Warehouse management or warehouse control?

It is said that in wholesale business, for example, the result is made by buying. This means knowing how to buy the right supplies in the right amount and, of course, as cheaply as possible. This is absolutely true, but I argue that it is possible for companies in wholesale and other industries to make and improve results through effective inventory management.

Rapid changes in the operating environment and growing customer demands are common for companies today. The corona pandemic blew up demand for e-commerce and forced many companies to modernize their operations. The expansion of e-commerce will also increase the requirements for internal logistics.

In line with LEAN thinking, the aim is to get “waste out” of all activities, ie to operate optimally, without any unnecessary movement. The following text includes a few perspectives that affect internal logistics, the supply chain and thus the service capability and customer experience of the entire company. This blog post opens a series that will take a closer look at the factors below.

Reliability of delivery

Today’s level of demand is that the product range is wide and that (almost) everything is available at all times. Next day delivery is already becoming a basic requirement in many industries. This, combined with the general desire to reduce capital tied up in inventories, imposes conflicting requirements. Good level of delivery is achieved when you know what is being ordered, how much and where the goods are physically located.

No errors

Flawlessness is most related to collection, but also to deliveries more broadly. The collection must be 100% correct so that customers receive the products they have ordered in the right type, size and quantity. However, the correctness of the collection alone does not guarantee accuracy. If shipments are improperly packaged or some other link in the supply chain fails, delivery is not faultless.

Dynamics

The operating environment of companies lives in a fast cycle. Product ranges change quickly and the sales of different products can vary a lot from season to season. In addition to these, many other factors mean that inventory must also be dynamic – a lot of space is reserved for a product at the beginning of the season with a short picking trip, while at the end of the season there is less need for space and there are fewer pickings. Increasing dynamism can also affect the efficiency of picking and make it possible to make significant savings.

Accuracy and efficiency of picking

Picking can also either achieve or lose significant efficiency. If a forklift or collection trolley is traversed crosswise in a warehouse, picking is inefficient. Instead, the optimized collection route provides significant benefits. Similarly, on paper picklists, e.g., picking multiple orders simultaneously is challenging and error-prone and places a lot of demands on the person doing the picking work, while guided picking, e.g. Efficient picking has a significant impact on deliveries and accuracy.

Customer experience

Customer experience has been at the heart of successful business thinking for some time now. Good internal logistics can have a significant impact on the customer experience in the form of fast and correct deliveries. From this angle, it can be said that with functional and effective internal logistics it is possible for a company to gain a competitive advantage, but if internal logistics does not work, it is definitely a competitive disadvantage for the company.

Continuous improvement and development

“Let’s fix this now for good” is a very often heard phrase. In today’s world, things can’t be fixed in one go because in a week or a month they may already be obsolete again. For this reason, also in line with LEAN thinking, functions need to be continuously improved. Continuous improvement is achieved through indicators and process development.

The title of the text was “Warehouse Management or Warehouse Control?”. The title was intentionally leading. The company can manage its inventory, manage and make a profit. But only by controlling inventory can a company ensure that the supply chain and internal logistics work optimally and is a productive function for the company.

Jakke Vyyryläinen

CEO, Metsys Oy