Effective inventory management benefits from having a clearly defined process. Developing the right processes and plans to keep your warehouse organized isn’t easy. But this guide to the best warehouse management practices will help you get your warehouse running smoothly.
Running around crazily and without clear direction will always leave your warehouse in disarray. A good warehouse management system will dramatically improve your warehouse operations.
What Is Warehouse Management?
For a warehouse to run smoothly, it requires a good warehouse management system. Warehouse management systems are software solutions that ensure seamless transitions within the supply chain, distribution centers, and warehouse. That, combined with the efforts of warehouse employees, can make for an extremely efficient warehouse free of error and miss-ships.
But, warehouse management does not run solely on the reliance on a warehouse management system—it includes the entire warehouse ecosystem. From how the docks are loaded to how a return is made, warehouse management must adhere to proper guidelines and processes that help make it a better workplace and warehouse.
Following these warehouse management best practices can help alleviate any breaks in the supply chain and provide the employees with a system that makes their job easier. Read on to see warehouse management best practices that you can implement in your company.
Warehouse Management Process
Some of the most common warehouse management processes are used throughout the world. Here are the basic steps and processes commonly used within each of them.
Picking is a really simple and essential part of the warehousing process. There are several ways that you can refer to picking. Some might call it prepping, others might consider it something else, but in essence, picking is just the time workers spend walking throughout the warehouse to find different items that have been ordered.
There are several ways to make the order picking process more efficient and strategies you can use so that your warehouse workers aren’t running mindlessly throughout the space trying to find different products and materials for orders. Depending on the size of the warehouse and the diversity of products, this can be a huge task. Needless to say, good picking strategies are needed as warehouses grow in size, capacity, and busyness.
Here are some of our favorite efficient picking strategies—be sure to check out our warehouse picking 101 post for a more in-depth look.
Zone picking is really simple. You’ll need to put physical inventory items that are regularly picked together in specific zones. That means that you’ll be able to have your pickers quickly move throughout different zones without wasting time looking through every individual shelf. This strategy is perfect for warehouses that regularly pick the same items in groups.
One of the most popular of all picking methods is discrete picking. This strategy is incredibly easy to implement. Discrete picking is what most people likely think of when considering a picking strategy. All you’ll need to do is walk through the warehouse and pick items in the most efficient order. Some strategy is definitely required because you need each item to be placed in order, but after that, it’s just a matter of following the list.
This strategy is always best used in smaller warehouses because of the amount of walking or moving throughout the warehouse that is required.
Batch picking is when your picker will pick specific items for a group of orders all at once. If you have a large warehouse, this is a way for the picker to spend less time walking throughout the entire warehouse and more time focusing on filling orders strategically.
When pickers only have to grab specific SKUs once or twice a day, it will really speed up the process and help make their job not feel redundant.
Wave picking is like discrete picking except with a different time frame. When wave picking is done, pickers only go through the warehouse at specific times. They’ll grab everything they need to and spend all of their other time completing different tasks during those times.
This strategy works best when the team of warehouse pickers is also required to finish different jobs along with their warehouse picking. In that sense, it’s also a way to have many different members of the team working together to complete a somewhat tedious task.
Beyond the last few ideas, there are some less common strategies to combine different approaches. Be sure to check out our Warehouse Picking 101 blog post.
Packing within a warehouse focuses specifically on the packaging of orders for shipment. Depending on what your warehouse specializes in, this can look very different. In some cases, you may need to pack individual products, orders, or pallets for shipments. It’s definitely an extensive process, but it doesn’t need to be frustrating, confusing, or difficult. However, it does need to be well planned. Without having a very successful strategy for your packing department, your warehouse will likely struggle and, in turn, can get backed up.
Ensuring that your packaging portion of the warehouse is well maintained is very important. Without it being well maintained, you could miss orders, ship incorrect items, or even forget to ship orders altogether. Here are a few different ideas for how you can successfully structure your packing.
Keep Things Clean and Organized
Keeping your warehouse clean and organized is essential to keeping everything on track. If you don’t keep your warehouse clean, it’s definitely going to come back and bite you eventually. Lost orders, lost inventory, and missed shipments will just be a few of the problems that come to those who cannot keep things clean and organized.
Double-Check Each Order
One sure-fire way to ensure that every order is filled week by week is to double-check orders. If you aren’t already double-checking orders before you ship them, then you definitely should start doing that right away.
There are a few different ways that you can double-check shipments. One obvious way is to manually check every package before it is sealed for shipment. But, perhaps a more efficient way is to use a scale. Many larger warehousing companies such as Amazon use scales to check the weight of each order before it goes out. This system is pretty simple as you could set up a scale and barcode system that would tell you what each order should weigh.
No matter how you choose to double-check each order, make sure that you take the time to do it.
Use Efficient Packaging
Efficient packaging will help bring your shipping costs down and your profits up. While this isn’t so much to do with packing efficiency, it definitely can help. Perhaps the new, more efficient packaging allows you to quickly pack items or more quickly move and store them throughout your warehouse.
If you’ve never thought about your packaging, then be sure to check and see how it’s doing for efficiency.
Keep Inventory Accurately Updated
Keeping your inventory up to date will help ensure that you always know what is coming in and going out of your warehouse. When you’re able to keep track of your inventory, you’ll have a better idea of what your packing process looks like. For instance, if there was a surplus of a certain item, you’d likely be able to find the order that missed it.
One way to keep track of your inventory records is with inventory management software like Extensiv Warehouse Manager from Extensiv. Extensiv Warehouse Manager can help you manage your SKUs and keep track of inventory with barcode scanning and inventory management. Get a free demo today!
When it comes to shipping, there are all sorts of ways that you can utilize different processes to get your warehouse running more efficiently. One of the biggest problems with shipping is that it’s often extremely expensive. The shipping cost is often determined by the size and weight of what you’re shipping. But, in some cases, you can get discounts and deals from shipping companies if you send high quantities through them regularly.
Order Tracking Software
When it comes to shipping, we’re only going to touch on one specific point here, order tracking software. Providing order tracking for your customers is almost essential these days. Whether you choose to provide full order tracking or just something very minimal is completely up to you, but it will improve your shipping process by making customers happier. Additionally, you’ll be able to close the loop on orders and not spend too much time worrying about whether or not the order arrived on time.
Using 3PL for Your Warehousing
3PL or third-party logistics is when two warehouses work together to lessen the workload that would otherwise all be on one warehouse. Partnering with a third-party logistics team can save your warehouse money, time, and manpower that you might not have. Here are a few reasons why you might get started using a 3PL.
Ultimately, when it comes to 3PL, the third party can help with almost anything within your warehouse process. All you’ll have to do is employ them to make your job a little easier.
A 3PL team can handle all of the receiving for you. Through the use of cloud-integrated software systems, you’ll be able to track inventory throughout its entire lifetime in your system. When you ship products to your 3PL, they’ll scan them and place them in their inventory system.
After the 3PL has your inventory, they’ll be responsible for storing it and keeping track of it. This is one of the biggest reasons many companies consider using a 3PL. Warehousing can take immense amounts of space. Having that space can be expensive for small businesses or e-commerce businesses that want to focus more on their online business than the warehousing or shipping of the products they sell.
Picking, Packing, Shipping
When it comes to picking, packing, and shipping, a 3PL can handle everything for you. All you have to do is send order information to their warehouse, and they’ll use their employees to retrieve items from storage locations, pack them up, and get them shipped to your customers. In many cases, they can use your logo and return address so that customers won’t ever know where the specific order originated from.
As you can see, there are many advantages to using a 3PL, and one of the biggest ones is the money that will be saved. Not only can a 3PL store huge amounts of your inventory, but they’ll also handle all of your picking, packing, and shipping.
Top 12 Warehouse Management Best Practices
Believe it or not, there are practices that will provide more value than others. These are some of the best practices that every warehouse manager should be incorporating in their warehouse management systems.
1. Prioritize Automation
Long ago were the days when everything had to be manually entered, so why are you still doing it? Automated data gathering and scanning can help to streamline the entire process from picking to shipping a package and placing orders or processing returns. Automation is the key to success and the way the world is moving, so embracing it can speed up entire processes, track valuable data, and avoid errors that come with manual entry.
2. Invest in a Better WMS
Warehouse management systems (WMS) help you maintain and manage all things related to your warehouse operations, supply chain management, picking, packing, and shipping. A good WMS can distinguish between a streamlined workflow and a messy, inefficient one. You can gain valuable data insight, manage workflows, and track employee time, amongst other things. Using Extensiv Warehouse Manager as your inventory and warehouse management tool can effectively improve processes across the board without severely changing how you run things.
3. Prioritize Employee Safety
There are tons of safety regulations and guidelines that ensure your warehouse employees stay injury-free and help each other stay that way as well. Make sure that whichever way you take your warehouse management, prioritizing employee safety is at the top of the list.
Employees should know how to climb a ladder correctly, drive a forklift, look for open shelving, etc. By conducting safety seminars and reminding your employees to be diligent on the job, it can save a lot of people from harm. Employees may not always question safety methods because they worry about calling out their superiors. Still, if you are proactive in securing their safety, that can majorly retain employees.
4. Reduce Touch Points
There’s a saying, “there are too many cooks in the kitchen,” which means there are just too many people involved in a situation. This can definitely ring true along the supply chain. You can limit errors and delays by limiting the number of touchpoints and hands that a package or process goes through.
If it makes sense to have one person package the product, seal it, scan it in, get it on its way to the truck at one station, then do it! Often an assembly line approach is actually only making things worse. Too many hands and too many processes that are not aligned can cause unintentional errors.
5. Organize Based on ABC Analysis
Merchandising your warehouse in a way that makes sense is very important to get products sold and moved in an appropriate amount of time. Some warehouses use the FIFO or LIFO methods, but an ABC analysis can help position products in the warehouse based on the highest, middle, or lowest value.
- A – High-value, low sales: this group is meant for the merchandise that makes your company suitable money but costs a significant amount to procure. You won’t want to keep these items in stock for too long because of the financial strain that it could put your income statement in.
- B – Middle-value, average sales: Falling right in the middle is letter B. These goods are sold on a more predictable basis but aren’t the most frequently sold.
- C – Low-value, high sales: These merchandise items are the ones that you can’t keep on the shelf. They help boost your balance sheet but don’t provide a large source of income because of a lower selling point. You shouldn’t need to market these items too much or give them a lot of attention.
6. Boost Employee Incentives
Your warehouse employees work very hard and want to feel appreciated and praised for their work. Boosting employee incentives in the warehouse workplace can be an effortless way to:
- Boost morale
- Increase productivity
- Help with employee retention.
Some incentives that can help in the warehouse include a sound HVAC system. The warehouse should be nicely conditioned in the summer and perfectly heated in the winter, especially on the loading docks, where the doors are open for extended periods of time.
You can have employees of the month, add snacks and beverages throughout the day, and ensure proper breaks away from the warehouse for a refresher. Plus, incentivizing record numbers can be a fun way to boost productivity while praising those who commit to process improvement and streamlining processes.
7. Plan Ahead
Tracking data points and forecasting can make all the difference in your warehouse. You can plan and expect fluctuations and spikes or drops in volume by forecasting future numbers. With accurate information, you need to be prepared with the proper procedures, enough staff, and the right budget to ship on time. Budgeting for things like extra machines, enhanced software, and packaging materials can help alleviate any breaks in the supply chain when that time comes.
8. Implement Lean Warehousing
Lean warehousing implements the five lean thinking principles:
- Value streams
You define value based on the customer’s need for the product or service.
Value streams mean you determine all steps that get you from the beginning step to the final stage, where the product is in the hands of the consumer.
Once you determine the value stream’s cleanest and most streamlined path, you figure out the proper flow. The supply chain has many steps to it, and once you’ve trimmed the fat of your warehouse operations, you can finally figure out the best flow to your processes.
Pull means that you have products readily available for a customer to “pull off the shelf” as they need it. This requires seamless workflows from the inventory team, the shipping and receiving team, and the pricing team. If everyone works cohesively, pull is perfected.
The last step in the lean warehousing principles is perfection. We say perfection in the sense that practice makes perfect. However, obviously, with human beings and even technology and time, we find ourselves having to face imperfect things. But, when it comes to implementing lean warehousing strategies, the pros say to run through your system at least 10-20 times before you can call out, locate, and fix any issues in the value stream. The perfection stage simply means, keep running through the first four steps until you can run as efficiently as possible, without fail (for the most part).
9. Continuing Education
Continuing education is a big one. Of course, employees learn more and more on the job each day, but this doesn’t mean they aren’t missing something. Continuing education falls in line with employee retention and incentives. Offering employee training and development as well as educational opportunities within your business not only helps you, but it helps your employees. It encourages employee growth and retention and enables you to stay in line with your industry’s updated trends and safety procedures.
Plus, to think that your employees will be with you forever can sometimes be wishful thinking. It doesn’t mean you should hold your employees down to one role. It means you should encourage their growth within your business, but also with the knowledge that as they grow and learn, they may find they can move on and apply to other roles elsewhere. This is a good thing!
A good employee actually wants to learn more, and they are not content just sitting in one role without advancement. You should invest in continuing education and make it a regular practice within your warehouse. Things move fast in the industry, and keeping up with that can only benefit you and your employer.
10. Regular Cycle Counting
As much as we want to rely on scanning systems and automation, regular counting of your warehouse inventory can secure those numbers. Plus, regular cycle counting each quarter can end up being a fun employee activity where you all pitch in and count the inventory, order pizza, and hang out. At least at the end of the year, it’s essential to get all of your inventory counts accurate and in order.
Regular cycle counting can accomplish multiple things at once. You can compare your manual counts to the system counts. This can call out any discrepancies within your warehouse management systems or software. You can also do your ABC analysis simultaneously and re-organize your inventory to better fit the demand. Lastly, you can clean, dust, and sweep your warehouse and shelving to ensure people are receiving products that look fresh and new.
11. Streamline Information Sharing
Exemplifying your data and warehouse information numbers amongst the group can be a great motivator. One way to share this information is with live dashboards on flat-screen monitors throughout your warehouse or in main packaging areas.
If you share live data in a way that doesn’t put pressure on your employees, it can be an incredible motivator for them and help them feel like they have some insight into the amazing work they do. You can show shipments pending, packing, and those gone out.
You could also include shipments about to be received into the warehouse. It helps streamline the entire process because they may have to reach out to those in the purchasing departments to get updates on purchase orders being received without that live data feed. It streamlines everything and gives your warehouse employees visibility on the business as a whole.
12. Set and Track KPIs
A KPI, or Key Performance Indicator, is often something that is only seen as a set goal for individuals in a corporate setting. But, setting KPIs as a business helps create an overarching goal that everyone within the company strives to achieve. This can be done departmentally, especially in a warehouse setting.
KPIs in a warehouse could look like:
- Decrease shipment times for incoming orders
- Decrease time it takes to unload a delivery truck
- Clean and organize one section of the warehouse per week
Now, these are very basic, overarching examples of KPIs you could set within your department. With KPIs comes data tracking, and that’s the most important part. So, some of the responsibility will lie on managers and team leads to gather the actual data and report it to the company metrics. This can actually create a bit of drive and accountability within the team. Reaching goals every quarter can help improve your overall workflow.
So, following these best practices and utilizing the available tools can only improve your warehouse management. The main takeaways should be; automate where you can, focus on your employees, and make safety a priority.
Inventory Management vs. Warehouse Management
Oftentimes inventory management and warehouse management are used interchangeably, which is incorrect. The two areas deal with very different aspects of a business. Inventory management focuses mainly on inventory control and supply chain management, forecasting, pricing, and product strategy. It makes sure that inventory counts are accurate and match demand. Inventory management also provides real-time data analytics so products can be purchased and priced competitively in the market.
On the other hand, warehouse management utilizes warehouse management systems to centralize all the processes with stocking and handling inventory. As you know from the best practices, it’s a very robust and expensive part of the warehouse process, but inventory management remains its own entity.
Despite their differences, they also carry many similarities. Both warehouse and inventory management play critical roles in picking, packing, and shipping items, as well as cycle counting, stocking shelves, managing multiple locations, and overall receiving, tracking, and calculating inventory stock levels.
Effective Distribution Strategies for Improving Your Warehouse Workflows
When it comes to picking, packing, and shipping, you want to achieve two things: accurate shipments and fast shipments. The industry is constantly changing, and as people shift more towards online-only shopping and demand faster shipping speeds, there is always room for improvement in your warehouse practices. Here are some of the best strategies to improve your warehouse bottom line and streamline workflows.
Reduce Your Order Lead Time
Two lead times affect your business. First, order lead time is when it takes for an order to reach the customer. Slow lead times can lead to irate customers who expected their order in a specific window, which was extended. Esure your warehouse is organized for easy accessibility, your shipping team is efficient, and shipping times are accurate on the website, so you can maintain a short lead time for orders.
Purchase order lead time, on the other hand, can negatively affect stock levels and create more backorders and out-of-stock notifications. To improve PO lead time, you can do a few things.
- Negotiate with your manufacturers to ensure that purchase orders are placed on time and filled in the promised time.
- Increase order frequency. While one order is shipping or en route, it can be a good idea to place another PO, especially if the items are in high demand and must be in stock.
- Consolidate your suppliers so there are fewer places to make mistakes and you know exactly where your orders are coming from.
Consolidating Box Sizes and Packing Materials
When items are packaged manually, an organized assembly line is required to move quickly and efficiently. The last thing you want is for your packaging area of the warehouse to be the biggest holdup. If you have too many options for packing materials and box sizes, it can really slow things down.
That’s why consolidating to have just 3-6 box sizes, knowing how to quickly fill them is key. Then, consolidate your packing materials to include one for fragile items and one to fill any space, and leave it at that. The fewer items an employee needs to consider, the faster they can work.
Rearrange Your Warehouse
When your business started, you probably organized your warehouse using one of the many organizational techniques recommended. But as your business grows, you’ll find out which products sell faster or more often. You will also have your processes well put together and know what does or doesn’t work for you.
Rearranging your warehouse to more appropriately suit the needs of your picking and packing team can ultimately change how efficient the entire warehouse runs. Don’t be afraid to move things around and try a better method or organization.
Keep Using AI: Receiving Automation
You likely use a warehouse management system to keep track of inventory, orders, and everything associated with the warehouse. But there are always ways to introduce more automation to make your workflows more efficient. There are programs to bring even more automation to your receiving department. These automation systems allow bulk receiving actions rather than scanning everything via your barcode scanners. It’s something to consider to shave off a lot of time between the products arriving and when they can be stocked on the shelves. Every little bit counts.
Take Your Warehouse to the Next Level With Extensiv
One of the best practices in warehouse management is having a proper warehouse management system that can help improve the efficiency and profitability of your business.