By Joey Tan
Picture Malaysia’s bustling warehouses. Goods trailing across the country, back and forth like clockwork, all to meet our never-ending shopping cravings. In 2019, Malaysia’s logistics and warehousing market was predicted to reach over RM200 billion in terms of revenue generated by 2023. That was four years ago.
As of July 2023, Malaysia’s logistics industry is projected to reach RM66.25 billion in 2023 and grow to RM87.57 billion in 2027, with experts predicting an expansion at the compounded annual growth rate (CAGR) of 7.1 per cent. Meanwhile, the warehouse and storage market was forecast to reach RM2.58 billion in 2023, expanding at a CAGR of 8.2 per cent to reach the princely sum of RM3.59 billion in 2027
But beneath the surface, the traditional manual systems are overworked and overwhelmed. Under the weight of e-commerce’s explosive growth, these same methods, long the backbone of local warehouses, are now proving insufficient in meeting the surging demands of a world pampered by the speed of e-commerce. Omni-channel distribution is needed, but existing methods are insufficient to meet this need.
Meanwhile, as the industry moves to erect new warehouses to meet these demands, a different problem arises as a crucial factor is overlooked in the rush — the lack of due consideration for optimal design and technological integration.
Adding to industrial woes, the fear of the workforce being entirely replaced by machines has also proved an added stumbling block, slowing the adoption of automation in logistics and warehouse-based businesses. Inventory opacity — a lack of real-time visibility into inventory movements — is another issue, leading to potential inaccuracies when reconciling physical inventory and accounting systems. But that’s not the only issue the warehouse industry has to face.
Besides this, the warehouse industry also has to contend with the widening gap with its sibling-industry, manufacturing. While the manufacturing sector has adopted digitisation with ease, the warehouse industry continues to struggle in this regard, a problem that can be attributed to several key factors.
Primarily, the fervent embrace of Industry 4.0 technologies has funnelled significant investments and innovation into enhancing manufacturing processes, inadvertently relegating warehouse operations to a secondary role. Additionally, there exists a prevailing misperception that warehouses hold a lesser degree of importance and warrant fewer automation initiatives compared to their manufacturing counterparts. This perception has resulted in a misallocation of resources, thereby impeding the advancement of warehousing technologies. Furthermore, the dearth of comprehensive market awareness and information dissemination regarding the potential benefits of Warehouse Management System (WMS) solutions in optimising warehouse efficiency and inventory accuracy has compounded the growth gap between these two sectors.
The end result? The cumulative effects of these challenges are hitting Malaysia’s warehouses. The ever-changing world of e-commerce demands intricate processes like shop & deliver to shop & pick, which manual systems struggle to handle, while inefficiency reigns as the lack of real-time data makes it hard to seize new opportunities and boost sales. In fact, the warehousing market in Malaysia is currently an alarming 94 percent smaller compared to e-commerce (at a market value of RM2.58 billion vs. RM39.8 billion). But there could be a solution to this conundrum — through the incorporation of digitised systems.
A potential knight in shining armour to the industry, digitised Warehouse Management Systems (WMS) could help bridge the gap between the need for efficient and accurate delivery and logistics, and the manual organisation systems currently in place. Here are some of the ways these systems bring a modern touch to warehousing.
To begin with, WMS enables warehouses to seamlessly connect with manufacturing processes, ushering in automation for data and information exchange. This integration extends to managing both inbound (receiving, putting away) and outbound (picking, sorting, packing, loading, shipping) warehouse flows. Digitising warehouse processes through WMS can help with reducing errors, particularly by cutting down on repetitive manual tasks. This streamlined approach, supported by digitalisation and automation, leads to maximum stock accuracy. Real-time inventory accuracy empowers businesses to make quick and informed decisions, enhancing overall efficiency.
Furthermore, WMS swiftly acquires and updates data across all warehouse operations, accelerating data-driven decision-making and automating instructions for warehouse staff. It grants comprehensive visibility into stock status and movement, enabling predictive capabilities for accurate stock and space availability forecasts, effectively overcoming the dissonance caused by inventory opacity.
WMS enforces checkpoints at every warehouse process stage, ensuring stock accuracy and creating a robust audit trail. Streamlined processes under WMS will also optimise labour Key Performance Indicators (KPIs), marking significant progress toward resource allocation and operational excellence within Malaysia’s warehousing sector.
A noteworthy trend in the warehousing business, as observed in the market, is the hesitance and low adoption rates of WMS, primarily stemming from a prevalent misconception regarding the initial investment. The misstep often lies in setting unrealistic expectations, beginning with the end goal and thereby discouraging many businesses from pursuing WMS implementation. However, a more nuanced perspective recognises WMS as a progressive journey, emphasising the importance of meticulous planning and step-by-step implementation with the ultimate goal in mind.
Properly executed, WMS has the potential to yield substantial benefits, including a threefold increase in order fulfilment rates and a significant reduction in stock variances, thereby markedly enhancing warehouse operational efficiency and stock accuracy. Beyond the technological component, successful WMS implementation hinges on onboarding processes, user training, familiarisation, and comprehensive support, all of which contribute to delivering an exceptional customer experience within the warehouse environment. Local WMS developers recommend a gradual approach for maximum efficiency, one which centres on taking a foundational step by introducing basic inventory systems to those not yet prepared for full WMS integration — the better to help them familiarise themselves with the systems before embracing them wholesale.
Malaysia’s warehouses are facing daunting challenges, but there’s hope on the horizon. Warehouse Management Systems and a staggered approach which takes users into consideration could be the ticket to success. The ‘robo-lution’ beckons, and it’s our path to competitiveness and efficiency in the digital age.
Joey Tan is senior business development manager of Intelli-Mark Consolidated Sdn Bhd