Warehouse optimization requires careful planning and execution. To operate at your best you must prepare. Whether you are a seasoned vet or new to running a warehouse, these are steps you can take to optimize your warehouse in order to grow your business. In this post, I will give you the information and resources you need to get your warehouse in tip-top shape.
Why is it important to 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 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.
In fact, The National Retail Federation projected online and other non-store sales to increase between 10 and 12 percent in 2018.
With this statistic in mind, it’s imperative you minimize mistakes while you still can and optimize your warehouse. There has never been a better time to step up your game and capitalize on consumer spending and the rising use of eCommerce.
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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.
Begin by mapping out the layout of your warehouse. Use your space’s full capacity to optimize the layout. 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 believe they need to move into larger locations really do need to. They often have enough space, they’re just using it poorly.
Here’s how to better organize your warehouse layout:
- Measure the space you have to work with.
- Define storage, sorting, shipping, office, and product locations.
- Pick the best shelving for your products e.g. two-tier, fixed, mobile, etc.
- Create clear labeling for aisles and product locations.
- Establish optimal material flow paths and picking paths.
- Place hottest selling items in close, easy to reach locations.
- Avoid overstocking items that are slow sellers to open more product space.
After you have optimized your space start to consider optimizing processes, data, and software. We will talk more about how later.
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.
Provide Cleaning Tools
As the owner of a company, it’s not exactly your top priority to keep tabs on the cleanliness of your warehouse. Instead, 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.
Install Proper Lighting
Make sure all areas are lit properly. Low visibility can lead to mishaps during picking and sorting. 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.
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.
Follow Osha Guidelines
Every warehousing safety regulation you need can be found in the OSHA Pocket Guide. Warehouse managers will learn the importance of driving forklifts properly and material storage methods, among many other things.
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’s 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.
You should think about the optimization of your warehouse workflow the moment a product arrives in the receiving bay. When that product order arrives, it’s officially a part of your warehouse. Once received, products are checked for damages, mis-picks, and quantity. It’s important to give employees plenty of space to remove inventory from pallets and perform other duties.
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’s 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 costs 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, automation methods use scanners to run a comparison by simply scanning product barcodes while unloading them. When optimizing your warehouse always remember to work smarter not harder.
Picking is one of the most pivotal processes in your warehouse. When done efficiently, you have a well-running operation. 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:
- Don’t mix multiple SKUs in the same location
- Place products in optimal locations for pickers
- Designate zones for certain products e.g. peak season products, on sale items, or hot sellers
- Pick as many orders as possible in a single run to lower pickers travel time
- Automate picking process, like alphabetizing the locations of your products
- Implement incentives for pickers
Picking actually has optimization opportunities that many warehouse managers tend to overlook.
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.
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. 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. 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. They also often integrate with warehouse management systems to make the process more seamless. However, these features are just the tip of the iceberg. Learn what shipping software can do for you inventory here.
Diversified shipping options gives your customers more orders delivered on time. 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’s 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 consumers using Amazon Prime. Most sellers can only become a Prime member through Fulfillment by Amazon (FBA), which ensures two-day shipping.
There’s also Merchant Fulfilled Prime. This method 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. Also remember to track orders to ensure delivery in a way that works with your business model.
The purpose of data collection is to allow warehouse managers to see what they are doing well 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 processes. Which, when used correctly, can clearly point out any fallacies in the warehouse that need to be optimized.
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 can be flawed and skew 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 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.
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 - are a few examples of warehouse data collection tools. 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. If a tool or software is out-of-date or used incorrectly, every step in your workflow will be incorrect from the top-down.
At this point you’ve seen the term automation enough, 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 can also 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 ShipStation to manage orders and ChannelAdvisor to sync online sales and shipping needs. A warehouse management software, like SkuVault, comes in and collects the information 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.
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.
Becoming a successful warehouse manager means taking the initiative to increase the profits of your business from behind the scenes. 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 processes and using the correct tools and software, you are sure to minimize cost and optimize profits in no time.