As the main hubs for storing and managing inventory, warehouses play a crucial role in the efficiency and effectiveness of supply chains, ensuring the seamless flow of goods from production to distribution. However, traditional paper-based inventory management systems present significant challenges in terms of efficiency, accuracy, and sustainability. Did you know that inadequate inventory management can cost businesses over $300 billion each year in lost revenue?! Recent research found that 43% of small businesses in America don’t track inventory, or do so manually. As a result, nearly 34% of businesses have faced situations where they’ve unintentionally sold a product that was unavailable in their inventory, resulting in delayed order shipments and unhappy customers
The shift to a paperless warehouse environment transforms the warehouse into a more automated environment, and offers a solution to these challenges, leveraging digital documentation and advanced technologies to streamline operations and drive operational excellence.
The Challenge of Paper-Based Inventory Management
Like most manual systems, paper-based systems are plagued by errors and limitations leading to inventory inaccuracies, order fulfilment delays, and increased operational costs. The average level of inventory accuracy in US retail operations is a mere 63 percent. This often results in stockouts, delayed delivery times, order cancellations, and a negative customer experience overall.
Recently, a global research and advisory firm estimated that inventory distortion resulted in a $1.77 trillion loss for the world’s retailers in 2023 alone.
Inventory shrinkage causes retailers in the United States to lose around $45.2 billion annually, out of which administrative errors contribute to 16.4% of the damage. Additionally, paper documentation results in excessive paper consumption, contributing to an increased carbon footprint and environmental concerns.
These issues can be solved to an extent with a foolproof warehouse management system.
AI-Powered Solutions for Digital Documentation
Supply chain AI techniques offer innovative solutions to modernize inventory management and facilitate the transition to a paperless warehouse environment. AI inventory management software enable inventory checking, fulfilment, and restocking with an efficiency that is unmatched by manual methods.
Digital documentation and advanced technologies such as RFID (Radio-Frequency Identification), barcode scanning, and image recognition allow for real-time tracking and visibility of inventory movements without the need for manual data entry.
According to IBM Global’s AI Adoption Index of 2022, 1 in 4 companies (26%) use AI for real-time inventory management. By digitizing documentation processes and leveraging AI-powered inventory management systems, warehouses can improve inventory accuracy, enhance order fulfillment speed, and reduce labour costs associated with manual data entry.
Expected Outcomes and Business Impact
Let’s look at the many benefits of implementing paperless warehouse solutions ranging from cost reductions to operational efficiencies and environmental sustainability.
Improved visibility and efficiency
Keeping track of ever-fluctuating orders and shipments is challenging, to say the least. Especially while using paper-based, manual logs to track productivity and performance, a process that is extremely error-prone and time-consuming.
Paperless Warehouse Management Systems are empowered with AI to report multiple functions of every activity in the warehouse, providing detailed information in real time. This improves visibility throughout the warehouse and ensures that organizations always have access to up-to-date, accurate data. It was found that using warehouse management systems can decrease the inventory shrinkage of a company by 25%.
Decreased Costs
The time and resources required to keep a paper-based warehouse system going can add up. From buying and maintaining paper, ink, printers, and other materials to organizing endless paperwork, a lot of time and money that could be invested elsewhere goes to waste.
With a warehouse management system, companies can majorly cut down on costs associated with paper-based management systems. Recent market research estimates that companies can reduce labour costs by up to 20% with a WMS.
Enhanced Customer Service
Keeping track of inventory is one of the most challenging parts of a supply chain. If the recorded inventory and the actual inventory in the warehouse don’t match, it leads to dissatisfied customers who are kept waiting. About 34% of businesses were found to have sold a product that was unavailable in their inventory, leading to delayed order shipments and unhappy customers.
A WMS system enables the accurate tracking and movements of goods not just within the warehouse, but between multiple warehouse locations, ensuring inventory records are accurate and orders aren’t disrupted.
Optimised Use of Space
Manual procedures rely on human operators to identify items and designate their storage locations in the warehouse. As it is not humanly possible to see every position, some storage space inevitably goes to waste. Furthermore, operators may choose locations based on convenience which may not always be what’s best for the product.
Such biases and errors can be easily avoided through an AI-powered WMS that can track item locations and identify the best places to store them with more efficiency than a manual system ever can.
Reduced Environmental Impact
The environmental costs of paper-based warehouse management can be significant. Going paperless drastically reduces the amount of physical waste accumulation and helps to lower the carbon footprint of organizations.
Conclusion
Paperless inventory management is not merely a technological upgrade, but a transformative movement, reshaping the landscape of commerce. The global warehouse management system market is expected to reach $3.9 billion by 2025, with a major focus on reducing inventory shrinkage.
Ultimately, the transition to a paperless warehouse represents an opportunity for organizations to modernize inventory management practices, strive for operational excellence, and drive environmental sustainability. This powerful promise of paperless warehouse management can be achieved by harnessing the capabilities of AI-powered digital documentation solutions to overcome the limitations of traditional paper-based systems and unlock new levels of efficiency and productivity. For more information, please write to hello@felixsolutions.ai