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  • 5 Min Read
  • Why Warehouse Automation Matters: 7 Hidden Cost Leaks of Outdated Manual Processes

    Dustin Caudell

    Written by Dustin Caudell
    Thu, Oct 24, 2019

    Warehouses are digitally automating manual processes and shedding traditional paper checklists and spreadsheets.
    Warehouses are digitally automating manual processes and shedding traditional paper checklists and spreadsheets.

    The digital revolution has utterly transformed the supply chain management, unlocking new levels of control, visibility, efficiency and performance. In order to beat competitors and serve customers, more and more companies are adopting cutting-edge warehouse automation technologies to digitize their supply chain.

    Meanwhile, organizations unable to adapt to needs of the modern supply chain fall further and further behind. Using manual data entry into spreadsheets, paper printouts or handwritten checklists are still common throughout supply chain operations. All should be digitally automated.

    Whether they’re used in the warehouse, on the manufacturing floor or in the field, manual processes have become untenable in today’s fast-moving, take-no-prisoners business landscape.

    In this article, we’ll discuss seven ways that sticking with manual processes is costing you valuable time and money.

    1. Lack of Oversight = Lack of Agility

    The major impact of handling supply chain processes is the lack of visibility, control and up-to-date data. When it comes to inventory, the lifeblood of supply chains, opaqueness hinders business agility. Your company cannot rely on its stock levels nor react to unexpected shortages or delays in a timely manner.

    Compare this to a real-time inventory control solution. Using mobile barcoding technology, organizations can automate inventory processes from data collection to material movements inside and outside the four walls. As each transaction is made, a digital path of traceability is created, enabling warehouse teams to gain trustworthy views of actual stock levels and flows.

    2. Extra Employee Effort, Lower Productivity

    Manual supply chain processes are slow, tedious and repetitive. In the warehouse and production floor, awkward, dangerous or risky movements are sometimes required, raising the specter of possible injury. Collecting data on the factory floor by hand and keying it into your computer systems is an additional thankless, error-prone step that consumes valuable time and effort.

    Despite its crucial importance, the supply chain is not the primary purpose of your business—rather, it enables your business to operate logistically. Every moment that your employees spend on unnecessary manual supply chain processes is a moment that could be spent generating value for your core business functions instead.

    Automating data collection can all but eliminate data entry, paper checklists and spreadsheets, saving colossal time. By equipping workers with mobile barcode scanners, your frontline team is able to reduce awkward movements, such as overreaching or attempting to access unsafe areas, reducing chances for workplace injuries.

    Also Read: How one company improved productivity and efficiency by 450% »

    3. Errors Everywhere

    Mobile barcoding automates data collection, lowering human effort while significantly increasing accuracy and productivity.
    Mobile barcoding automates data collection, lowering human effort while significantly increasing accuracy and productivity.

    Even your highest-performing employees are only human, which means they’re bound to slip up from time to time. While on a long shift, it’s all too easy to hit a wrong key, invert two numbers, misremember a detail or misinterpret someone else’s handwriting. One study by the University of Hawaii found that 88% of non-trivial spreadsheets contain at least one error. RFgen supply chain consultants estimate the ultimate cost per error at $50-$100.

    Considering that the highest estimated accuracy achievable using manual processes is only about 60%, even inexpensive errors could be draining revenue and ballooning overhead costs.

    The impact of errors doesn’t end there. As these incorrect data points propagate through your supply chain workflows, they can create even bigger issues downstream. Bad data can be difficult to reconcile. Meanwhile, management and leadership are making business decisions based on incorrect information and workers are devoting additional time trying to hunt down inventory that isn’t there.

    4. Misplaced or Lost Inventory

    Inventory management is one of the most important facets of the supply chain, and also one of the most likely to suffer from inefficient manual processes. When workers can’t find inventory that the system says is “there,” what happens?

    Your warehouse team sinks much of their productivity in trying to find it. Meanwhile, other team members may have to expedite shipping for replacement items to meet a shipment deadline to the customer. After that, the phantom inventory either becomes a write-off or is found elsewhere after the fact. Often, that material can be sitting on the receiving dock waiting to be processed manually by your team. Since it’s not in the system yet, it’s not “there.”

    Knowing exactly how much stock you have, where and in what condition is especially critical for larger operations. With more moving parts spread across multiple facilities, the cost of wasted, lost and delayed materials are sure to mount.

    An ERP-integrated, real-time inventory management system that includes enterprise mobility for the supply chain is crucial to squishing these inefficiencies.

    5. Loss of Competitiveness

    Streamlining your warehouse and inventory operations with a fully-integrated ERP mobility solution is essential.
    Streamlining your warehouse and inventory operations with a fully-integrated ERP mobility solution is essential.

    Manual processes are almost never faster than their automated equivalent. By adhering to manual processes for managing inventory, warehousing and manufacturing processes, your business is accepting the risk of being outpaced by rivals who have embraced digital automation and can operate with greater speed and agility.

    Digital supply chain transformation, or the “digital supply chain,” remains a top focus for organizations that move, make and ship materials. According to a PricewaterhouseCoopers study, companies with “highly digitized” supply chains can improve their efficiency by 4.1% and increase their annual revenue by 2.9%. Companies that use warehouse automation in their supply chain gain additional benefits such as faster time to market, which affords them a greater capacity for innovation, and multiple increases for line-level workers (an area often overlooked).

    6. Inability to Adapt

    Besides the direct costs on your employees and the increased security risk, manual supply chain processes have an additional cost: the inability to adapt.

    A single data point on its own is nearly worthless; it’s only when combined with countless other data points that you can form a complete and accurate picture. When manual processes occur in isolation, they can create business silos that inhibit the sharing of information and prevent you from discovering valuable data-driven insights or learning from your organization’s own trends.

    Fragmented, hidden and unknown data about inventory flows, consumption, levels and usage is necessary to make valuable business decisions. Breaking down these silos and integrating and harmonizing your enterprise data between multiple business systems is drastically simpler with a mobile inventory management solution that creates 24/7 visibility in real time within your ERP database.

    Only with highly accurate, up-to-date data can supply chain businesses make effective decisions that drive down overhead and increase revenue.

    7. Dissatisfied Customers

    With so many disadvantages for your business, it’s no surprise that slow manual processes have repercussions and negative externalities for the end customer as well. Manual data entry leaves significant opportunity for errors, resulting in slower fulfillment timelines and more inaccurate order fulfillments with costly returns or charge-backs.

    Contrast this to businesses that invest in digitizing their supply chain processes with automation and mobility. These companies will be better prepared for the “demand-driven supply chain” that anticipates changes in customer trends and behaviors based on prior data. Minimizing incorrect orders and delays in shipments going out the door are cornerstone goals to delivering a satisfactory customer experiences in today’s world of same-day and two-day order fulfillment.

    According to a 2019 survey, customer experience is the greatest benefit of digitalization for 54% of retailers with a digital supply chain.

    The risk of not bringing digital automation into your supply chain operations is vast. Beyond the immediate economic consequences of correcting wrong orders, your brand could also suffer from long-term reputational damage in the eyes of your customers, business partners and investors.

    Conclusion

    Manual supply chain processes are having a significant cost on businesses of all sizes and industries. So what’s the alternative to the endless inventory spreadsheets, handwritten checklists and tribal knowledge draining your company’s bottom line?

    Automating supply chain processes using real-time, ERP-integrated technologies like mobile barcoding are the key to stamping out inefficiencies in every area of materials management. Mobile barcoding not only automates data collection to maximize inventory accuracy, but enables real-time transactions, live visibility into movements and stock levels, and creates traceability for raw materials, components and finished products.

    Learn More: Automating Data Collection with Mobile Barcoding »

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