Things You Should Know About
Warehouse Management in 2024
Warehouse Management in 2024
With the development of the Logistics industry (14 – 16% annually) and the E-commerce sector (16 – 30% annually), the demand for warehouse services is higher than ever. A prominent example is the trend toward modernizing operations and businesses' optimization of warehouse costs. In this article, join Ricoh in exploring the trends shaping the warehouse management industry in 2024.
(*) According to the Vietnam Logistics Business Association 2023
(**) According to the Vietnam E-commerce Association 2023
Warehouse Management Trends in 2024
The vigorous development of Artificial Intelligence (AI), with machine learning technology at its core, has led to data-driven analysis and optimized storage space. The warehouse management industry in 2024 is expected to undergo significant changes. Below are Four potential trends in 2024 from the perspective and research of Ricoh.
Warehouse management trends in 2024 from the perspective and research of Ricoh.Multi-channel warehouse management: Driven by market consumer habits, transitioning from physical stores to e-commerce platforms and online markets post-Covid-19 pandemic. Cloud-based management technology: Meeting the need for quick access and monitoring of warehouse operations anytime, anywhere. I nventory forecasting: Businesses can easily analyze market demand and make systematic decisions based on data, making inventory forecasting a crucial aspect of warehouse management.
Additionally, as mentioned above, with the explosion of AI and machine learning technology, other trends such as Automated Warehouse Management, Blockchain Technology, and IoT-based Inventory Tracking will also gain attention starting in 2024.
Things to Know About Warehouse Management System
What is Warehouse Management?
Warehouse management, also known as inventory management or stock management, encompasses a set of tasks related to organizing, supervising, arranging, and preserving goods in a warehouse. Goods can range from raw materials to products serving the manufacturing process and finished goods.Managing inventory is a crucial task that must be carried out continuously and consistently throughout the storage period of goods in the warehouse. Read the content below to understand the process and the benefits of implementing a warehouse management system better.
What is a Warehouse Management System?
According to Wikipedia, a warehouse management system (WMS) is an application software designed to assist businesses in managing their inventory by performing functions to control and track the movement and storage of available resources.The WMS was developed to provide businesses with an overview of real-time warehouse conditions and activities, control warehouse personnel, and support daily planning for administrators. Below is a basic diagram describing the warehouse management process. This process consists of 4 stages: Receiving - Inventory - Picking - Shipping.
Benefits of Implementing a Warehouse Management System
Process Optimization: Rationalize real-time warehouse input and output processes and automate manual processes such as tracking and labeling inventory. Easily arrange, route, and manage inventory according to FIFO, LIFO, or FEFO principles. Cost Reduction: Minimize labor costs by reducing product search time. Maximize warehouse space utilization through optimization and rationalization of storage. Supply Chain Optimization: Improve product visibility and performance in the warehouse to optimize the supply chain and streamline processes. Real-time information retrieval capabilities make decision-making easier, faster, and more accurate. Enhanced Product Visibility: By implementing barcode or RFID solutions, each product is uniquely identified and tracked in real-time, ensuring inventory safety. Improvement in Workforce Management: Easily predict labor usage and set KPIs. Organizing and optimizing personnel, shift scheduling becomes more efficient and easier.
What constitutes an effective warehouse management system?
| Metrics | Calculating Formula |
| Processing Time | = Effective inventory holding time + Time to input inventory into the system + Time to prepare goods for storage |
| Accuracy | =(Actual inventory quantity) / (Projected inventory quantity) * 100% |
| Order Cycle | = (Customer's order received time - Customer's order placement time) / Total number of orders delivered |
| Metrics | Calculating Formula |
| Storage time | = Total time to hold received goods |
| Dead/spoiled stock | = Dead/spoiled stock in the period / Total inventory quantity in the period) x 100 |
| Stockout rate | =(# of stockout items / # of items shipped) x 100 |
| Inventory shrinkage | = End-of-period inventory value - Physical inventory value counted |
| Accuracy of available inventory | =(# of items counted that match records / # of items counted) x 100 |
| Fill rate | =[(Total items - Total items delivered) / Total items] x 100 |
| Average Inventory | =(Initial inventory value + End-of-period inventory value) / 2 |
| Inventory loss ratio | = (Quantity of lost or damaged inventory) / (Total quantity of incoming inventory) * 100% = (Quantity of lost or damaged inventory) / (Beginning inventory quantity) * 100% |
| Inventory carrying cost | = [(service fee + risk cost + capital cost + storage cost) / total inventory value] x 100 |
| % of space used per square meter in the warehouse | = Total square meters used / Total warehouse area (% shelf utilization) |
| Metrics | Calculating Formula |
| Success order rate | = [(# of orders delivered on time / # total orders) x (# of orders completed / # total orders) x (# of orders not damaged / # total orders) x (# of orders with correct accompanying documents / # total orders)] x 100 |
| Transport Lead time | = Order processing time + Manufacturing time + Delivery time |
| Metrics | Calculation |
| %Gross profit margin | =[(Total revenue - Cost of goods sold) / Total revenue] x 100 |
| Labor cost per hour | =(Annual net income level / # of working weeks in a year / # of working hours per week) |
| Lost sales rate | =(# of out-of-stock days / 365) x 100 |
| Customer satisfaction score | =(# of positive feedback / # of total feedback) x 100 |
Who should establish a Warehouse Management System?
- Retail industry aiming to optimize processes: Order processing, Inventory management, Sales; Minimize labor costs
- Manufacturing plants aiming to optimize processes for input, management, and output of raw materials, components, finished goods, and sales, and reduce labor costs
- Logistics industry: Optimize storage space, Transparent operational processes
- E-commerce industry: Optimize storage space, Ensure timely delivery and service quality
Common Issues
As mentioned at the beginning of the article, warehouse management is a process that requires smooth operation from all departments. However, in reality, there are many errors and frequent incidents that occur during warehouse operations, including:
- Easy mistakes in quantity, product code entry
- Time-consuming manual checks
- "Full loading" situation affecting the management plan of goods locations
- Time wasted searching for product locations
- Overloaded employees due to frequent manual inventory checks
- Ink and paper waste
- Inaccurate inventory control: excessive inventory; Shortage of safety stock; Inability to input and output according to FIFO, ...
To address these common issues, two common solutions in Vietnam today are Barcode and RFID.
So what are the differences between manual warehouse management and Barcode and RFID solutions?
| Manual | Barcode | RFID |
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Warehouse Management Levels
Given the increasing demand for warehouse and business management, as well as the diverse requirements for managing different types of goods, Ricoh understands that customers find it difficult to understand and apply suitable warehouse management solutions based on their resources, finances, and needs. Therefore, Ricoh will work with customers to categorize their needs and provide appropriate management solutions.
Conclusion
Warehouse management is a prerequisite factor that directly affects the development of businesses. An effective warehouse management process will help optimize investment resources and reduce operating costs, providing businesses with a foundation to expand their operations while maximizing profits.
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