Paper-based systems refer to the use of physical documents and paperwork for tasks such as tracking inventory, managing orders, and recording transactions in a warehouse setting. Despite the advancements in technology that have occurred in recent years, many warehouses continue to rely on paper-based systems for these tasks. It is relevant to discuss this topic because paper-based systems can be inefficient and have various drawbacks, such as the potential for errors, difficulty in organizing and accessing information, and environmental impact. In this article, we will explore the inefficiency of paper-based systems in warehouses and why it may be time to consider transitioning to digital solutions.

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How paper negatively affects warehouse ops beyond just productivity

There are several reasons why tasks such as tracking inventory, managing orders, and recording transactions can be time-consuming and error-prone when done on paper:

Data entry

One of the main drawbacks of paper-based systems is the need for manual data entry. This can be time-consuming, especially if there is a large volume of documents to process. It also increases the risk of errors, as data may be entered incorrectly or missed entirely.

Inventory accuracy

Accurate picking is a critical aspect of warehouse operations, and paper-based systems tend to be less accurate compared to automated warehouse management systems (WMS). Picking processes can account for 40%-60% of warehouse operational costs, so it is important to ensure efficiency in this area.

Training time

Paper-based systems require users to have a thorough understanding of the correct procedures to follow, which can lead to lengthy training periods before new employees become fully productive. This can be further exacerbated by the additional time and effort required to instruct and monitor the work of new employees. This represents a significant upfront investment with no guarantee of a return on investment. In contrast, an automated warehouse management system (WMS) can enable new employees to become productive in a matter of days rather than weeks or months.

Inconsistent processes

It is common for individuals to seek out ways to streamline processes or make improvements when consistently making the same decisions. This is due to human nature and the desire to find more “efficient” ways of doing things without following all necessary process steps. Because this happens on paper, not registered, these processes are harder to check.

Limited real-time access to information

With paper-based systems, it can be difficult to access up-to-date information in real-time. For example, if an inventory count needs to be done, someone may need to manually count each item and record the results on paper, which can be time-consuming. Additionally, if the information is stored in a physical location, it may not be immediately accessible to all relevant parties.

Poor organization

Paper documents can be difficult to organize, especially if there is a large volume of them. This can make it challenging to locate specific documents or information when needed, leading to wasted time searching for them. Papers are also prone to being lost or damaged, which can cause problems such as lost data and delays in tasks.

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Moving beyond paper

It is difficult to determine the exact cost of paper-based systems in the warehousing sector on a yearly basis, as it will depend on a variety of factors such as the size of the warehouse, the volume of paperwork being handled, and the cost of resources such as paper and storage. However, keeping the above in mind, it is generally accepted that paper-based systems are more expensive to operate than digital systems.

There are many digital alternatives to paper-based systems that can be used in warehouses to improve efficiency and reduce costs. Some examples include:

1. WMS systems: This type of software allows warehouses to track inventory levels, reorder points, and stock-outs in real-time. It can also provide reports and alerts to help with inventory planning and decision-making.
2. Electronic point-of-sale (POS) systems: These systems allow warehouses to process transactions electronically, rather than using paper invoices and receipts. Electronic POS systems can also provide real-time data on sales, inventory levels, and customer information.
3. Order management software: This software allows warehouses to track and manage orders electronically, rather than using paper documents. It can provide real-time updates on order status, as well as generate reports and alerts.
4. Barcode scanning systems: These systems use scanners to read barcodes on products and automatically update inventory levels or process transactions. This can improve accuracy and reduce the need for manual data entry. Want to rely even less on human input? Check out the Powerhouse AI app, allowing warehouses to automatically scan labels and count and check inventory.
5. Radio frequency identification (RFID) systems: RFID systems use radio frequency technology to track and manage inventory, orders, and other warehouse tasks. RFID tags can be attached to products or documents, and can be read by scanners to automatically update information in real-time.

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Still have to use paper because of your clients or suppliers?

We understand that warehouses may not always be able to eliminate paper entirely, as suppliers may not be willing to change their processes, clients may require paper documentation, or regulatory requirements may mandate the use of paper.

Given these circumstances, there are still certain valuable actions a warehouse can take to become less reliant on paper and increase productivity and accuracy. For this reason, we included a Document Extraction module within the Powerhouse AI application: simply take a picture of whatever paper documents you receive and the app will read it and transform it into structured data (e.g. an Excel sheet) that can be pushed automatically into your ERP or WMS. Get in touch to learn more.

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