3 Strategies to Build Resilience Into Your Warehouse
By Jeff Greene, Warehouse specialist, Andersen Material Handling
Building resilience into your warehouse is a great strategy to protect your business against economic disruption. Uncertainty created by labor strikes, international wars, and talks of recession are fueling companies to re-think many areas of their organization. Warehouse, distribution, and operations managers should weigh three potential weak spots to proactively combat economic uncertainties: Labor, space, and inventory.
1. Labor
Labor challenges continue to plague warehouse and distribution managers. A smaller labor pool is now the norm. Warehouses nationwide struggle to get workers on the floor due to low unemployment rates (which have returned to pre-pandemic levels), an aging workforce (especially for warehousing), and high turnover rates.
However, automation can provide immediate – and long-term – relief. Don’t think of automation as replacing humans, automation actually helps manage tasks that employees don’t want or fulfill roles where adequate labor is unavailable. Investing in automation can be a great way to reduce labor dependency and insulate your operation from an unpredictable labor market. The great news here is that there are so many options in automation technologies: autonomous forklifts (AGVs), automated storage solutions (VLM’s and pallet shuttles), robotics (AMR’s), turnkey automation and integrated systems; even simple additions like conveyor systems, palletizers, and stretch wrappers can help alleviate labor dependency.
Focus on areas to reduce the physical demands of warehouse activities. Look for any opportunities to streamline and organize tasks for better productivity with fewer workers. Most automated solutions will raise throughput, eliminate picking errors, reduce travel time, and improve ergonomics – ultimately reducing your dependency on labor.
Labor shortages also mean higher labor costs. Consider utilizing a flex labor strategy to help protect your operation from labor volatility. This strategy draws upon a few core, full-time employees and using part-time or temporary labor to handle seasonal or fluctuating demand. The ability to scale your labor up and down accurately depends on good, reliable, and predictive data. Automation can connect to strategic data resources to provide insight into keeping productivity high in the right areas, at the right time. Many material handling companies can provide expert consulting to help determine the appropriate solutions for any given organization.
2. Optimize Your Current Space
Industrial real estate is scarce. Warehousing costs, in particular, remain elevated even as the economy softens. Now is a great time to look for potential areas to repurpose floorspace. It’s critical to find any areas to squeeze in more inventory before you buy or build.
Here again, automated storage technologies may offer solutions to optimizing existing floorspace.
In the face of such economic uncertainty, you don’t want to build or buy right now. It’s a huge commitment, and once you make that commitment, you’re stuck with that space, and well, you still have to heat, cool, and light that space even if your revenue starts dropping.”
— Mark Dunaway, President – North American Region, Kardex Remstar
An often overlooked area is vertical space. Unused vertical space can provide massive space-saving benefits. Even using traditional racking storage technology can exponentially increase pallet storage when taking advantage of unused vertical space.
Automated storage and retrieval systems (AS/RS) — such as Vertical Lift Modules, Vertical Carousel Modules, or Horizontal Carousel Modules — can save up to 85% of floor space.
3. Inventory Management
No matter the industry, making the most of inventory requires planning and a solid grasp of current and future customer demand. Recent disruptions in supply chain, e-commerce, international affairs and economy has impacted inventory management styles.
There has been a recent shift from “just-in-time” (JIT) inventory management to “just-in-case” (JIC) inventory strategies. A JIT model focuses on keeping everything as lean as possible. The strategy of JIT is to have supplies replaced only as goods are consumed, no sooner.
JIC is an approach based on expected sales, and supplies are purchased to meet any level of demand. JIC principles help avoid the effects of supplier delays, unexpected increases in demand or spikes in the cost of materials. Many companies fall somewhere between the two approaches.
During economic uncertainty, it may be wise to maintain a JIC inventory strategy. Ask yourself if you have the inventory needed should a supplier not be able to supply the goods you need. Do you have enough to sustain you while you seek alternatives? It is relatively easy to switch back to JIT model if you feel your supply chain is stable enough or the company needs the cash.
Of course, buying more inventory brings us full circle as to where will you keep all that extra inventory? As discussed, building or buying more space isn’t always feasible or the best option in the face of economic uncertainty. So it boils down to utilizing your space more efficiently with warehouse automation solutions.
One more point on inventory management. In case of a full-scale recession, be in a position to have a diversified supplier network in place. It’s always a good idea to have your purchasing department routinely look for new suppliers and have them on stand-by should economic conditions impact your standard network.
Although no one can predict where our economy is going, a healthy, in-depth look at your current labor, space and inventory status will help you prepare your warehouse for anything to come.
About Jeff Greene
Jeff Greene is a lead technical consultant on material handling storage and engineered solutions. He has partnered with many organizations developing, strategizing, and implementing their current and future storage needs.
About Andersen Material Handling
From Raymond and Komatsu forklifts and other warehouse utility vehicles to warehouse planning and storage racking, to dock and door products, to integrated automation, including ASRS, conveyors, and goods-to-person picking systems, Andersen is a broad organization with experts in every area of material handling.
AMH currently operates branches in Wixom (Headquarters) and Grand Rapids, Michigan; Cleveland and Toledo, Ohio; and Miami and Deerfield Beach, Florida. The South Florida offices also do a robust export business in Latin America and the Caribbean.