The warehouse concept is as ancient as Mayans keeping grain in a central storeroom. At the core, needs are simplistic: a roof, floor, shelves or bins – and, of course, the inventory. But in today’s digital landscape, where customer centricity rules and speed of delivery is essential, smart warehouse management can be elevated far beyond the basics to reach a strategic level. Applying analytics and modern supply chain principles can take it even further, turning the smart warehouse into a strategic differentiator. There’s just one major obstacle. Many enterprises are trying to stretch the lifespan of outdated warehouse technology, hoping to make do with legacy software solutions. Such thinking can backfire. Let’s examine why.
Outdated legacy solutions
Many see the warehouse industry as highly mature, already as advanced as needed. Although this is an outdated view, it’s easy to understand why the warehouse is often overlooked when companies are looking for high-impact opportunities to improve profits or please customers. Rows and rows of bin locations and pallets simply are not as buzz-worthy as some other innovations competing for investment dollars, like 3D printing, back office automation, machine learning, or artificial intelligence.
So, when it’s time to allocate resources, those other areas in the organization planning transformative updates often move to the front of the line. Few companies can overhaul their entire IT infrastructures and operational processes, from automating invoicing to deploying chatbots, in one massive swoop. Enterprises must stretch funds and are faced with intense pressure to deploy digital technologies to remain competitive. Prioritizing is difficult.
The warehouse team is often left to ‘make do’ with outdated technology, manual tools and labor-intensive processes. The company may be content to settle for basic solutions. But, the old-school approach to warehouse management is prone to errors and plagued with delays. Reports seldom reflect real-time truth, forcing some risk-adverse companies to increase safety stock levels for ‘just in case’ insurance. Disparate solutions may lead to major discrepancies about inventory status.
This uncertainty about which inventory report – or which interpretation of the report – is more accurate can lead to enterprise-wide decision paralysis. Department leaders, business unit managers and front-line personnel can find themselves embroiled in the minutia of tracking thousands and thousands of SKUs, subcategories, parent-child relationships and stages of readiness or repair. Once teams begin debating definitions of ‘available to ship’ or how merchandise should be returned to inventory, the team has become highly unproductive.