Inventory Solutions for Your Business

 

Request Free Demo

 

 

October 25, 2016

Warehouse Optimization 101

warehouse optimization 101

New Call-to-action

Have you ever woken up on Monday morning and found yourself suffering the consequences of indulging in a lazy Sunday? While taking in some much-needed R&R, you neglect your usual ritual of cleaning and preparing for the work week, and now Monday has arrived and caught you completely off guard. The house is a mess, laundry still hasn’t been washed, and now you are scrambling to make it into work on time. If this is a narrative that sounds eerily familiar then I'm sure you can relate when I say preparation makes a big difference.

When discussing warehouse optimization the same principle applies. To operate at your best you must prepare. Whether you are a seasoned vet or new to running a warehouse, there are steps you can take to ensure that you are getting the highest level of efficiency from your warehouse. In this post, I will give you the information and resources you need to get your warehouse in tip top shape. 

Why Optimize Your Warehouse?

For those who are new to running a warehouse, the foundation you build determines how well your operation will run in the future. By thinking about optimization from the beginning you not only set high-efficiency standards but also create room to adapt and modify your operations as needed. In contrast, if you are already running a fully operational warehouse it’s likely that there is still room for improvement. Sometimes refining the things you are doing well and optimizing the areas that need improvement is all it takes to boost your performance and capabilities.

Besides creating a more effective workflow, optimizing your warehouse has significant financial benefits. Every year businesses lose substantial amounts of money because of mis-ships, out- of-stocks, returns, and human error, which can all be traced back to inefficient practices. All of these mishaps can be avoided by optimizing your warehouse workflow. You can learn more about how much mis-ships and other mistakes really cost you on our blog.   

Rise of eCommerce

Although mistakes are unavoidable, it is imperative that you get all of your ducks in a row and minimize them while you still can. There has never been a better time to step up your game and capitalize on consumer spending and the rising use of eCommerce.   

In fact, The National Retail Federation announced it expects sales in November and December for 2016 to increase a solid 3.6 percent to $655.8 billion significantly higher than the 10-year average of 2.5 percent and above the seven-year average of 3.4 percent since recovery began in 2009. Additionally, NRF is forecasting non-store sales to increase between 7 and 10 percent to as much as $117 billion!

If you have survived the rush of peak season before, then it is likely that you understand why it is so important to have an efficient warehouse. With the sudden increase in sales and demand, workers are forced to speed operations. Which ultimately leads to more frequent mistakes that can be quite costly. However, by making some adjustments you can run your warehouse at peak efficiency throughout the year resulting in increases profits.

Warehouse Organization

The first rule for optimizing your warehouse is to get organized! Without a well-planned method for organization, warehouse managers quickly find themselves in over their heads. Floor plans and employee safety need to be optimized before all else. Even if you are already operational the potential saving from optimizing may be worth considering.

Begin by mapping out the layout of your warehouse. Optimize your floor plan by using your space’s full capacity. Appropriate use of warehouse space allows your staff to get jobs done faster and complete more jobs in a day. Not only do you allow employees to work smarter, but you also save on overhead cost by not expanding unnecessarily.

In fact, Matt Grierson, a managing director at Dexion, which provides storage solutions across Europe says only a small fraction of the companies that approach him believing they need to move into larger locations really do need to. They often have enough space, they’re just using it poorly.

So how do you get the most out of the space you do have? Good question. You can start by:

  1. Measuring the space you have to work with.
  2. Define storage, sorting, shipping, office, and product locations.
  3. Pick the best shelving for your products e.g. two-tier, fixed, mobile, etc.
  4. Create clear labeling for aisles and product locations.
  5. Establish optimal material flow paths and picking paths.
  6. Place hottest selling items in close, easy to reach locations.
  7. Avoid overstocking items that are slow sellers to open more product space.

After you have optimized your space start considering optimizing processes, data, and software. We will talk more about how later. For those who are already running a warehouse but realize they are not optimizing space appropriately, a re-design may be the solution. For more helpful management tips check out our blog.

Warehouse Safety

A major component to managing a warehouse is to ensure the safety of your staff. The constant moving of people and products can create the perfect environment for accidents to occur. Therefore, you should make sure aisles and walkways are clean and free of spills and debris at all times.

As a manager, I understand that there isn’t always time to check periodically for cleanliness. So in order to save time and effort, it is a good idea to hold supervisors and staff accountable for their work environment. Have brooms, mops, and trash cans readily available and encourage employees to take care of their workstations throughout the day.

Another tip for optimizing your warehouse is to make sure all areas are lit properly. Low visibility can lead to mishaps while picking and sorting as well as safety issues. Bright lights encourage alertness and safety by keeping your employees awake and aware of their surroundings. Lastly, provide large visual cues throughout your warehouse of various safety and overall warehouse guides to create a consensus on how the workplace operates.  

As a business owner or warehouse manager, it is your job to make sure that your warehouse is optimized, and it begins with organization and safety. Conduct visual inspections of your warehouse regularly to ensure that you are always at peak efficiency. Clean, neat, and organized are words that should be synonymous with your warehouse.  

Establish and Optimize Processes

As a business owner or warehouse manager, your primary goal is to ensure that the right product gets to the right place at the right time. In a way, you are the gatekeeper between the business and the customer. As the gatekeeper, it is your job to facilitate this transition and make the process appear as seamless as possible, which, as you may already know, is no easy task. In order to achieve this, your entire warehouse operation from receiving, to picking, to shipping, to data collection needs to be optimized for peak efficiency.  

Receiving

Begin thinking about how you can optimize your warehouse workflow the second product arrives at your warehouse. When that product order arrives, it is officially a part of your warehouse. Once received, products are checked for damages, mis-picks, and quantity.

There are two common methods for receiving products. Manual and automated. In the manual checking process, an employee looks over a shipping invoice and visually checks that everything listed has arrived and has the right quantity. While this method is one of the cheaper options for checking products, it increases the chance of human error dramatically. During manual checks, it is not uncommon for people to look over a certain item or mistake one product for another. In many cases, multiple people are required in order to double-check the shipment. This requires twice the effort and cost your business time and money.

Instead, try to automate this process with some form of inventory management software or warehouse management software. Yes, they are different. Do your research and decide which one will work best for your warehouse. Automation minimizes the error of manual checking by doing the work for you. Instead of visually cross referencing an invoice with the product, this method uses scanners to run a comparison by simply scanning products barcodes while unloading them. When optimizing your warehouse always remember, work smarter not harder.  

Picking

Picking is one of the most pivotal processes in your warehouse. When done efficiently, you have a well-running operation. However, if done poorly you can end up in a situation that costs you time, money, and customers. When a product is picked incorrectly, you  appear less reputable as a company, and to make matters worse you just wasted the time and money it took to pick and ship that product and now have to spend more time picking and sending the right product.

To optimize this process and avoid picking nightmares consider the following:

  1. Don’t mix multiple SKUs in the same location
  2. Place products in optimal locations for pickers
  3. Designate zones for certain products e.g. peak season products, on sale items, or hot sellers
  4. Pick as many orders as possible in a single run to lower pickers travel time
  5. Automate picking process
  6. Implement incentives for pickers

Little tips like these are what separates a good warehouse from a great one, and as a business owner or manager, you should always strive for greater results.  

Learn While Picking

Picking actually has optimization opportunities that many warehouse managers tend to overlook. They do not consider that their warehouse workflow can be improved by simply paying more attention to their buyer’s purchases. Whether you are new to managing a warehouse or fully operational, paying close attention to buyers can give you insights into new solutions.

Study the habits of your buyers. By doing so you can find new ways to optimize picking. For example, if your company sells sports equipment and you have a larger number of retail buyers who purchase from you regularly, consider how you are picking for these customers. Instead of picking the orders as they arise, try picking them all at once. If you have multiple buyers who make the same purchases regularly, go ahead and prep for these orders and sort them according to past purchases.

You can also use picking to learn about your products. By keeping track of how frequent an item is picked you can make in-depth decisions about that product. For example, say that you stock a product that needs to be picked only once every few weeks. You should stop wasting inventory space on low selling items and think about how to optimize these products.

Look for solutions like just-in-time (JIT) shipping. With JIT shipping vendors send you products the same day that you get a sale for said item. Since the product can get to you in a short amount of time, you can still ship it like you normally would and be sure that it will still arrive on time. In this scenario, you effectively save inventory space while maintaining shipping expectations. When thinking about optimization minor adjustments like these can have a significant impact on savings over time.

Product Shipping

Attempting to optimize the shipping process is essentially a race against time. Speedy and efficient shipping times lead to a more productive and profitable warehouse. Improving packaging and shipping time are the key components to optimizing warehouse shipping.

Packing

Packing needs to be done quickly with minimal mistakes. Packaging hundreds of orders a day can be a real nuisance without structured methods. Start by establishing a packing location that is near the shipping location. Once again, optimizing warehouse space saves you time, and as we know time is money. From there you want to ensure that the physical method of packing is optimal.

Even the way you package products contributes to the overall efficiency of your warehouse. When boxing products less is more. Designate only two or three standard shipping packages. With only two or three boxes to choose from, pickers are able to assemble orders at a faster rate. This approach also optimizes freight expenses and makes it easier to support a pick-path methodology.

Shipping software also increases the efficiency of the packing process. Shipping software can create product labels and calculate the weight of the package. However, these features are just the tip of the iceberg. Learn what shipping software can do for you inventory here.

Shipping Time

Diversify shipping methods to provide an array of options for best shipping solutions. If you are currently only using one shipping solution do your research and see what other shipping providers are available to you. Shipping providers like FedEx, UPS, USPS, and freight on board (FOB) are some of the most popular methods to choose from. Understand that the more shipping providers you have, the more options you have if trouble arises.

For example, imagine that it is holiday season and you have late orders that need to be delivered as fast as possible. If you only use one shipping provider and they are not able to deliver the product then you are out of a sale. However with multiple shipping providers your chances of making the delivery increases.

Increasing shipping efficiencies can also open doors for your business. Say for instance you are a warehouse who wants to gain access to Amazon's consumers using Amazon Prime. Most sellers can only become a Prime member through Fulfillment by Amazon (FBA), which ensures two-day shipping.

However, Amazon has recently created Amazon Merchant Fulfilled Prime. Merchant Fulfilled Prime allows merchants who meet certain shipping standards to fulfill shipping themselves, ultimately saving the merchants the overhead cost associated with FBA. But the main requirement is that you must consistently ship quickly and efficiently. To be competitive, faster is always better.

Keep a list of multiple shipping methods and stay up-to-date on changes in the shipping industry. In today's economy, business is constantly changing. Also remember to track orders to ensure delivery in a way that works with your business model.  

Data Collection

If you see people doing a ton of writing and typing on keyboards as a means to collect data, you have a problem. With the almost endless methods for data collection, you should not be relying on manual collection methods. These methods are can be seriously flawed and skewed data to the point that the information collected becomes useless.

Instead, use mobile computers with barcode scanners to collect data as a more reliable solution. Mobile computer and barcode scanners are the tools that you will need to automate much of your warehouse process. When used, they collect important data about every process in the warehouse. This data includes, but is not limited to:

  • purchase orders
  • replenishment needs
  • product locations
  • picking orders
  • purchase history, and so much more.  

The purpose of data collection is to allow warehouse managers to see what they are doing well at and what areas still need improvement. This information will give users an aggregate breakdown of everything in the warehouse. Having real actionable data grants managers the ability to make informed decisions about their products and process. Which, when used correctly, can clearly point out any fallacies in the warehouse that need to be optimized.

Tools and Software

To keep a competitive edge in any industry you have to be able to adapt and meet the expectations of your consumers. The same is true for warehouse managers. In an era of technological growth, you’ll want to be in the know to avoid falling behind. Research what tools and software are currently driving the industry and strive to adopt the tools and tech that will propel your business.  

Barcode scanners, minicomputers, iPads, and radio-frequency identification (RFID); the electromagnetic fields to automatically identify and track tags attached to objects. These are some of the tools to research and be in the know about. Each can be used to coordinate warehouse processes and improve efficiency. However, like any tool they are only useful when used appropriately. Keep in mind the goal is to automate your workflow, and tools like these are the physical pieces that link all the parts of your warehouse.

Automation

By now you have seen the term automate several times, but what exactly does it mean to automate? Automation refers to the software and tools used to sync the various departments in a warehouse while coordinating data into a single platform. It also can be used to describe the use of tools to relieve manual processes.

Warehouses use different software in different departments to operate. Every department has its own software needs, and warehouse management software is the hub used to sync and manage the various tools and software. For example, a warehouse may use a shipping software like Shipworks to manage orders and Channeladvisor to sync online sales and shipping needs. A warehouse management software, like SkuVault, comes in and collects the info to show managers exactly how much product is available in the warehouse and online as well as what products have been shipped or still need to be shipped.

This software has a wide range of features and capabilities. Know when it's time to incorporate a WMS into your warehouse, but remember to automate where it makes sense. It can be a lofty investment, so keep ROI in mind and upgrade selectively. Added complexity could befuddle staff and generate unneeded work. However, the amount of time and money that can be saved makes the option worth exploring. Learn how a warehouse management system can increase business profits and make an informed decision.

Conclusion

Being a successful warehouse manager means taking the initiative to increase the profits of your business from behind the scene. As the gatekeepers between business and consumers, warehouse management contributes to the health of a company by taking care of the company's products. Warehouse optimization largely contributes to the success of a company. By optimizing workflow process and using the correct tools and software, you are sure to minimize cost and optimize profits in no time.  

Dominique Robinson is a content marketer who works at SkuVault, a warehouse management systems software company. Dominique's passion for helping people discover better ways to improve their business manifest in his coverage of management operations. His ability to relay the most up to date coverage of news and trends in the industry has helped provide readers with a targeted platform to meet their needs.

FILED UNDER: Inventory Tips and Tricks