Introduction
As manufacturers and distributors face escalating costs and complexity in their businesses, the demand for greater productivity in warehouse operations grows. For these companies to remain competitive and profitable, they must find ways to drive warehouse performance to new levels based on their individual company needs. However, their existing ERP systems often lack the automated capabilities necessary to increase visibility into operations, enhance market agility, and boost warehouse productivity.
Regulatory Challenges
Regulatory challenges loom over warehouse management. With high-profile recalls on everything from toys to dog food to peanut butter, manufacturers are clearly under growing pressure to track their products with even greater precision. They must have immediate access to data on everything from lots to serial numbers to shipping locations if they are to avoid crushing costs—and legal penalties, in the case of a recall. Complicated supply chains further contribute to the risk of expensive recalls.
Business Challenges
The limitations of many companies’ warehouse operations often come from these three factors: orders, labor, and the warehouse assets themselves. To drive performance and productivity gains in warehouse operations, manufacturers and distributors must confront the inadequacies of how these issues are handled.
Ineffective order management—The pandemic has strained the patience of customers who are tired of delayed inventory and inflated costs—if they are paying for it, they want the perfect order. To meet this demand, many companies strive to achieve the perfect order delivery rate, which Performance Magazine defines as “delivered in full, to the customer commitment date, in perfect condition and with accurate documentation.”
Most companies, however, fall short on these key performance indicators. They allow service levels to diminish, and are vulnerable to fines and chargebacks from powerful retail customers. More perfect orders mean fewer imperfect orders; and it’s the costs of correcting those imperfect orders that eat into margins. Premium freight costs, excessive overtime, and extended cash-to-cash cycle times all damage overall profitability. To prevent paying premiums on rush services, an ERP consultant like Datix can offer guidance tailored to your organization about how to execute a perfect order every time for less.
- Excessive labor costs—Given the increasing complexities associated with today’s customer and supply chain relationships, companies are struggling to meet performance expectations without adding labor resources. From September 2021-2022, total employee compensation rose by 5.0%, wages and salaries rose by 5.1%, and benefit costs rose by 4.9%. For those hiring in 2023, negotiating compensation with potential employees will be challenging to navigate in such an unclear economic climate.
Inefficient asset use—Yet another factor limiting the performance of today’s manufacturers and distributors is the tendency to underuse assets such as equipment and warehouse space. Considering the growing demands they face, the natural tendency is to spend more on warehouse equipment such as forklifts, pallet racks, and conveyors. Companies are also likely to contract for more warehouse space—often at premium rates.
Rather than better utilizing the assets they currently possess—and keeping costs in check—companies instead see costs rise as they acquire more assets. As a result, they are likely to be out-maneuvered by high-performing competitors with the ability to generate more from less. Read more about how capacity planning can help you manage assets to save money and increase output.
Wrap Up
These regulatory and business challenges are not insurmountable. A modern ERP solution implemented to meet your organization’s specific needs can help overcome these challenges.
Learn how to Improve Business Productivity and Agility with Modern ERP
Stay tuned for another post next week on warehouse management!
Read previous blog on Market Drivers for Warehouse Management in 2023
About Datix
Unlike our competitors, Datix will work with you closely to understand your precise warehouse needs so we can find the best ERP solution for you. We use your inventory management pain points to find the right methodology for your needs and offer our support throughout every step of the implementation process. With 25 years of experience, Datix is the partner of choice for ERP solutions.
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Please note: This blog post was based on the Executive Brief Conquering costs, complexity, and customer demands with warehouse management from Infor and updated by Datix
