Benefits of Digital Transformation of warehouse operations

Benefits of Digital Transformation of warehouse operations

Digital transformation has been among the priorities of companies in recent years and this trend was exacerbated by the aftermath of COVID. Distribution and logistics operations are no exception to this trend. In fact, in a survey conducted by MHI Annual Industry Report, as many as 80% of companies interviewed believe that the digital supply chain will be the dominant industry model in the next five years; and 20% think that it is already the dominant model. Being the heart of a distribution business, the digital transformation of warehouse processes is a necessary step. In this article, I will review the meaning and means to achieve a digital transformation of warehouse operations.

What is digital transformation?

In lay terms, digital transformation is the improvement of business processes, products, and services through the use of technology. At the company level, a digital transformation brings the following benefits:

Increase operational efficiency: By digitizing and integrating processes at all levels, you reduce costs, execution time and margin of error.

Encourage collaboration and improve internal communication: Digital transformation is based on having a digital platform that promotes communication and collaboration in all departments.

Generate insights based on data: One of the most important benefits of digital transformation is that it allows you to collect and analyze data that can be used in decision making.

Enable a high-quality user experience: High-value companies know that the goal is not just to deliver products, but positive experiences to customers.

Enable future growth: The ultimate and most important benefit of a successful digital transformation is setting the stage for all subsequent business growth.

Warehouse processes

Before defining the digital transformation needs of the warehouse that we will address, we need to be clear on the way a warehouse works. I have talked at length about warehousing and its processes. The figure below summarizes the warehouse process flow and the interaction with the distribution processes.

Goals of a digital transformation of warehouse operations

As well as any transformation process, a digital transformation of warehouse operation within the context of a whole organization transformation, must have clearly defined goals. This is a list of the ones we commonly see.

• Eliminate manual entry of inventory transactions into the ERP system.
• Eliminate misplacement of inventory items.
• Minimize overstock or shortage of items.
• Minimize the rate of order picking errors and customer returns.
• Avoid in-stock expiration of products.
• Standardize the frequency of inventory counts and cycle counts.
• Optimize the number of warehouse employees and improve their efficiency.
• Motivate and engage warehouse employees and integrate them with other departments and managers in a collaborative environment.

Basic steps to achieve a successful digital transformation

Optimize your manual processes: Digital transformation starts with back office automation, and it cannot be successful if you do not optimize the manual processes that you will be automating.

Define the scope and goals of the transformation: Be sure that you have clearly identified what you want to digitize and, most importantly, set reasonable timelines for doing it.

Make the action plan: No one can get somewhere without a mapping on how to get there. With something as complex as digital transformation, the planning phase is essential.

Involve the whole organization: Make sure that the action plan counts with the approval of all levels involved in the implementation.

Involve external consulting experts: Even with the adequate talent and expertise, digital transformation is so complex that the chances of failure decrease by almost 40% if an outsider expert is included in the process; especially if:

• Your digital products require development.
• Back office automation involves customization or new software.

Tools available for a digital transformation of warehouse processes

In “Warehouse Trends: What Should Be The Distributors’ Focus” I wrote about the technological trend affecting distributors, and in a recent article I summarized the technologies available to automate picking and storage. The technologies mentioned in these articles have to be part of the Digital Transformation process of the Warehouse, complemented with technologies that promote the digital transformation of internal communication. The table below summarizes some of the available tools classified into two groups: warehouse and communication tools.

I hope this article on warehouse digital transformation has been helpful to you. I will continue to post information related to warehouse management, distribution practices and trends, and the economy in general. If you are interested in this article or want to learn more about Laceup Solutions, please subscribe to stay updated on future articles.

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