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Picking Errors Cost More than You Think

Published on: Jul 11, 2018

Sage 300A fully automated warehouse can help you reduce errors. Have you ever considered just how the tiniest mistakes impact your business?

Consider these statistics. The average picking error rate is between 1% and 3%. That doesn’t sound too bad until you consider just how many orders that impacts.

If your warehouse processes 100 orders an hour, that means that 1 order will be wrong every hour. Multiply that by the average 8-hour workday and that’s 8 incorrect orders a day. In one month, that’s 240 mistakes!

Your numbers may be lower than that, of course, or your reported error rate may be lower. You may not even know that a customer’s order is wrong unless they report it; many people don’t, especially if the mistake provides them with higher cost materials than they originally ordered.

Think of all the lost productivity and profits those numbers represent. Returns may be higher than usual because of mistakes in picking and packing; inventory may be inaccurate if the wrong items are included in outbound orders.

Barcode scanners connected to your ERP system no longer require heavy investments into new hardware. Instead, you can transform your mobile device into a barcode scanner with Sage-compatible software. Learn more about barcode scanners and watch our video for more information on how scanners can improve efficiency in the fully automated warehouse.

The Cost of NOT Having a Fully Automated Warehouse

There are additional costs of picking errors that can make the cost of not having a full automated warehouse clear:

  1. Lost sales. Picking errors usually mean shipping errors and shipping errors result in lower customer satisfaction and customer retention. One picking error can affect the customer’s perception of an entire order. That is why it is important to improve the picking and fulfillment process before it has an impact on the customer.
  2. High return rates. Returns are expensive. You have the cost of documenting the problem, return shipping, and retagging to name a few.
  3. Extra shipping. There are even more shipping costs than the expense of the return; you also need to consider the cost of expediting the correct order.
  4. Added service costs. Errors that impact the customer mean more time spent in customer service to field the complaint and solve the problem.
  5. Increased packaging costs. Don’t forget that if you can reuse the returned item, it has the added expense of being repackaged.
  6. Additional labor costs. In addition to restocking costs, you have the wasted labor hours spent on that unit. A picking error could be a stocking error, meaning you may have the cost of doing a cycle count at that location.
  7. High COGS. Costs rise as more people need to get involved in the process. Persistent fulfillment problems can damage the sales process—now your sales force is spending time placating customers rather than making new sales.

A Fully Automated Warehouse Improves Profits

When you add up these costs, the benefits and return on investment (ROI) for a fully automated warehouse just got easier to prove. In fact, most warehouse managers believe increasing automation and adopting mobile technology in the warehouse can have the greatest impact on improving profitability. Choosing warehouse automation makes a lot more sense than the cost of doing nothing.

Warehouse inventory software, specifically barcode scanners, improves profitability by reducing costly errors. When you can swipe and scan a barcode using mobile technology that’s as simple as tapping your smartphone, you’ll see an improvement in order accuracy and inventory management.

Mobile scanners are also easier to train people to use because the technology is so familiar. People are used to scanning items with their smartphones, and scanning barcodes is no different. Barcode scanners make inventory management faster and easier.

A fully automated warehouse is also connected to an ERP System, so if you are running both, you’ll enhance productivity and accuracy even further.

The task of moving to a fully automated warehouse is much less daunting when you can get everything you need from a single source. Sage 300 offers a direct connection to your warehouse automation software which verifies every item as it is shipped or received, improving accuracy in your warehouse. You can do all this without the cost of purchasing expensive equipment. Transform your cellphone into a powerful barcode scanner, integrate it with your ERP, and reduce costly mistakes.

IWI Consulting Group offers more information on our website. Watch the barcode scanner video, learn more about Sage 300 products, and talk to us first about improving warehouse efficiency. For more information, visit IWI Consulting Group or call 1-866-916-3851.