Building a streamlined supply chain for your business involves making intentional decisions to improve your supply chain’s functionality. At the warehouse level, it’ll involve reducing redundancies, eliminating bottlenecks, and investing in the right tools.
In turn, your customer gets to receive their orders fast and complain less about the quality of the order. Your business also benefits by being more competitive, earning more profits, and reducing business costs.
Improving your supply chain will be easy as long as you follow warehouse management best practices and invest in the right warehouse management system. Here’s how to improve your warehouse management and overall supply chain:
Defining Warehouse Management Systems
A warehouse management system (WMS) is a solution/software that empowers organizations to have more control over their warehouse operations, from the moment goods get into the warehouse until they reach the customer.
A warehouse management system streamlines various functions like tracking inventory, picking, storing, and transportation. It allows ample visibility into an organization’s inventory, whether it’s within the facility or in transit.
For optimal visibility into your supply chain, warehouse management systems are typically integrated with radio frequency identification tags, smart antenna technology, and/or barcode readers. This integration allows warehouse managers to track inventory as it moves throughout the warehouse floor.
4 Tips for Streamlining Your Warehouse Operations
How you manage your warehouse operations has a huge impact on your bottom line. Streamlined operations help improve customer satisfaction, increase inventory turnover, reduce order return requests, and keep business costs low.
Here are four best practices for streamlining your warehouse operations:
Utilize RFID Tracking Technology
Radio frequency identification (RFID) technology is essential to improving real-time visibility into warehouse operations. It’s a type of technology that uses radio frequency to broadcast information about a piece of inventory, which is essential for asset localization.
RFID technology comprises two parts; antennas and tags. Antennas receive and send information, which can then be processed on a warehouse management system. Tags contain information about your inventory, from location to description of the item. The tags are attached to items in the warehouse, ensuring that they’re always broadcasting information.
Unlike barcodes that need to be within the vicinity of a barcode reader for you to access inventory information, RFID tags are always broadcasting data, reducing the effort needed to track inventory.
This allows warehouse workers to pick and pack inventory without the extra step of scanning it. If you have smart antennas in your warehouse, your RFID tags will automatically record inventory location, from arrival to departure.
The technology also makes it easy to locate items within a warehouse, saving the time and cost of manually tracking inventory. Most importantly, RFID tags increase the accuracy of your warehouse management decisions since you’ll always have real-time information about your in-stock inventory.
Track Warehouse Performance Metrics
The small details of how you operate your warehouse impact order fulfillment, customer satisfaction, and your profits. Issues like order delays or sending out the wrong order can lead to you losing your valued customer. Fortunately, you can reduce these inefficiencies by focusing on the right inventory management warehouse performance metrics:
Receiving Efficiency
This is a measurement of how quickly you can receive orders in your warehouse and get them ready for sale. The receiving function involves multiple things, such as receiving raw materials and goods returned from customers. The faster you handle the receiving function, the faster you can get goods to your customer.
You can measure order-receiving efficiency by calculating the time between receiving an order and when the order is ready for sale. Use RFID tags to record timestamps of when an order comes into the warehouse and when it gets into storage.
Picking Accuracy
Poor order-picking accuracy will often result in multiple returns from customers. This will increase warehouse costs and customer dissatisfaction. You can measure order-picking accuracy through this formula:
(Total orders – incorrect items returned)/ total orders * 100% = picking accuracy
You can use RFID tags to increase your picking accuracy. They’ll help your team locate the right items for packing to ensure you send the right goods to customers.
Inventory Turnover
Inventory turnover measures the quickness with which you sell any inventory you receive. The goal is to ensure that inventory moves quickly in and out of your warehouse as this reduces the cost of storage.
The speed at which your inventory moves through your warehouse is also an indicator of the items that you’re selling the most. That’s why the inventory turnover metric is essential for forecasting and planning. It makes it easy to identify slow and fast sellers, helping you know what you’ll need to stock more/less of.
Measure your inventory turnover with this formula:
Inventory turnover = Cost of goods sold/average inventory
Backorder Rate
Your backorder rate is a measurement of the frequency at which an item is out of stock. It can help you in forecasting to ensure you’re ordering the right volume of inventory from vendors.
A high backorder rate can impact customer satisfaction as they’ll often look for goods from the competition. Having a high backorder is an indicator of poor inventory tracking and/or forecasting.
You can measure the backorder rate with the following formula:
(Total backorders/total orders) * 100 = backorder rate
Order Lead Time
Lead time is defined as the time between when a customer makes an order and when they receive it. Having a low lead time is good as customers don’t have to wait for too long to receive their orders.
High lead times are a sign that your business is using a slow carrier service, having trouble managing orders, or using the wrong order-picking system. It could also mean that you’re receiving more orders than you’re equipped to handle.
Optimize Supply Chain Visibility
Having a firm grasp of the what, where, how, and who of your supply chain can improve your warehouse management. It’ll help keep customers happy and the business profitable. You’ll also easily reduce inefficiencies, forecast demand better, and reduce costs.
Here are a few ways you can improve supply chain visibility:
- Collaborate with stakeholders. Ensure that there is informational transparency between you and your suppliers, distributors, and retained. This will make it easy to forecast demand and improve order delivery.
- Map processes. Record all warehouse processes that precede order fulfillment, from receiving the order to last-mile delivery. Doing so will help you identify bottlenecks or redundancies in your supply chain, reducing unnecessary delays.
- Integrate systems. Pick the right software for any process that can be automated, from order picking to overall warehouse management. You should then integrate the solutions you pick to improve access to information. This way, you won’t always have to switch between software or ignore important information that’s located on another tool when making decisions.
Choose Your Warehouse Management Software Carefully
The right supply chain warehouse management system should fulfill your every need. It needs to meet both your current and future business needs. Speak with your team to identify ways that your warehouse operations could be simplified by a WMS. If you already have a WMS, ask them about any ways that the tool falls short of their expectations.
Other than focusing on a tool’s features, factor in how easy it is to train your staff on how to use it. Software with short learning curves is often easy to integrate into any business.
Experience Surgere’s Effective Warehouse Management Solution
If you’re looking for a warehouse management system that’ll help streamline your supply chain, try Surgere today. We integrate IoT devices with our software, Interius, to give businesses real-time intelligence about their supply chain and drive efficient business operations.
Read our case studies to learn how we’re helping businesses like Hutchinson streamline their supply chains.
