Running a third-party logistics (3PL) warehouse is challenging. It involves organizing, managing, and maintaining all operation processes that occur in a warehouse in the smoothest and most efficient manner. Regardless of how meticulous you are in your processes and workflows, every warehouse operation is prone to mistakes and problems which can affect the overall warehouse management.
In fact, challenges in 3PL warehouse operations can negatively impact the speed, efficiency, and productivity of either a particular warehouse or the entire chain of processes that are linked with the warehouse.
What’s even worse is that these problems are only identified after the processes have started, or in some cases, once they’re completed. By then, it’s usually too late to fix the errors—and it may even be too costly to restart the processes. But knowing the potential challenges that you may face in your 3PL warehouse beforehand can help you spot the problems early and rectify them before it’s too late.
In this article, we will look deeper into the top five warehouse challenges that you should keep an eye on and how you can solve them.
Top Five 3PL Warehouse Problems
If you’re encountering problems in your warehouse operations, rest assured you’re not alone. According to a report by McKinsey & Company in 2019, the overall warehousing costs for companies worldwide is about €300 billion each year (approximately $320 billion), and that figure doesn’t include the additional costs of correcting errors and mistakes.
Given the high costs involved in warehouse operations, it’s crucial that you recognize the potential problems and go all out to prevent them.
1. Redundant Manual Processes
It’s common for most warehouses to perform multiple processes on each item, and those processes come together to create workflows. However, problems occur if the workflow is done manually and is not organized correctly. Imagine a few workers manually collecting data on the same item that passes through the warehouse and entering it into a spreadsheet multiple times.
Such redundant manual processes consume valuable time, effort, and money, which can be detrimental to your business in the long run.
Solution: To combat this, try using barcode technology to streamline warehousing processes. When coupled with the right warehouse management software, all you need is just a quick scan of a barcode and you can eliminate redundant manual processes while maximizing resource utilization. With this technology, managers can also capture data in real-time and monitor activities with more speed and accuracy.
2. Poor Warehouse Layout
One of the biggest concerns for 3PL owners is the lack of space in their warehouse. This is not because the warehouse is small, but rather due to poorly designed layouts. In fact, insufficient storage space and inefficient use of available spaces are huge pain points for the 3PL industry as they negatively affect profitability.
Solution: The best way to solve this issue is to find an optimal layout that makes good use of space while still leaving enough room for workers to move around. By creating a carefully planned warehouse layout, you can significantly reduce travel time, increase productivity, and ensure inventory is stored safely.
3. Inaccurate Inventory
Accuracy and efficiency in managing inventory go hand in hand in warehousing. Having incomplete or inaccurate inventory results in problems like maintaining flawed stock levels and buildups of obsolete inventory. Due to this, warehouse workers end up retrieving goods based on inaccurate information, leading to inefficient processes. This results in reduced productivity and increased expenses, which translates to loss of revenue.
Solution: Implementing a solid inventory receiving process with good quality control checks may just be the right solution. Accurate inventory can ensure goods are retrieved smoothly and efficiently to reach your customers as soon as possible. Additionally, you should also incorporate cycle counting in your warehouse processes. This can help in verifying inventory accuracy and identify the root causes of errors.
4. Seasonal Demand
Demand planning is an important element of warehouse operations. While certain products experience the same amount of interest throughout the year, others are more popular during specific times of the year. When there is an influx of demand for seasonal products, it’s critical that your warehouse is prepared to take on the orders. The last thing you want is to not have enough of such products in stock, or to not know where to store them on such short notice.
Solution: The best way to prepare for this is to stay on top of current market trends and the fluctuations in demand for products that you store in your warehouse. You should also be constantly communicating with your clients so they can relay information on current demands.
Additionally, you can also look at inventory velocity data to identify fast moving products at different seasons. This allows you to stock up these products in anticipation of rising demands, as well as allocate areas within the warehouse to store them.
5. Labor Shortage
Warehousing is a labor-intensive environment, but unfortunately, it’s facing a major workforce shortage due to rising demand for logistic services. Based on a report by Instawork, 73% of warehouse operators are having difficulties attracting workers in 2022, which is nearly three times the figure (26%) that reported difficulty last year. Although the situation is slowly improving, the current lack of staff is still forcing 3PL companies to delay shipments to their end users, hitting revenue hard.
Solution: When it comes to solving labor shortage issues, your best solution is to rely on technology and intelligent automation. By automating workflows and decisions in order processing, picking, packing, and shipping, you not only make the lives of the warehouse team easier, but also increase productivity and minimize the need for labor.
Fixing Warehouse Problems with a Smart 3PL Fulfillment Solution
It’s undeniable that being aware of possible challenges in warehouse management beforehand can be a lifesaver. Once you recognize these issues, you must seize the opportunity to solve them before they get out of hand.
Leveraging on a smart fulfillment solution platform like VeraCore can help you run a warehouse smoothly with minimal manual effort. Its tools are highly configurable, so it’s easy to design an elegant workflow to automate processes and minimize shipment delays and errors.
Additionally, VeraCore’s smart 3PL fulfillment solution is equipped with standout features like barcode technology, intelligent automation, advance shipping notices, digital picking workflows, and customized client portals.
To learn more about how our smart solution can help take your 3PL business to the next level, speak to our fulfillment experts now!