<h3>High Interest in Warehouse Logistics</h3>
<p>There is still a very high interest in <strong>warehouse logistics</strong>. It started with increased <strong>e-commerce</strong> and a greater demand for better <strong>customer service</strong>, resulting in increased costs. Many companies invest in <strong>automation</strong> to meet these demands.</p>
<h3>Traditional View vs. Modern Needs</h3>
<p>However, the traditional view on warehouse logistics often presents problems. Historically, ambitions have been quite low, and the willingness to invest in both technology and soft values has been minimal.</p>
<p>The traditional view has been, “storing goods in a structured way with acceptable quality.” Costs have not been the focus. Even with fluctuations in demand, resources have remained static.</p>
<h3>Adapting Resources to Demand</h3>
<p>I have a good example of this mindset&#8217;s persistence. This mindset still exists to a very high degree. I shared the picture below on LinkedIn, illustrating apparent efficiency vs. true efficiency. This concept also applies to warehouse logistics. If there are no value-creating tasks, you can&#8217;t invent tasks for the staff. You need to adapt resources to current demand. However, when I shared the picture, I received many questions from senior roles asking, “What do you do with the staff?” I am quite surprised that so many people do not understand and accept true efficiency! The same rules apply to warehouse logistics as they do to production units. If there is no demand and fewer activities, you reduce resources. If there is higher demand and more activities, you increase resources.</p>
<p><img class="aligncenter size-full wp-image-1294" src="https://roblogistic.com/wp-content/uploads/2021/02/Lean-post-2.jpg" alt="" width="1080" height="1080" /></p>
<p>(Picture borrowed from Lean Enterprise Institute)</p>
<h3>Importance of Competent Warehouse Management</h3>
<p>This mindset is the most important one you need to implement in modern warehouse logistics. That is why I keep repeating: the first thing you need to have in place before investing in technology is competent warehouse management. This is why I have written so many articles about <strong>leadership</strong> and <strong>lean practices</strong>.</p>
<h3>Overcoming Old Culture</h3>
<p>Senior management often underestimates the old culture in their warehouse logistics. You have to educate and work with the old static mindset and adapt to a production-based mindset. That is why I prefer to say “warehouse production” rather than “warehousing.” Warehouse production is so important as a margin enhancer that you can&#8217;t afford to ignore it. As I wrote in my last article, according to a <strong>McKinsey report</strong> “Lean and mean: How does your supply chain shape up?” you can reduce warehouse operations costs by 20-50% when implementing lean! The main reason for this increased efficiency is the focus on adapting resources in lean and the mindset to focus on value-creating tasks. Minimizing “touches” in the flow and “hunting” time thieves, reducing bottlenecks, etc.</p>
<h3>The Need for Agility</h3>
<p>The times when we could have too many resources during periods of low demand are over. Like all productions, you need to adapt to demand; that is why everyone is talking about <strong>agility</strong>. E-commerce with low margins and very volatile demand understands this. They could not survive without a production-based mindset. However, the trend is coming to warehouses working with <strong>B2B</strong> too. Every business needs to look at all costs, including warehouses, for many reasons. For example, increased labor costs, increased facility costs, and shortage of labor.</p>
<h3>Investing in Automation and WMS</h3>
<p>As I wrote before, you need to have competent warehouse management in place before looking at investments in any kind of <strong>automation</strong> and/or <strong>WMS</strong>. Otherwise, you will certainly not have the expected impact. You need to adapt your <strong>KPIs</strong> to the new mindset. Every important KPI should affect and be visible in financial figures. It is the same for all KPIs: productivity, quality, HR, and so on.</p>
<h3>Transparency and Communication</h3>
<p>Transparency is also important, just like in production. The staff need to see the pace in the warehouse to feel ownership and take responsibility. <strong>Visualization</strong> is an important part of this, and I have written an article about that on my blog. You need to communicate the current state in the warehouse in regular meetings, talk about the KPIs and financial figures. The more knowledge in the organization, the better the understanding of the actions taken. This applies to all levels in the organization, from the top to the floor.</p>
<h3>Addressing High Costs and Investments</h3>
<p>I often see companies with high ambitions regarding warehouse logistics, but often they have forgotten to involve and educate warehouse management, and they also seem to have trouble identifying the issues regarding high costs despite big investments in automation and WMS. My advice: start with people and culture, a new mindset, before investing in technology. Lean can be the right alternative for your organization.</p>
<p><strong>Roberth Karlsson</strong></p>

Importance of transition from traditional warehousing to warehouse production
