Your warehouse is the foundation of your business, and managing it effectively is central to its success. It’s the hub in which you manage your goods until they safely reach the hands of your customers. Poor warehouse management is problematic for a business as it leads to delays in order fulfillment, high operational costs, and inventory write-offs. Warehouse management, however, can be a difficult and complex task if one doesn’t have the tools or knowledge to optimize their warehouse.
In today’s world, customers have higher expectations for distributors as the demand for fast service and delivery is high. On the B2C side, 65% of consumers are even willing to pay more for faster shipping. Whether you are serving businesses or consumers, meeting the expectations of today’s customers is a challenge. As a result, warehouse optimization is now more important than it’s ever been.
What is Warehouse Optimization?
Warehouse Optimization is the strategy you use to organize your warehouse operations to ensure they are as efficient as can be. This could include where you store inventory within your warehouse, how you use personnel, what manual processes you choose to automate, and more. It’s also about how you make the most out of fundamental warehouse processes such as picking, packing, shipping, receiving, order fulfillment, inventory management (etc). When crafting your warehouse optimization strategy, consider the day-to-day life of your employees and how it can be improved upon.
Why Optimizing Your Warehouse is Important
Increasing the efficiency of your warehouse practices through warehouse optimization can help your business in the following ways:
- Cost Savings
- Speed of Delivery
- Fewer Errors
- Reduced Returns
Cost Savings
Through optimal warehouse practices, you will be able to reduce the amount you spend on storage costs whether that’s the cost of storage space, depreciation, rent, utilities, warehouse personnel (etc).
Speed of Delivery
By speeding up all your warehouse processes you will ultimately increase the speed at which you are able to get goods into the hands of your customers. This will lead to higher customer satisfaction and your customers will see you as a reliable and trustworthy distributor.
Fewer Errors
Optimizing your warehouse means fewer manual processes, which will ultimately reduce the chance of errors occurring. By eliminating the need for manual entry and keeping your warehouse practices organized, you reduce the chances of mistakes occurring in the data entry process.
Reduced Returns
With fewer mistakes occurring, you will reduce the chances of sending damaged/defective products to customers, or the wrong quantity or product type. For example, as an apparel company, you may struggle with instances where you are sending the wrong size or color to your customers because of manual processes within your warehouse practices. By organizing your warehouse and reducing the number of errors within your processes through automation, you will ultimately reduce the number of returns you get and the logistical headaches that they can cause.
Tips to Optimize Primary Warehouse Processes
When it comes to warehouse management, there are 6 primary warehouse processes that you must optimize including:
- Receiving
- Picking
- Put-away
- Packing
- Shipping
- Storage
Here are some tips as to how you can optimize the most fundamental warehouse processes:
Automate Receiving
Ensuring that you have received the right products in full and on time is critical to ensuring the success of your operations. Integrating mobile barcode scanning with your software is one of the best ways to simplify the receiving process. Barcode scanning allows you to update quantities and product information as soon as an item is received. Barcode scanning can also alert you as to when the product you scanned is not in the purchase order, has been scanned too many times, or has not scanned all the items on a purchase order.
Find the Right Picking Strategy
Picking is the process of gathering products within your warehouse so that you can fulfill customer orders. Among all the different tasks within your warehouse, order picking is the most expensive process there is as it accounts for 50% of a warehouse’s labor costs. When it comes to order picking, deciding on an efficient picking method is essential, as it will allow you to determine how you want your warehouse to be laid out.
Individual/Discrete Picking
This is a method of picking where workers pick all the items within an entire order at once. This method is more suitable for you if you’re a small business with a small warehouse and fewer orders coming in. For most businesses, however, picking orders one by one is not an efficient warehouse practice.
Batch/Consolidated Picking
Businesses with a reasonable number of orders coming in can reduce the amount of time workers spend traveling within your warehouse by implementing batch picking. Batch picking is when warehouse staff pick the same SKU for multiple orders. For example, a worker might pick items for 20 different orders that are similar. Rather than making several trips, batch picking increases efficiency as it allows workers to pick many SKUs within one single trip. To ensure that you have success in batch picking, making sure that your warehouse is effectively organized is key, below are two examples of picking methods that will determine how you would organize your warehouse for the picking process:
Zone Picking
Dividing your warehouse into zones is one way to help with the batch-picking process. You may choose to have separate zones based on the size of your item and keep large items separate from small items. Or you may want to organize your zones based on the demand for your products and have popular products in one zone and less popular ones in another. No matter how you divide up your zones, zone picking involves employees only picking SKUs from the zone’s that they’re assigned to.
Wave Picking
The difference between Zone picking and Wave Picking is simply that employees aren’t restricted to specific zones but can instead pick from any zone but do so at a specific time. This allows for more flexibility in the picking process.
Once you’ve figured out the order-picking method and strategy that works for your business, be sure that your warehouse software helps you to consolidate orders based on the zone.
Design Put-away Strategy Based on Order Picking Strategy
Put-away is the process that occurs after an item is received and items are then put away into the appropriate spot in the warehouse to be stored. After figuring out your picking strategy, your put-away strategy should follow suit. You should be putting goods away based on the most optimal picking path that you decide for your workers. Putting goods away in the proper spot in the warehouse will ensure that your warehouse space is utilized effectively, and travel time is minimized for your staff.
Maintain Optimal Inventory Levels
Maintaining optimal inventory levels means carrying enough inventory to satisfy demand while avoiding understocking or overstocking. Overstocking means that you will incur excess storage costs, and understocking means that you won’t be able to fulfill orders – both result in a loss of money. To prevent this from occurring, make sure the software you’re using helps to keep track of your inventory and monitor sales trends to help you purchase the right amount of inventory at the right time.
Have Enough Packing Stations
Optimizing the packing process is important not only for the speed of your operations but also to ensure they’re packaged well enough to prevent damage once shipped. Sending out damaged goods means more dissatisfied customers and more returns to manage. To optimize your packing process, make sure to have enough packing stations to meet demand and ensure these stations are well-equipped with the right materials and machinery.
Use Carrier Integration for Shipping
For shipping, ensure that your software provider allows for integration with useful shipping management platforms. For example, a platform such as 2Ship allows you to manage your shipping data while helping you to find the best shipping rates possible. By connecting your shipping data with your warehouse inventory software, you can also prevent inconsistencies and wasted time that result from using multiple stand-alone systems.
Other Tips for Warehouse Optimization
Use Labelling Systems
Properly labeling all your products is going to make your warehouse processes significantly easier, and there’s no better way to do so than with SKUs. Using SKUs, also known as scannable barcodes, is going to help you easily identify and keep track of products in your warehouse. SKUs can be used to let your warehouse personnel know exactly where in your warehouse a product is located and its quantity. You can choose to label SKUs on the individual product but for faster picking, consider labeling SKUs on the shelves where the product lives. This makes scanning easier as barcodes are always visible and easily reachable.
Schedule Shipping at a Different Time of Day Than Receiving
Scheduling shipping around the same time as receiving, is a recipe for disaster. To prevent things from getting hectic for your warehouse staff, consider scheduling shipping and receiving at different times of the day. For instance, you might receive shipments early in the morning and then make shipments late in the afternoon. Separating shipping and receiving processes will ensure that your employees are focused on one task rather than trying to juggle both.
Train Employees on Your Software
Your warehouse software is no good if your employees don’t understand how to use it. Investing in the skills and knowledge of your warehouse workforce will pay dividends. Train them to understand how to best utilize your software system to save time and make their jobs easier. Proper training will help to enhance productivity, reduce costs and improve processes.
Focus on Reporting
You may have all the right warehouse practices in place, but you won’t have any idea as to how to track the success of your processes without robust reporting. Having software that lets you create useful automated reports helps, but you must make sure you take the time to regularly review and draw conclusions from your reports. By focusing on reporting, your business will have:
- Increased Communication
- Increased Productivity
- Increased Accuracy
- Increased Timeliness
- Increased Information
- Improved Decision Making
Final Thoughts
So, how do you optimize your warehouse? Have the right processes in place and ensure your warehouse is fully equipped with all the right tools to help you succeed. By optimizing your warehouse, you are setting your business up for success for years to come.
When choosing the right software, many SMBs think that they need expensive WMS solutions, which is often not the case. Your software simply needs to be an all-in-one solution that has the necessary WMS functionality for all the primary warehouse processes described in this article.
