A warehouse is a complicated matter, especially when it is full of products. Endless rows are overwhelming, and you get to a point where you have no idea where everything is supposed to go.
But are you prepared for the increased demand that will come with these customers? Do your warehouses have enough inventory to satisfy them promptly?
Products sold need to be moved from the warehouse and delivered to a customer’s doorstep. One mistake or delay can ruin your company’s reputation, as well as impact revenue.
Logistics in eCommerce is not always easy. Common challenges like inventory miscount or back-end logistics can quickly lead to problems.
Warehouse optimization plans can help companies save money and cut down on inefficiencies. We’ll explore what warehouse optimization means, why it is essential, and how to create your plan.
Warehouse optimization is the process in which the use of time, space, and resources in a warehouse is made more efficient through automation and careful planning, improving customer satisfaction and experience.
Importance of Warehouse Optimization Techniques
Warehouses are a critical component of eCommerce success because they store the most vital part – inventory.
The internal processes need to be as efficient as possible in any warehouse. When you prioritize efficiency in a supply chain, it ensures timely order fulfillment for customers and minimizes costs by cutting redundancies.
Warehouses can be optimized to create a productive and profitable environment.
Warehouse optimization does not mean that we can just cut costs and save money. It is about quality of service.
For new businesses, it can even mean building up for future success.
Companies with warehouses already in place can use the data collected by RFID to streamline their inventory management and improve those areas that are not as successful.
Optimizing the warehouse also translates to financial benefits. Many different things must go right to fulfill a single order.
Despite warehouses spending a lot on measures to avoid human error, the environment is too chaotic for mistakes not to happen.
Inefficient practices lead to a lot of wasted time and money. For example, when a business sends out the wrong shipment, they have to pay an average of $22 in labor costs and customer impact.
It is easy to forget about the people who work in warehouses. They are handling material and machinery such as forklifts and pallet jacks.
Without proper safety precautions for moving heavy equipment and protecting employees, a warehouse can lead to low morale, high insurance claims, or worse.
Reasons to Optimize Your Warehouse
In some businesses, inventory and delivery processing is outsourced to a 3PL fulfillment warehouse. In others, the company handles things internally. The latter method can be successful if warehouses are careful about space use while maintaining employee safety.
Safety is a crucial concern for warehouse operations because it’s the most critical challenge.
With emergency exits, fire extinguishers, and lighting, the employees feel more at ease. The mere presence of these safety precautions is psychologically reassuring. These features take up valuable space, which could be used for products instead.
The question then becomes how much space to dedicate for safety precautions.
Space Optimization Techniques
The space utilization formula is a way to figure out how much warehouse space you need by multiplying the number of units in stock with the average inventory level. The calculation relies on two statistics:
- The total storage capacity of the warehouse does not include any other space in the building besides loading docks and walkways.
- The total volume of products you can store.
Utilizing this formula will give you a better understanding of the distribution and utilization of your warehouse space instead of just measuring it by total square footage or inventory.
Finding the perfect balance between process optimization and space efficiency can unlock new opportunities to improve your bottom line.
Warehouse Optimization Tips
Warehouse automation includes both process and physical automation.
Manual tasks such as data collection and inventory management can be automated with computers, but physical automation involves using tools like drones to move goods.
Here are the benefits of having a well-motivated team:
Accurate matching of labor to workload
A clear organizational structure that gives each employee a specific role to fill, such as breaking up departments by task or dividing tasks among employees on different days of the week, minimizes worker fatigue. This leads to fewer hours worked per day without having to pay overtime.
Better planning and forecasting
With the information about future inventory demands, warehouses can plan better and allocate resources without spending extra money.
More return customers
I learned that customer service is a critical deciding factor for repeat business, and optimizing the warehouse can lead to better order fulfillment.
When automation is used correctly, it can help with inventory and packing. This will lead to a more efficient system that allows fulfilling orders faster.
Five Tips on How to Optimize Warehouse Operations
After recognizing that your warehouse is not performing well, the next step is outlining specific actions to improve it.
When it comes to your warehouse, no two are the same. But a few tips can help you out regardless of your type or size.
Understand product velocity
A retailer’s product velocity refers to the rate at which certain items sell. Some products will always be moving more quickly, whether because of a seasonal need or during special promotions.
Warehouse design and layout must consider the ability to retrieve items quickly. High shelves around a warehouse make it more difficult for employees, causing them to spend longer looking for things that slow down operations.
To motivate them, I should allow my salespeople to work in nearby pallet flows close to packing areas.
Reduce human errors
When a warehouse has the technology to reduce human error, it will increase productivity. It would help if you had something like software or machines that can automate repetitive tasks because it allows your employees to do more creative work.
Ideally, these labels should be easy to read from a distance and distinguishable with barcode scanners. If you can’t identify them at first glance or by scanning the label’s bar code, there is bound to be confusion.
Make use of warehouse management software.
Warehouses are typically where people can do various tasks, from moving products to packing and labeling.
Skubana is a software that integrates with warehouse management systems to allow for one unified platform.
A warehouse management system (WMS) helps managers track inventory levels and ensure they don’t run out of stock. This is important to avoid wasted overhead expenses.
Like Skubana, you can do anything with your warehouse with the right IMS tools.
Skubana has a variety of features that allow you to optimize your warehouse for the following:
- We track our inventory down to the pick location, which helps us decide what we need in stock and when to be ordered.
- I also tried to make inventory management more accessible by linking all warehouses together.
- Automate the packing and shipping process using various carriers for more affordable rates.
- I have been using a system that will allow me to see which orders were completed by my employees.
- I found that grouping item by pick location on the packing slip allowed me to quickly find specific things.
Automate shipping routing
The order fulfillment process relies on packing the correct goods in boxes and sending them to their respective destinations. This can be done more efficiently with automation, which routing automation does.
Skubana has a solution for order routing called Orderbots that allows warehouses to set their routes before receiving orders.
Skubana’s shipping calculator is the easiest way to find and compare rates for all major carriers.
Invest in robotic technology
Warehouses that invest in technology, like robotic arms and lifts for heavy objects, see clear, tangible benefits. A few decades ago, the extent of this technology was limited to tasks given by humans, but now it can take on more.
The machines found in warehouses today are not too different from the ones you might find at a manufacturing plant.
- Automated guided vehicles
- Autonomous robots
- ASRS is a system of automated storage and retrieval used in warehouses, distribution centers, or other environments where the product needs to be stored.
Companies are beginning to use innovative tools in their warehouses that can positively impact customer satisfaction, delivery mistakes, and reputation.
The Warehouse Optimization Checklist
If not sure if the work has been done correctly, contact a professional.
Here is a list of things to check when looking at your warehouse space:
- Determine the size of your area to work with.
- Define where you will store, sort, and ship your inventory.
- To make the most of a shelf, select one that matches the products on it.
- To make it easier for shoppers to find what they are looking for, create labels that clearly state the aisle and product.
- For a factory to be efficient, it needs the proper flow of materials.
- One way to keep customers in the store is by placing high-demand items at eye level.
- Don’t stock up on inventory that isn’t selling. It’s essential to have enough space for the items generating revenue.
In large companies or those that have to ship many orders, one warehouse is not enough for customers who expect a speedy delivery.
It is not cost-effective to have a giant warehouse because it takes up so much space. Instead, many businesses will open several distribution centers, which temporarily send products from the warehouse before they are processed and shipped out.
Implementing a Warehouse Space Optimization Software
Warehouse management systems rely on the contributions of many different people, not just technology. Whether they be forklift operators or shipping specialists, each person has a role in reducing warehouse costs.
The warehouse manager is responsible for implementing an optimization plan, but this cannot be done without the support of every employee.
It isn’t easy to convince people of new technology, especially if they have less responsibility.
To get the most out of employees, warehouse managers should do these things:
- Employers should not make decisions on their own and instead, take the time to get feedback from employees.
- Allow your employees to learn how new software and tools work by providing training sessions.
A warehouse optimization plan takes a long time to implement. It can take months before changes in your operations are seen.
Evaluate your warehouse optimization plan three months after implementation. This will help you identify any problems or issues with the process and make necessary adjustments.
- How has the new system impacted staff?
- What are some possible mistakes in optimization? For example, does the warehouse have wide enough aisles to store inventory despite being too narrow for heavy machineries like forklifts or pallet jacks?
- In a WMS and IMS integration, are there any errors or glitches? If so, what were those specific errors that you encountered?
- What changes have you seen in your warehouse? For example, has customer satisfaction gone up, or is the rate of inventory errors decreasing?
Warehouse Optimization Trends To Watch
Warehouse optimization is a challenge, but it’s something that businesses need to stay competitive. The rise of new business models and changes in employee expectations will continue to change the warehouse environment.
Warehouse owners try to help brands by offering them a few different options. They can either take the offer of flex land or temporarily extend their warehouse space for seasonal products.
Warehouses are feeling the pinch of labor shortages, so many employers have started to focus on improving employee quality of life. For example, air sensors and efficient lighting can help ensure employees feel comfortable at work.
Internet of things (IoT)
The internet is making a significant impact on how we interact with everyday objects.
It turns out that having devices around the warehouse can allow for more detailed reporting, such as accurate real-time stock reports and good quality.
It’s about getting everything right.
Warehouses must be willing to change and grow with the market, or else they will fail.
If you are considering a warehouse optimization project, make sure to plan it out before investing. However, there is no need to wait until the design phase to make changes and improvements.