency Identification Devices.


6.  Inventory Inaccuracy: The single biggest problem that traditional warehouses face is the complications that arise out of inaccuracy in knowing inventory level. Without a thorough grasp over the level of stock that a warehouse has, overstocking and stock-out are extremely common. In such scenarios, warehouse managers do not have a proper idea when their shelves would need replenishment. Concurrently, purchase orders are not served timely and then shelves go empty for days causing disruptive tremors across the entire supply chain. Moreover, without proper adherence to FEFO, FIFO rules, fast-moving products can get damaged. All such traditional warehouses conduct the annual audits of stocks manually and that causes shut down for a few days. However, in smart warehouses with efficacious inventory management systems, cycle counts are conducted at an intermittent period and that too simultaneously with the everyday operations, without causing breakage in the productive timeframe.


7.  J.I.T and Cross-Docking: This point can also be clubbed with the compromised warehouse spaces. E-commerce platforms have empowered consumers in such a way that they prefer same-day delivery or promptness in delivery to a greater length. Modern warehousing methodologies of just-in-time delivery or cross-docking completely corroborate to the efficiency in dealing with warehouse spaces. Without a competent workforce enabled by technology, this magnitude of proficiency would always remain elusive.


8.  Forecast and Analytics: One prime feature that WMS-enabled modern warehouses provide and traditional paper-based warehouses don’t is the privilege of business analytics. Business analytics is a powerful set of tools that analyses business trends in predictive and descriptive ways. These methods are extremely fruitful in presenting a strong business case. Additionally, they present a tentative forecast of the future trends that can help businesses stay afloat in times of disruptions and renders resilience to the fabric of the enterprise. This is an especially practical aspect of warehousing where customer demands have become exceedingly volatile and disruptions, both seasonal and unprecedented, have become the order of the day. The post-COVID scenario of uncertainty has cemented the need for formidable data analytics. In the traditional warehouses, where there is no scope of data curation, BI does not even exist in the whole purview. On the other hand, WMS stores individual data pertaining to manufacturers, sellers, product details, locations, shippers, and all the necessary stakeholders that create a huge pool of data that can be utilized to its hilt.


9.  Lack of Transparency: Traditional warehouses do not offer end-to-end visibility into their operations due to the lack of technical expertise. But in the modern day and age, stakeholders need complete transparency in the entire distribution cycle and thorough knowledge on the statuses of their consignment. The zilch of it takes away the reliability and credibility of the warehouses. Not only does WMS fulfills this age-appropriate need, but with the help of AR/VR tools, multiple parties would also be able to go through the entire process in the days to come.


This discussion attempts to prove how traditional warehouses have started losing their sheen in the light of digital transformation and recurrent disruptions. Though a digital revamp may seem to burn a hole in the pocket, it is an extremely important and even a necessary facet of the modern supply chain. With the resurgent importance of warehousing operations, one would definitely not afford to lose sight of profitability. Spending on WMS, AI/ML, WCS etcetera are good investments. They reap the fruit of labor consistently and in their own sweet time. Thus, it is time to shrug off the slumber of indifference and adapt to the changes to keep up with the pace of time. Otherwise, obsolescence and redundancy loom large over businesses.

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