Top Warehouse Inventory Management Challenges

Inventory management plays a vital role in overall warehouse operations. It affects order fulfillment, labor expenses, customer satisfaction, retail businesses, as well as the supply chain and logistics. In fact, according to a Deloitte analysis regarding supply chain leadership, 79% of organizations with superior supply chain capabilities achieve revenue growth that is significantly above average.

If warehouses and businesses want to thrive in the global supply chain and retail industry, warehouse managers and owners need to assess their operations and face challenges in warehouse inventory management.

Warehouse inventory management involves efficiently and effectively managing the storage, movement, and tracking of goods within a warehouse. Here are the top challenges one should look out for when it comes to warehouse inventory management:

Inventory accuracy

Inaccurate inventory data is one thing that should always be avoided in warehouses as much as possible. However, it continues to be one of the most common warehouse management challenges. According to a study by Wasp Barcode Technologies, 43% of businesses either don’t track their inventory at all or use manual processes to do so. This bad decision can result in a lot of complications.

Inaccurate inventory can lead to order fulfillment errors, overstocking or understocking, customer dissatisfaction, and increased carrying costs. Challenges can arise from manual data entry errors, discrepancies between physical counts and recorded quantities, and problems with tracking changes in real time.

Poor or disorganized warehouse layout

An inefficient warehouse layout can lead to wasted space, increased travel times for workers, misplaced inventory, difficulty in locating items, unoptimized order processing, unnecessary labor costs, or even collisions and accidents. Warehouse managers and owners need to analyze their operations and look for signs of poor warehouse layout.

Poor order-picking process

According to Conveyco, walking and manually picking orders can account for more than 50% of the time associated with the whole process. Inefficient order-picking processes can result in delays, errors, wasted time, and increased labor costs. Selecting the right picking method or solutions, and optimizing the sequence in which items are picked can greatly enhance productivity and order accuracy.

Overspending on labor costs

Too many labor costs also happen to be one of the top warehouse management challenges. According to Kane is Able, labor costs comprise the largest portion (about 50% to 70%) of a warehouse’s total operational expenses. This means it’s even more important to maximize these labor costs and ensure that you’re not overspending or wasting resources.

Inefficient processes, inadequate training, poor inventory or layout, and a lack of performance monitoring can lead to specific labor inefficiencies. And in return, will balloon labor costs. Implementing certain better training programs, using technology to automate repetitive tasks, and optimizing work schedules can help control labor costs.

Poor or unreliable traceability and connectivity

Traceability and connectivity are crucial for tracking the movement and status of inventory items throughout the supply chain. According to the Global State of Traceability survey, 68% of supply chain leaders and executives view traceability as “very or extremely important”. However, it remains complex and one of the top warehouse management challenges.

Inaccurate or unreliable tracking can lead to lost or misplaced items, difficulties in identifying the source of quality issues, operational delays, and challenges in meeting compliance and regulatory requirements.

Poor quality control

Quality control, of course, is of utmost importance in every business or operation. Inadequate quality control measures can lead to the shipping of defective or damaged products, which will result in customer complaints and returns. Not only that, but brand reputation will also suffer from poor quality control and oversight.

Implementing ESL for industrial settings

ESLs, or electronic shelf labels, are digital labels that can be attached to shelves to display products and parts. In an industrial warehouse context, they can be used to display real-time inventory information, pricing, and product details. The SOLUM ESL’s Newton Sub-Giga, for example, was specifically designed for an industrial environment. Newton Sub-Giga can help digitize and scale operations and achieve digital warehousing.

By implementing an industrial ESL solution like the Newton Sub-Giga, you can enhance inventory accuracy by updating product information automatically as items are moved or sold. This technology can also streamline price updates, optimize the order-picking process, enhance supply chain traceability, reduce manual data entry errors, improve productivity, and provide more accurate and up-to-date information to warehouse workers and customers.

Properly analyzing and optimizing operations

Analyzing data and performances related to inventory movement, order processing, and resource utilization is essential. This helps identify inefficiencies and areas for improvement in inventory management and more.

By analyzing these data points, you can identify bad patterns, bottlenecks, and areas of waste. Optimization involves making data-driven changes to processes and workflows to enhance efficiency. Regular analysis and optimization ensure that warehouse operations remain agile and responsive to increasing demand and business needs.

Implementing good flow and organization in the warehouse layout

An organized and well-designed warehouse layout can significantly improve operational efficiency. By grouping similar items together, optimizing the placement of frequently accessed items, and minimizing unnecessary travel distances, warehouses can reduce the picking process and replenishment times. A well-organized layout also enhances safety by reducing the chances of accidents and injuries due to clutter or congestion.

Implementing automation or other smart technologies

Automation technologies, such as conveyor systems, robotic pickers, and automated guided vehicles (AGVs), can streamline various warehouse processes. They can significantly reduce labor costs, improve order and inventory accuracy, and accelerate order fulfillment.

Smart technologies, on the other hand, including IoT (Internet of Things) sensors, or RFID (radio frequency identification), can provide real-time visibility into inventory locations and conditions, helping to prevent stockouts, reduce overstock situations, and enhance supply chain traceability.

Having a separate department or level for quality control

Dedicated quality control departments or processes help ensure that products meet the required standards before they are shipped to customers. By having a separate team responsible for rigorous quality control, warehouses can inspect and uphold the standards of incoming and outgoing items. Warehouses can reduce the risk of defective products reaching customers. This will improve customer satisfaction, reduce returns, and maintain the reputation of your brand.

Warehouse inventory management has a lot of elements and stages that need to be flawless. With the right solutions and a holistic approach, warehouse operations can adapt to specific business needs and achieve operational excellence.