Supply Chain KPI Killer #6: Damage and Loss Prevention and AI-Powered Prevention

Like before in our Supply Chain KPI Killer series, we have already revealed many articles about multiple solutions for your KPI performance. Thanks to our knowledge, you got a chance to increase your awareness of the most substantial issues that harass your key performance indicators in the supply chain.

In this fresh content today, we look closer from several perspectives on preventing damage and loss. We'll investigate the top 5 issues related to damaged packing and loss in warehouses and during shipping. We also provide direct answers to these problems by analyzing what we know from our experience in warehouses and opinions provided by operations managers in logistics. So, you get this condensed source of information in just two pages of the article. Step into this with us and see how to reduce the impact on your KPIs with AI warehouse.

Damage packing in the warehouse: what causes damage?

We know now that KPIs are hardly affected by warehouse or shipping losses. We know that you should have insurance for high-value, high-risk consignments, but this will not be covered in all exceptions, like with returns from customers (not in all cases). Nevertheless, a substantial part of every KPI is an indicator of damage. So, Key Performance Indicators can point out damage, and you may notice a drop in performance. You need to investigate the root cause and manage prevention depending on the reason.?

Here are the common reasons for damages in the warehouse and during shipping:

5 warehouse damage

1 - improper handling. This happens mostly if your teams rough around in the warehouse. Warehouse clerks can damage products when not properly trained. When they do put away, they can crash the pallets with items, which is the most costly issue that happens frequently.

2 - storage conditions. If operating in FMCG, extreme temperatures, humidity, or poor ventilation can deteriorate products. This can all happen in e-commerce warehouses where high-tech goods are stored. FMCG is also affected by pest infestation. Insects, rodents, or other pests can damage and contaminate food.

3 - rack collapse. This fault happens when forklift drivers hit the racks or when racking systems are overloaded, which can lead to product damage and injuries. It happens less often now, but it still happens in 2024.

4 - theft and pilferage. A high-value and even more diverse stock in the warehouse often leads to attempts of unauthorized access, which can result in theft or damage to products. Theft can also happen among your personnel.

5 - automation, VAS, and machinery. A warehouse's Value-Added Service area is often equipped with conveyor belts. So, malfunctioning conveyor belts can cause products to fall or become damaged. This can also happen in all kinds of automated warehouses, where technology can break down, and items are really exposed to damage.

5 shipping damage

1 - packaging issues. Items can be broken during transport, sometimes even because there is too much free space in the box. So, filling with extra foam could be the solution, but not always. This is about how inadequate packaging materials or poor packaging techniques can cause products to shift or break during transit.

2 - rough handling. Poor packing often damages boxes and pallets after unloading from trailers and containers. Mishandling by carriers or during transfers can also result in damage.

3 - poor loading plan. This often happens when shipping containers or trailers are overloaded. Overloading containers can cause products to shift and become damaged. So, the lack of a loading plan is the reason for that issue.

4 - unstable shipping platforms. Dock ramps can cause damage while a forklift is loading them. This is why unstable pallets or crates can contribute to product damage.

5 - supply chain disruptions. Well, if your supply chain is facing delays, disruptions, or changes in the shipping route, it can increase the risk of damage. Why? You may need to remove pallets and load them onto different trailers, so there is extra exposure to damage.

Tips on warehouse loss prevention

#1. Keep the entrance secured

Get better control over the access. You should implement a strict system for controlling access to the warehouse, such as requiring identification badges or using biometric scanners. Moreover, don't forget to secure doors and windows. To prevent unauthorized entry, You must ensure that all doors and windows are properly secured and locked.

#2. Create more and stronger barriers

Leverage internal security barriers. For this purpose, you should use internal barriers or gates to restrict access to specific warehouse areas. If you run an e-commerce warehouse, think about the separation of duties. This can implement a clear separation of duties to prevent employees from having excessive control over assets. It is also worth considering running regular audits. The audits of security procedures can help identify potential vulnerabilities.

#3. Install CCTV cameras

Nothing can better meet your security needs than the strategic installation of CCTV cameras in key areas, such as entrances, exits, loading docks, and high-value storage areas. This will provide clear visibility and ensure that all areas are covered to deter theft and identify potential issues. Regular monitoring and good footage will also help identify suspicious activity.

#4. Use alarm systems

Always consider motion sensors, so install them in strategic locations to detect unauthorized movement. Also, implement door and window sensors.

#5. Light the area up

A lack of adequate lighting is very common in all sorts of warehouses. So, ensure the warehouse is well-lit to deter crime and improve visibility. This will help forklift drivers get their jobs done right. You can also install lights on forklift trucks to get better motion-activated lighting. You can use motion-activated lighting to illuminate areas when needed.

#6. Do a background check

Get better screening of your personnel. Even if this is flex personnel, you should conduct thorough background checks on all new employees to identify potential risks. Keep continuous monitoring and regularly review employee records for any red flags or changes in behavior.

#7. Check employee performance

When we are already talking about personnel, start with performance reviews. You should conduct regular performance reviews to assess employee behavior and identify any potential issues with their work. A team leader who should take responsibility for employee training and onboarding is the best for this task. Provide employees with training on security procedures and awareness of potential threats.

#8. Deploy technology

To prevent damage, you should also consider more advanced technology. For example, drone surveillance, which utilizes drones for aerial surveillance, helps monitor the warehouse perimeter and detect potential threats. On the other hand, AI and machine learning algorithms can analyze data from cameras, sensors, and other sources to identify anomalies and potential security risks. See more below about AI in warehouses.

AI warehouse - reduce damage and losses

AI in warehouse management isn't a new trend; it has become a vital part of all trends. In 2024, over 56% of CEOs believe that AI will boost their operations in warehouses. So, we look at the possibilities of AI performance and the thinking that can truly improve your operations.

You can get predictive maintenance on your assets and equipment. AI algorithms can analyze sensor data from equipment to predict potential failures before they occur. This allows for proactive maintenance and can reduce downtime when it comes to equipment failures in the warehouse and costly repairs.

Optimized inventory management. It is a well-known fact that AI-powered systems can accurately forecast demand. You can optimize inventory levels and prevent stockouts or overstocking.

Picking paths with intelligent picking systems. AI-guided robots or wearable devices can assist workers in picking and packing orders. This can improve accuracy and efficiency. It is not only robots; AI can be used to help better navigate order pickers in the warehouse while they're collecting orders.

Use automated guided vehicles (AGVs). The smart brain of AI-powered AGVs can autonomously transport materials within the warehouse. Here, you can significantly reduce labor costs and improve productivity.

Get better quality control. AI-enabled vision systems can inspect products for defects, ensuring quality. This feature reduces returns. You can use it in your WMS system, integrated with cameras near the docks, before loading to prevent the shipping of damaged goods.

Summary on minimizing damages

Well, as we said above, AI is undoubtedly revolutionizing warehouse management. A WMS system with AI offers solutions to common challenges such as equipment failures, inventory management issues, inefficient picking processes, labor costs, and quality control problems.

We may say that you can lower your damages and improve KPI performance once you unlock the power of AI for your warehouse. Contact us today to learn how our AI-driven solutions can help you optimize your operations. See our references and get improved efficiency in your warehouse. Our experts can provide tailored recommendations and support to help you achieve your warehouse management goals.