28 February 2024 Warehouse management is a crucial activity for the financial health of a company. If done well, it ensures that products are available when needed, organized and managed correctly, in order to reduce costs, increase operational efficiency, improve service quality, provide faster delivery, and consequently, customer satisfaction. However, for many companies, the reality of warehouse management is different and still represents a place of great challenges and strategic thinking. Inventory management, reverse logistics, order delivery delays, manual processes, employee safety, and lack of training are just some of the many bottlenecks that hinder business success. Thinking of helping you, the manager, to solve some of the difficulties in the logistics chain, in this article we present the 8 main challenges in warehouse management and what solutions are necessary to address them, based on best practices and market experiences. Take a look: 1- Inventory Control One of the main challenges for warehouse management, without a doubt, is inventory control. We can say that inventory works for the logistics chain as a kind of backbone, meaning it is the fundamental structure that supports not only the workflow but also the sales themselves. That said, ensuring excellent control and maintaining the balance between demand and supply is essential for the continuity of operations. Lack of control can lead to severe problems, such as excess or shortage of products, affecting a negative consumer experience, as well as resource waste and increased operational costs. Solving the challenge: One of the main solutions for performing inventory control in warehouse management is the use of a Warehouse Management System (WMS). The WMS is a tool that helps in inventory management, from product receipt to routing and shipping. The software allows for greater process efficiency as it tracks inventory products in real-time. In this way, managers and employees can monitor the level of available products, ensuring that there are no excesses or shortages of items, as well as organizing and managing them based on order history. 2- Lack of Storage Space One of the most common situations among companies is the lack of storage space in inventory. This happens for various reasons, such as demand growth, seasonality, a wide variety of products in an inventory, or lack of product planning. This problem generates a series of consequences, such as increased financial resources, loss of obsolete products, and additional costs for warehouses to accommodate excess products. Solving the challenge: To solve this problem, it is necessary to understand the current customers’ purchasing model and also market influences. Knowing the demand for each period, as well as the quantity of the most and least purchased products, helps in stock organization and, most importantly, in procurement based on purchase volume. With the use of systems like WMS, it is possible, in an automated way, to balance the lines and better organize the stock. From the moment the goods arrive at the warehouse, the WMS software starts to operate, indicating the best address to assign them. To do this, the system considers the specific characteristics of the item and its turnover. The most interesting thing is that the WMS can identify products that have a lower turnover and can be stored in less privileged areas of the warehouse. This also happens with high-turnover items, which start to occupy areas close to shipping. Additionally, the tool calculates the available storage space and creates organizational rules, carefully utilizing every square meter of the warehouse. Another advantage is the routines of defragmentation and automatic replenishment, always in the ideal quantities to maintain stock balance. 3- Picking Optimization Picking is where most warehouse management problems occur, and this happens for a simple reason: it is the sum of errors that previously occurred in processes such as product receipt and stock storage. If inventory control and management are not carried out efficiently, picking will be highly vulnerable to errors, increasing costs and reducing the quality of the service provided. Therefore, product retrieval and shipments to recipients may be compromised. Solving the challenge: Since it is an activity of separating and collecting products to fulfill customer orders, picking is a process that can require a lot of time and resources. Therefore, investing in WMS technology can increase productivity, as the software offers features to plan picking routes, identify products via barcode, and monitor employees in real-time. With WMS, your employee will not have to waste time searching for products in the warehouse. The system guides, through notifications, step by step the entire process to be carried out, avoiding errors and especially delays. The optimization provided by the software can reduce product picking times, improve warehouse productivity, and allow more orders to be fulfilled in the same period. Additionally, with improved picking, shipping and waiting times for customers are reduced, mitigating the likelihood of errors and increasing customer satisfaction. 4- Order Management The fact that the consumption model has changed in recent years is not news to anyone. Access to the Internet, combined with the numerous sales channels available, has made online shopping easier. However, according to a survey conducted by Procon, between 2019 and 2020, there was a 285% increase in complaints filed against online purchases, and most of them are attributed to delay or failure to deliver the product. It is possible to conclude that the increase in demand has had a direct impact on order management, which has become one of the biggest challenges for warehouse management in the current scenario. Solving the challenge: Optimizing order management is possible by investing in technologies. The WMS system, for example, contributes to managing order information in real-time, indicating to the employee the availability of the product in the warehouse, the location of items in the warehouse, the quantity of each merchandise to be separated, and other relevant details to increase productivity and service quality. Another very useful tool, especially for companies that sell through multiple channels, is the Order Management System (OMS). With the software, it is possible to centralize in one place the information related to orders, stock, and deliveries, ensuring agile fulfillment and personalized service. 5- Delivery Accuracy One of the biggest challenges faced in warehouse management is delivery accuracy. For many companies, ensuring efficiency and customer satisfaction in the order sending and receiving process still represents a difficulty. The problem is that if these processes are not carried out efficiently, the company may earn a negative reputation in the market. Globally, about 30% of change and return requests are made due to incorrect or damaged deliveries. This is a very significant number and demonstrates the importance of ensuring accurate picking, packaging, and shipping processes in the warehouse. With increasingly fierce competition, offering a reliable and quality service is essential to stand out and retain customers. Solving the challenge: It is essential to have resources capable of controlling the movement of products in the warehouse and tracking orders in real-time. In general, this activity is performed manually, which can cause errors. Management systems, on the other hand, are able to monitor every stage of the delivery process, from product separation and collection to shipping, ensuring that each item is sent to the correct location, within the established deadline, and in perfect condition. It is worth investing in solutions like the WMS system (to organize internal warehouse processes), OMS (to optimize order management), and TMS (to gain greater control over transportation). Working in an integrated manner, these software solutions can bring a huge leap forward in terms of performance and delivery quality. 6- Cost Management Understanding cost management is fundamental for the success and profitability of businesses, after all, the warehouse is responsible for most of a company’s financial resources, including labor, equipment, storage space, electricity, security, among others. Good cost management allows the warehouse to operate more efficiently, reducing unnecessary expenses and maximizing productivity with the use of already available resources, allowing for greater profitability and creating new competitive advantages, such as reducing prices for customers. Solving the challenge: If your company is overspending, it might be time to review logistics and consider the possibility of investing in systems that help optimize processes. The WMS system, for example, helps automate and optimize many warehouse processes, reducing operational costs. The software can predict demands, avoid overproduction, and reduce storage costs. Furthermore, it prevents product excesses and shortages, efficiently manages employees, reduces downtime, increases employee productivity, controls the flow of goods, and ensures that processes are executed quickly and accurately, without delays or rework. 7- Reverse Logistics Reverse logistics can represent a major challenge for warehouse management. If handling the normal flow of orders is already a complex task, managing the opposite path, that is, the return of goods from the customer to the warehouse, certainly requires double the organization and control. In a market where consumers expect free deliveries and returns, reverse logistics can mean spending extra resources and labor that involve identifying and separating products, inventory control, processing refunds, and eco-friendly disposal of items. Solving the challenge: The solution to this challenge can also be found in the WMS system, which allows for tracking of returned products, as well as process automation, such as inspection, repair, repackaging, and resale of the product. The WMS also offers real-time reports on the location, condition, and movement history of the product, which facilitate management and decision-making. 8- Skilled Workforce The lack of skilled labor and proper training can lead to errors, accidents, and loss of productivity, challenges faced by many logistics warehouses. Success in warehouse management largely depends on a qualified and experienced team, capable of performing daily activities efficiently and safely. The importance of having highly qualified employees is even more critical in the era of digital automation and new technologies, where warehouse operations require more advanced technical knowledge. Solving the challenge: To solve this problem, it is important to invest in good training, thus helping employees acquire the skills, competencies, and knowledge necessary to perform tasks efficiently. Implementing proper recruitment and selection processes and a career plan are also essential to attract and retain qualified personnel. You can also rely on solutions that automate activities and make work more practical, eliminating hours and hours of training. And don’t forget: when evaluating software, consider ease of use! People and Technology: The Future of Warehouse Management In this article, we shared some of the most common challenges and practical solutions for managing a logistics warehouse. It can be concluded that the use of technologies like WMS can bring numerous advantages to companies, such as greater efficiency, cost reduction, improvement in process accuracy and quality, as well as ensuring a better customer experience. However, it is important to highlight that success in warehouse management also depends on the adoption of strategic management, capable and committed to the continuous improvement of processes and the quality of the service provided. By investing in technological solutions and qualified workforce, you ensure efficient management of your warehouses and gain greater competitiveness in the market, reducing costs and increasing customer satisfaction. Integrate your team today with the best inventory management solution available. Discover Deagor solutions! Talk to one of our experts and find out how our software can help you optimize your warehouse management, boosting your results! 8 Challenges in Warehouse Management and How to Solve Them Deagor WMS per ecommerce può aiutarti!