How Much Do Picking Errors Cost Your Business?

The average American makes an estimated 50 mistakes in a typical day. When under stress or tired, that number can triple. Your warehouse team is no different. Unfortunately, those errors can still cost your organization a lot of money. Warehouse shipping mistakes are an enormous source of lost revenue. Still, even a tiny improvement can save thousands or even millions of dollars each year. Read on to learn how picking accuracy affects your bottom line and how to reduce picking and packing errors overall.

What Picking Errors Really Cost You

Over a third of supply chain and distribution facilities tolerate a 1% mispick rate. You might think a 1% failure rate is nothing to get upset about. However, it's a cut in your operation's financials that won't heal. Left unattended, it will eventually bleed you dry. Let's look at some hypothetical numbers to illustrate the impact of picking errors.

The Damage of 1%

Let's say you're a facility that picks 250 lines per hour. Your orders average three SKUs, and you operate one 8-hour shift per day. Carried out over one business day, that's 6,000 SKUs picked.

Now, let’s assume you have a 1% mispick rate, and each mispick costs you an average of $100 in time and shipping to correct. That translates to 60 errors daily or $6,000 in lost revenue every single day. With 260 working days each year, your facility would lose $1,560,000 annually with only that 1% mispick rate.

What A 1% Improvement Means to You

What if you could improve your company's average by 1%, bringing your picking accuracy from 99% to 99.9%? That seems insignificant, but let's look at those numbers again.

Your facility would still pick the same 6,000 SKUs per day, but the mispick rate would be only 0.1%. So, instead of 60 mistakes a day, your team would only make 6. Each would still cost $100 to correct, dropping your daily loss to $600. Carrying that out over 260 working days, your operation’s annual loss drops to $156,000. That’s $1,404,000 in reclaimed revenue.

How To Reduce Warehouse Picking Errors

Automated storage and retrieval systems (ASRSs) offer the consistency that unassisted solutions do not. They make picking faster and more accurate while eliminating search time and reducing worker fatigue. Those factors increase productivity in and of themselves, allowing you to increase your facility’s pick rate.

More importantly, they also dramatically reduce warehouse picking errors. ASRSs deliver SKUs to your workforce consistently and efficiently without relying on workers to hunt for serial or batch numbers. This implacable consistency, combined with the flexibility to apply these technologies to your existing facility, drops picking errors to the ideal 0.1% target with less burden on your workforce.

What’s the ROI?

ASRS technology is highly varied, making it flexible enough to fit any facility. That adaptability means the total system cost also fluctuates, ranging from under $100K to over $1 million. For example, a robotic cube storage system costs around $1.5 million.

However, compared to the above savings, even a top-of-the-line system pays for itself in a year. Now, project that out over five years. Your organization could be looking at an additional $6 million in reclaimed revenue just by investing in an ASRS, even if it did nothing more than reduce warehouse picking errors.

Where To Get Started

It's human to get a little sticker shock when looking at the off-the-rack price of automated picking systems, but the numbers speak for themselves. Picking errors cost millions of dollars. Eliminating them drops that loss to zero and reclaims the lost revenue. ASRSs pay for themselves. That's the bottom line.

If you're ready to start your ASRS journey, let us guide you. Our solutions team has the warehouse automation experience to help you navigate the process while avoiding the pitfalls. Rely on us to make the conversion as seamless and pain-free as possible. To learn more about warehouse automation or to request a quote, contact us online or visit one of our locations throughout Georgia and Florida.

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Further Reading
How to Improve Order Picking Accuracy and Speed
5 Popular Order Picking Strategies – Which One is the Best?
How Much Does it Cost to Install an Automatic Storage System (ASRS)?