Levelling up your warehouse management

As Aiden and SAP wrote in their joint trendpaper, there are a number of trends affecting supply chain execution convergence:

• Digitisation and automation are changing the role of humans in the workplace

The influence of technology on everyday life is growing faster than ever. New digital innovations are taking work off your hands and, moreover, allowing work to be done much smarter. Demand forecasting, inventory management and route optimisation; these are just three examples where technology helps the human planner to work smarter and more efficiently. We see in our daily practice that companies are paying more and more attention to this.

• Sustainability and climate awareness influence all links in the supply chain

Therefore, supply chains are becoming sustainable, transparent and circular. The climate awareness of end users is increasing, as is that of governments. Legislation and regulations are following this trend. All parties in the chain are feeling the resulting pressure. That pressure will only increase in the coming years. This manifests itself, among other things, in low-carbon logistics. Transport is becoming increasingly electric and, in time, autonomous. All parties involved are doing everything they can to reduce the CO2 emissions of logistics chains to zero.

• To avert the risks of globalisation, some companies are looking local again

Pandemics, pirates, wars, blockades, strikes, natural disasters; global supply chains are under constant pressure. To reduce risks in the supply chain, many companies are moving their production processes back to their home countries or nearby regions.

• Consumer-oriented innovations: faster than ever and even more personalised

Consumers and business buyers expect customisation. This can involve a very simple addition, such as printing a child’s name on a lunch box. But it can also involve sophisticated configurations. This gives the customer order release point (the moment in process where the product is made customer-specific) a completely different place in the chain. Where do you put your stock in such a case? And what exactly do you need to have in stock? Flexibility and advanced data analysis will become more important than ever in this new future.

While warehouse management is only one element of the full supply chain, all these trends also apply to companies trying to level up their warehouse systems and processes.

Level 1: Storeroom

Let’s start with the most basic warehouse, where other departments and business needs determine how the warehouse is configured and used. At this level, the company only has one warehouse location and any technical systems are used by sales or support services teams, instead of a dedicated warehouse team.

This is the level where Swapfiets, the bicycle-subscription company known for its bikes with the distinctive blue front tyre, was before implementing SAP Cloud ERP (formerly SAP S/4HANA) .

Today, Swapfiets has grown to over 270,000 members across nearly 50 cities in eight European countries, offering both traditional bikes and e-bikes. ‘We’re at the stage where we’re evolving from a start-up into a fully established business’, says Rutger van Ouwerkerk, senior product manager ERP at Swapfiets. That means optimising processes—especially repairs. Swapfiets needs to make sure the right spare parts are in the right place at the right time so mechanics can fix bikes without delays. Without an ERP system, that was easier said than done. ‘We were relying on spreadsheets and didn’t have a clear overview of our stock flows. If a mechanic needed a spare part, they sent a manual request to the distribution centre. And if that part was out of stock, tough luck—it was simply unavailable. Our entire supply chain, from suppliers to our distribution centre, warehouses, and stores, was like a black box. We had no control over our stock levels, which meant we also had no control over the costs.’

At this level, many improvements in warehouse management can be handled directly within an ERP, such as tracking inventory and shipments to be made.

Level 2: Putaway and Picking

As companies either expand the size of their warehouses or expand to have multiple locations, more systems and processes are required to help those in the warehouses, especially to pick up or put down products in one or multiple locations.

At this level, the primary business challenge is knowing where inventory is located. You have accurate inventory levels, but not enough insight to where it is located in the warehouse or which warehouse it is in.

This was the situation for Waste Vision, a leading player in the production and maintenance of smart waste systems. This organization improved the traceability of its inventory with Aiden’s Warehouse Management solution.

Before implementation, tracking the movement of goods was still a challenge. With a seamless integration between the warehouse and Waste Vision’s SAP Business One solution, every step of the logistics process is accurately recorded, leading to increased traceability of both inventory and delivery. And ultimately to more satisfied customers and partners for Waste Vision.

For both Level 1 and Level 2, simplicity and ease of use are the two most important characteristics when selecting a warehouse management system to support operations. At higher levels, functionality overrides simplicity.

Level 3: Barcode Scanning

According to research by SAP titled ‘Wholesale Distribution Industry Software’, 50% of distributors still rely on manual, low-value tasks due to a lack of functionality in legacy systems. Therefore, it makes sense that 59% of these companies then say automating processes is a top priority when implementing new solutions.

At Level 3, the primary automation is using barcodes and mobile devices that scan in real-time to avoid the need for a person to be tethered to a fixed computer location.

Level 4: Resource Optimisation

At the next level, companies take all the data collected in a warehouse management system and use it to make decisions about resource allocation and optimization, especially for inhouse manufacturing.

Woodvision, a Dutch wholesaler of outdoor wood products, faced challenges in warehouse operations due to outdated, paper-based inventory management. Rapid growth and increased demand, especially during the COVID-19 pandemic, exposed inefficiencies such as manual order processing, lack of real-time stock visibility, and high error rates in order fulfilment.

To address these issues, Woodvision implemented SAP Extended Warehouse Management (EWM) with the help of Aiden. The system provided real-time inventory tracking, barcode scanning, and automated order processing, significantly reducing errors and improving efficiency.

Some of the main benefits mentioned by Woodvision after implementation:

• 90% reduction in picking errors, leading to fewer customer complaints and returns.
• Streamlined order fulfilment, ensuring smooth B2B and B2C operations.
• Enhanced training process for temporary workers, thanks to clear digital workflows.
• Optimised warehouse layout by relocating fast-moving items based on real-time data.

Level 5: Integrated with Material Handling Equipment

In the final level, machines are used to do most of the manual labour. According to Gartner, these automations range from intralogistics smart robotics to complex conventional material handling automation systems.

And while robotics and automations are the primary definition of Level 5 warehouse management, many companies are driven to explore these options due to labour shortages. Regardless of current level, many companies that want to improve their warehouse systems are looking for functionality that handles workforce management, task interleaving, slotting, yard management, dock scheduling or performance management.

Want to level up your warehouse management? Watch one of our webinars on warehouse management (in Dutch) or reach out to Aiden to learn about our different solutions that support warehouses at different maturity levels.