Warehousing or warehouse management is the act of regulating and controlling all elements in the warehouse and ensuring everything runs optimally. This includes everything from setting up layouts, controlling inventory, maintaining equipment, tracking incoming and outgoing goods, picking and packing stuff, shipping items, to implementing an automated warehouse management system.Warehousing involves a lot of processes and seems very complex. However, through this article, we try to help you understand the aspects of warehousing in a simple way.
To make it easier for you to comprehend this article, see the following table of contents:
Table of Contents
1. Arranging a Warehouse Layout
The most important step in optimizing warehouse management is to ensure an efficient warehouse layout.
What should be considered?
You need to focus on two things; sufficient space for your entire inventory and sufficient area to facilitate your staff working and passing by. In general, a good warehouse consists of these areas:
- Receiving area
- Unpacking area
- Packing area
- Shipping area
- Excess stocking area
- Warehouse office
- Main storage area
Setting the layout of the warehouse can be very difficult if you have limited areas. So it’s important to sketch before arranging or changing the current layout.
The grid system can facilitate the layout of your warehouse. Remember to provide areas that enable staff to walk fast and pick up items easily. Pickers must be able to walk back and forth in the hallway without blocking each other.
Determining the Location Names in the Warehouse
Effective warehousing cannot be carried out without specifying location names for clearly labeled stocks. Your staff must be able to know exactly where all the items are located.
Practicality is the key here. Using simple alphanumeric combinations will make it easier to find items. For example, you can start by including labels for particular rows, shelves, and bin locations.
For example, you can store medium sized black women’s clothes in row A, shelf A, and bin location 2. Black men’s clothes in row B, shelf B, and bin location 1, and so on.
Larger warehouses require more detailed location names.
The location name labeling depends on the size of the facility, the operational complexity of your warehouse, and some other factors. But in essence, the greater your facility, the more detail you have to label each location in the warehouse.
2. Optimizing Stock Management in the Warehouse
At this stage, you have arranged your warehouse layout strategically. But, then a question pops into your head: how should I store my products?
The answer is simple: place the best-selling items closest to the packing area!
Implement ABC Analysis!
Find out your best-selling products and put them as close as possible to the packing area to reduce walking time. This strategy is known as ABC analysis. Divide your inventory into three categories:
Category A – Products with the highest sales frequency, 20% of these products contribute to 70-80% of annual sales
Category B – Products with moderate sales frequency, 30% of these products contribute to 15-25% of annual sales
Category C – Products with the lowest sales frequency, 50% of these products only contribute to 5% of annual sales
Thus, you can put products in category A closest to the packing desk and put the products in category C farthest away.
You can even place small items which are frequently sold together with the best-selling products, next to the packing desk to save on picking time.
Note: Don’t be afraid to rearrange your product storage. Products in category A will not always be the same. The products that are sold the most in the middle of the year may actually become unsold ones at the end of the year. Thus, you should rearrange the product storage based on season, trends, and other factors as well.
Tips on Receiving Inventory in the Warehouse
For optimal warehousing, you must ensure that your staff can receive, unpack, store, and order new items as efficiently as possible.
The faster this happens, the faster the stock becomes available for sale
Errors or inefficiencies in this process will affect the entire supply chain. Therefore, you should use solutions that support efficiency. Using a warehouse management system with a mobile-scanning feature is one of the best ways you can try.
With an automated warehousing management system, receiving goods will be so much easier. Instead of having to sit in front of a computer and manually search and update each incoming item, you can simply scan the products and purchase orders, update the inventory quantity, and put the products into specific categories using your smartphone.
3. Speeding Up the Order Fulfillment Process
Being able to fulfill orders quickly and accurately is one of the good practices of proper warehousing. This is what warehousing was created for in the first place, after all. There are three aspects to consider when it comes to order fulfillment: picking, packing, and shipping.
Order picking may seem easy, but this will be different when you have hundreds or even thousands of different types of goods in your warehouse. In fact, the majority of order fulfillment time is spent on order picking.
Therefore, it is important to implement the right order picking strategy. Here are a few most common picking methods:
This is the most basic picking method, generally used by startup retailers or wholesalers. Simply put, the pickers will choose one order at a time as a whole before moving to the next. It’s best to avoid this method if you ship more than orders a day.
The pickers are assigned a batch containing the number of orders, then they pick everything at once, and then return to the packing desk.
They will then be assigned a new batch to pick up other items. The number of orders allocated for each batch is usually between 10 and 30, depending on the physical size of your product and the average number of orders.
Use this method if you have a high number of orders with single or low number of products. However, if you have a high number of products per order, this method is not suitable for you.
In this method, the pickers are assigned to pick items stored in a particular zone at a time. They must pass through all the areas containing the items ordered, pick them, put them in the container, and then return to the packing desk.
This is a great method for preventing pickers from blocking each other and is suitable for retailers who have a high number of orders with various types of products. Avoid this method if you ship single orders or have very few pickers.
Similar to zone picking, but this method requires pickers to collect goods from several zones at the same time. Then, packers must combine all separate items for each order.
This method is faster than zone picking, but the packing time is rather long, because the packers need to spend more time combining orders before shipping them. The wave picking zone is suitable for retailers who are used to sending many orders with multiple types of goods and need a super fast picking process.
Note: With an automated inventory management system, the wave picking process is even faster, because the order picking is scheduled automatically. Assignments are divided into sessions (wave) based on date, SKU, delivery method, and other categories. This system reduces human error by helping pickers know which items will be picked next.
How to Pack Items Efficiently
Packing is not just about putting orders in boxes and wrapping them quickly. This is the moment to ensure that you ship the right product, to the right customer, in the most efficient way. Two things you should pay attention to here are the packaging sizes and packaging materials.
The size of your boxes can have a big impact on operational costs. The bigger the size of your boxes, the more costs you will need to pay the courier. Having too many box sizes will also confuse the packers, so it’s best to choose just a few sizes based on the items that are frequently ordered.
Next, pay attention to the packaging materials you use. Make sure they protect your goods when delivered and in transit, but you should not add too much weight to the product, otherwise it will lead to high procurement and shipping costs. It is important to conduct a thorough evaluation of your packing method so that you will be able to eliminate unnecessary materials and make them more efficient.
Ship Orders Faster and Accurately!
A few steps that must be done in the shipping process include:
- Weighing the packages
- Printing the relevant shipping labels (and invoices, if you haven’t already)*
- Marking order status as ‘Shipped’ on the system
- Sending ‘shipping confirmation’ emails to the customers (an inventory management system integrated with a sales management system can perform this automatically)
*EQUIP Inventory enables you to print labels and other shipping documents instantly.
4. Evaluating and Measuring Your Warehouse Performance
Evaluation is critical to actualize proper warehousing. The following are some indicators that you should check when measuring the success of your warehouse management:
Find out how much time is usually spent on receiving, including how your staff records incoming items and how they have them stored. The manual method requires a long time to have inventory recorded and updated. Therefore, adopting an automated warehouse management system is a must!
Know the reasons why customer orders get returned to your warehouse. This could be due to wrong products, incorrect shipping addresses, late deliveries, damage during transit, and so on. Analyzing the problem will help improve your warehousing performance significantly.
Measuring the accuracy of the picking process can give you insight into the performance of your warehouse. Here is the formula for measuring it:
Lead time is the time it takes for customers to receive orders, also called order processing time. The shorter the lead time, the happier your customers. Make sure that prompt delivery does not reduce the condition of your product.
5. Choosing the Right Warehouse Management System
Warehouse Management Software (WMS) basically can take over most of the warehouse operations. This tool will automate and digitize as many processes as possible.
An automated warehouse management system helps you ensure that everything is organized, tracked and well documented. Human error can be minimized so that accuracy gets optimized. And certainly, all processes will become faster and simpler. However, finding the right warehouse management system can be tricky.
To facilitate the WMS selection, find out the answers to the following questions:
- How is the accuracy of your current picking process?
- What are your warehousing KPIs? And how profitable will it be if you optimize each of those KPIs?
- How many team members are needed to carry out your operations? Would it be more economical if you replace some of them with an automated system?
- How many orders do you handle each day? And how much turnover do they generate every year?
- Have you reached your growth target? How fast do you plan to achieve your business growth?
And here are some important aspects that you should look for in a WMS.
- Ability to organize warehouses: Helps speed up numbering, labeling, storage, picking, packing and shipping
- Integration with barcode scanners: Can be used on mobile and integrated with barcode scanners to minimize paper requirements and optimize accuracy when picking and packing
- Multi-warehouse management: Makes it easy for you to manage all outlets or warehouses across multiple locations
- Ease of use: A simple platform that can be learned and operated easily by each user
- Integration with other automated systems: Allows you to integrate it with other systems that you use for optimal results, such as an inventory management system, a sales management system, an accounting system, etc.
- Real-time reporting: Enables everyone to track information in real time and record every activity in the warehouse such as entry and exit of goods, exact quantity of inventory, etc.
Warehousing is a very complex task, but it can be simplified through the combination of the right strategies and implementation of automated solutions.
It all comes down to proper warehouse layouts, efficient inventory management, evaluation and measurement of warehouse management performance, and optimal use of WMS.
By applying these tips consistently, you will be able to realize warehouse management that is more efficient, accurate, satisfying, and profitable.