Warehousing is a complicated, and often expensive, part of every supply chain. It is a crucial facility for many businesses and in South Africa warehousing can present some additional challenges.
Warehousing is often the ‘step-child’ in the supply chain and can easily be overlooked as a stagnant part of operations. The reality, however, is that inefficient warehousing can have dire effects on your entire supply chain right up to the end-user, which reflects poorly on your business.
A few common warehousing problems and how to avoid them
When looking at your supply chain it is vital to investigate all warehousing options, concerns and red flags as this is often a big part of your supply chain cost. Below is a list of warehousing points to keep in mind, whether you are expanding or starting from scratch.
1. Data is crucial in order to optimise your warehouse efficiency
No matter the scope of your warehousing needs, accurate data will keep all your warehouse functions on track. Warehouses are generally a hive of activity, and therefore the perfect environment for mistakes and miscommunication. To minimise the risk of costly errors or delays, investigate your ‘smart management’ options for warehousing and use real-time data to track procedures such as:
- Assembly and special handling areas
- Quality inspection
- Reverse storage
- Forward picking
2. Warehouse security
A critical factor, especially in South Africa, is warehouse security. Warehouses are a tempting target for thieves as they are often located in areas that aren’t busy at night and therefore perceived as an easy target.
Whether you outsource your warehousing needs, or manage your own, it is important to regularly update your security. Contact reputable warehouse and supply chain management companies to request a security audit or consultation: this will help you see where you stand and what needs to be done to keep your goods secure.
Sadly, theft does not always come from the outside...
Draw up a company warehouse policy
No matter the scale of your warehouse, you need a company policy that specifically addresses warehouse operations.
In order to protect yourself and honest workers, you need strict rules and regular checks to ensure no goods leave the warehouse without approval. Such guidelines can be difficult to outline and implement if you don’t have first-hand knowledge of daily warehouse operations.
To ensure your goods stay where they need to be, you should consult with an expert warehousing partner to help you manage the internal operations of your warehouse. This is the most effective way to minimise the risk of theft.
3. Power security to combat load shedding
Load shedding is an additional unique challenge faced by South African businesses and it often directly affects warehouse logistics. Companies that deal with perishable or temperature-sensitive goods are especially at risk due to load shedding.
Just a short time without power can cause massive losses, especially in the food and beverage sector. Even if your stored goods are not temperature-sensitive, the delays caused by power outages can result in huge financial loss and supply chain delays.
With this in mind, it is crucial to partner with a warehousing and logistics supplier that can remain fully operational - even during load shedding - to avoid any risks to your goods and overall business operations. If you manage your own warehousing, it is a good idea to regularly review your procedures for load shedding to ensure all necessary equipment (such as generators) are available and well-maintained.
It should be noted that theft of generators is another big concern in South Africa, so your load shedding plan must address this as well.
4. Travel distances between warehouse locations
Depending on the size of your operation, you need to factor in your transport distances between your warehouses and delivery points. Transport (and particularly fuel) is one of your biggest supply chain expenses and changes to your warehousing structure or locations could dramatically reduce your transport costs.
If your business is expanding in size, or in the scope of products, it is well worth it to conduct network optimisation to determine whether you will benefit from warehousing specific products in specific locations where there may be a higher demand. This may call for decentralised warehousing, but could reduce your overall warehousing costs. Again, this is where accurate data and professional warehousing consultants can help you streamline your supply chain and dramatically reduce costs.
At Barloworld Logistics, we use predictive analytics to help forecast demand and ensure our customers are able to monitor consumer behaviour in real-time to determine aspects such as:
- How much stock to keep on hand in your warehouse: in the current economic environment we recommend keeping your operations lean with around eight to fourteen days’ worth of inventory. Using predictive technology we can help you identify trends in buyer behaviour to ensure you have the right stock, in the right amounts in the right location to improve the customer experience and eliminate waste.
Determining the ‘size and shape’ of your inventory is not as simple as saying ‘we need to keep 10 of each on hand’. Many factors come into play and this is where an experienced warehousing partner with access to the necessary information is crucial.
- Points to consider when planning your inventory/stock:
- Where product is sourced: Local vs Import will make a big difference to your lead times and storage needs.
- What is your stock turnover? Which items move more than others?
- Type of product: Foods require less days holding due to ageing of product as opposed to products that are not age sensitive.
- Value of product: You don’t want to put all your ‘cash’ on hold in a single warehouse. To reduce risk, high value products should be stored for as little time as possible.
- Route to market lead time: How efficient is the production plan relative to the ability to meet customer demand?
- How often does product change (certain industries SKU’s change often – cell phones etc.) which require a lower stock holding but must be closely aligned to supply and demand lead times.
- Plan for increased stock for peak seasons and other initiatives such as Black Friday or certain marketing campaigns.
- Warehouse Capacity: You need to balance warehouse capacity with demand and lead time
- Route to Market: Is it possible to ship directly from manufacturing to client and bypass warehousing for certain products?
- Route planning: Predictive technology allows us to map out the most efficient routes to travel between pick-up and drop-off points. This also helps avoid unnecessary trips - such as shipping stock from the Durban harbour to head office in Johannesburg, only to pick the stock and send it back to KZN.
By simply glancing at the above points it is clear that while the stumbling blocks of efficient warehousing are somewhat ‘obvious’, the solutions are often a lot more complicated. Many new businesses know they will need secure warehousing, but they are unsure what this really entails.
Warehousing is such a crucial, and often expensive, part of the supply chain that it needs to be consistently optimised in order to offer your business the most cost-effective solutions. Speak to your warehousing partner or expert and make sure that all your warehousing risks are being minimised while all functions are being optimised to their full potential.
Need advice to help you improve efficiency, productivity and profitability in your warehouse? We are here to help. Contact us today for a needs assessment.