The hustle and bustle of an active warehouse is music to every retailer’s ears. But to make sure everything continues to hum along smoothly, particularly as your sales orders grow and your operations become more complex, you must continually work to strategically improve efficiencies, reduce costs, and exceed customers’ expectations.
The Importance of Effective Warehouse Management
Inventory and warehousing facilities and technologies are a substantial investment for most retailers. The productivity and management of these processes have implications for every other part of your business and significantly impact your customers’ experience with your brand.
Let’s say you’ve implemented a successful marketing growth strategy that has doubled your customer base and sales order volume. Terrific! But before you can start celebrating your well-earned success, your warehouse team notifies you that this new flood of sales orders has overwhelmed your current systems, slowing fulfillment productivity and causing shipments to be delayed. And if you aren’t yet using a multichannel inventory management solution, you’ve likely also oversold a number of items and will be forced to inform your new customers that the items they’ve bought are actually out-of-stock, requiring even longer delays. If you had that experience as a first time customer, how likely would you be to make repeat purchases from that company?
And that’s just one common scenario. There are countless other potential business risks a company can incur from disorganized warehouse operations: everything from packaging errors and lost or damaged merchandise to mismarked items or even employee injury. All of these can slow your productivity, disrupt other processes in your supply chain, and ultimately eat away at your company’s profits.
Key Elements of Effective Warehouse Management
Warehouse operations are notoriously labor-intensive, cost drivers for businesses. But instead of viewing them as a necessary evil, modern retailers are seeing their potential to maximize the value they provide.
Take commerce powerhouse, Amazon, for example. They put warehousing on the map by taking what’s typically considered to be a retail headache and turning it into their competitive advantage. Amazon’s world-class operational systems are the most well known of any company, and their warehouses are regularly toured and reported on by top industry journalists. They’ve even parlayed their warehousing and fulfillment expertise into an a new line of business services, called Amazon FBA (Fulfillment by Amazon) – but we’ll dive deeper into that in the next chapter.
So what does it really mean to effectively run your warehouse operations? Effective warehouse management should:
Minimize errors, delays, and disruptions – With the proper processes and technologies in place, you should be able to automate and streamline warehouse operations to avoid costly delays and reduce human and system errors.
Maximize productivity – Establishing and maintaining an efficient flow of inbound and outbound activity throughout your warehouse will increase the overall quantity of products your company can process and improve the speed at which you can ship them to customers.
Ensure compliance and security – The phrase “safety first” is especially important in warehouses, which require workers to operate heavy machinery. Beyond Occupational Safety and Health Administration (OSHA) regulations, you need to make sure you’re operating in compliance with your various supply chain vendors and partners to prevent any unnecessary roadblocks. You’ll also want to ensure the overall security of all your facilities to avoid things like theft.
Provide supply chain visibility – The more visibility you, your vendors, and your logistics partners have into your receiving, packaging, labeling, and shipping methods, the more smoothly your operations will run.
Steps to Optimize Your Warehouse Operations
Whether you’re managing one warehouse or multiple warehouses, there are basic steps you need to take and processes you must put in place to ensure your warehouse is always operating like a well oiled machine.
1. EVALUATE YOUR OPERATIONAL VALUE CHAIN
What are all the steps in your current warehouse system, and, more importantly, how are they connected and reliant upon one another? Identifying and understanding how each activity and individual task is currently working throughout your warehouse will help you to see where inefficiencies are occurring. Mapping out your entire warehouse value chain will serve as your guide and launchpad for optimization. This evaluation exercise should bring to light processes that can be reworked, refined, or maybe even removed and replaced by new, automated technologies.
While you’re making these assessments, it can be helpful to keep your warehouse wish lists top of mind. If you had endless funds and resources, what types of tools, technologies, and set-ups would you like to have in your warehouse? Maybe these are all things that are currently out of your company’s reach, but chances are one or two of them may be doable. Either way, you’ll have a clearer vision of what your business needs to be striving towards. This clarity will be motivating and help you to make better decisions more quickly when the timing is right.
2. IMPLEMENT AUTOMATED AND INTEGRATED TECHNOLOGIES
No matter how your warehouse is set up, it’s quite stressful to manage and process large quantities of goods. And as you start to scale your business, it will become increasingly difficult to support that growth without overworking your warehouse team. Which is why implementing integrated and automated technologies is the best way to increase the overall accuracy and productivity of your warehouse operations while improving your team’s efficiency and relieving them from repetitive, monotonous tasks. Help unify and empower your team by giving them the right tools to achieve success.
Since you’ve already documented all the existing tools and processes in your warehouse operations, it should be easier to identify where integrations and automation would be most beneficial to your business. From purchase orders and inventory management to invoices and shipping labels, there will be plenty of opportunities to adopt new technologies that will unburden employees and drive efficiencies.
While finding the right technologies can seem like a time consuming and overwhelming process, the potential value these solutions can add to your business will make it worth it. Here are just some of the technologies you should consider implementing:
Inventory Management Software – Since inventory is at the core of every warehouse operation, the most critical technology need is a comprehensive inventory management software. Manual processes are error-prone and not scalable. Fully integrated inventory control systems are required to not only push the right stock quantities out to your multiple sales channels, but to integrate with all your other eCommerce platforms and track your end-to-end retail processes.
Warehouse Automation Systems – Automated warehouse systems utilize conveyor belts and sortation and retrieval technologies to streamline sorting, routing, and packing processes throughout your facility. To aid in the efficiency and interoperability of these systems, you must integrate them with your other crucial warehouse technologies like inventory, barcoding, label printing, and shipping solutions.
Barcoding Solutions – You can make your warehouse employees more productive, gain greater visibility into your warehouse activity, and increase the value and accuracy of your inventory systems by utilizing barcoding technology. Barcode scanning can be used through every step of your warehouse operations, helping to ensure the right products get received, stored, picked, packed, and shipped to the right people in the most timely fashion. Barcode scanning technology is also useful for performing regular stock takes by allowing workers to quickly scan all the items in a box, counting what should be in the box and identifying items that might have been mistakenly placed in the wrong box. Top inventory management and warehouse automation solutions will integrate with barcoding systems to make this process even more efficient.
In order to support your growing business, implement tools that will help improve the productivity of your team. Inventory management and multichannel selling software, like the Stitch Labs platform enables retailers and wholesalers to manage invoices, purchase orders, inventory quantities and sales order data in one application. This centralizes information and keeps teams on the same page, which saves you time and money.
3. ANALYZE WAREHOUSE PERFORMANCE
You can’t manage what you can’t measure. Once you’ve defined and implemented all these new processes and technologies, you’ll want to measure and track their progress to make certain they’re actually improving the productivity of your warehouse. While every business is going to value metrics differently based on their industry and goals, there are a few key warehouse performance metrics businesses should actively monitor:
Order Fill Rate is essentially the number of items ordered versus the number of items shipped. You want to make sure you’re fulfilling as many orders as quickly and accurately as possible to help guarantee customer satisfaction. Top businesses have a fill rate of 98% or higher.
Order Picking Accuracy is the percentage of orders picked without errors from either choosing the wrong product or quantity. Best in class businesses have 98% order picking accuracy or higher.
On-Time Shipment To Customer is the percentage of orders that shipped by the requested or defined date. If your customers are always getting late deliveries from you, it will reduce the likelihood of them becoming repeat customers and damage your reputation. Best in breed companies maintain 97% or higher on-time shipment rates.
Warehouse Capacity – You have to be aware of how much product your warehouse can hold at any given time. This is particularly important during peak seasons. Top businesses have over 95% of their storage space filled with products during peak seasons and an average of 91% warehouse capacity overall.
If your business has a solid understanding of these warehouse metrics, you’ll be better able to judge your overall productivity. But performance metrics are no good to you and your team if they’re spread across multiple systems and spreadsheets.
The most effective businesses integrate all their most important metrics into a single, comprehensive dashboard. This allows them to get the full picture of not only how their warehouse operations are functioning, but also how other business processes, like purchasing and shipping, are affecting their warehouse performance.
One way thousands of small and mid-sized retailers are tracking their inventory, optimizing their warehouses, and unifying their most important data is by using Stitch Labs’ powerful inventory management software solution. This type of scalable technology is helping growing businesses automatically sync all their most critical operational functions so they can deal with transfer orders, overflow inventory, and more so their teams can ship items more efficiently.
How Stitch Helps to Optimize Your Warehouse For Maximum Efficiency
These are just a few of the added warehousing benefits retailers get with a solution like Stitch:
Automatic Overflow System. Stitch can anticipate when you’re running low on specific items. If an order comes in and you need a backup warehouse to pull from, we’ll reroute the order to a secondary warehouse automatically.
Transfer Orders. Want to shift stock to a different warehouse? Stitch’s transfer order feature allows you to move stock to another warehouse whenever needed. And we’ll keep a record of this activity for your historical records.
3PL Integrations. If you’re taking advantage of third party logistics (3PL) providers like Amazon FBA, Shipwire, DCL, or AMS, we’ll directly integrate with their solution so you can assign a warehouse in Stitch to keep track of your 3PL-specific inventory.
Drop Shipping. Don’t let fulfillment of stock hold you back when expanding your product line. Drop shipping is a great option for businesses looking to grow inventory but are short on up-front cash or space to hold the products.
Things To Do Today
✔ Assess the efficiency of your current warehouse operations
✔ Identify and implement integrated inventory and warehouse automation systems to streamline processes, reduce redundancies and drive productivity
✔ Constantly track and monitor your warehouse performance to maintain efficiencies and reduce costs