Any blockbuster show wouldn’t be that way without efficient backstage management and handling of props. Similarly, a growing retail business needs an efficient inventory and warehouse management process.
Attractive prices may hook first-time buyers and some maybe some repeat customers. However, subsequent purchases by first-time buyers hinge on how great the experience was.
Did they get the right item?
Did it get delivered on time (or even before the promised time?)
Was the product everything they expected and more?
How you maintain, manage and operate your warehouse(s) has a major role to play in consistently ensuring order fulfillment delight.
This is all in a day’s work at a typical warehouse:
- Send purchase orders to vendors for products low in stock
- Receive previously ordered stock
- Bar code and enter it into the inventory management system
- Store it in identifiable locations
- Find the correct items to pick, pack and ship out according to orders
- Prepare for stock reconciliation days
- Keep the inventory system up-to-date with any stock lost or returned
The Components Of Good Warehouse Management
Here is what warehouse management entails:
- Warehouse design
- Inventory storage
- Order fulfillment
- Maintenance of inventory
- Warehouse Management Systems
Let’s look at all of these in detail.
Efficiency and ease of tracking, packing and shipping items lie at the heart of good warehouse design. Ergonomic design is a factor, too, as good warehouse design can speed up the picking and storing processes. Warehouses should:
- Enable easy movement of staff during their tasks
- Have designated receiving, sorting, packing stations, shipping and storage areas
- Maintain a separate area for dead inventory
- Include clear, well-lit signage and marked shelves
- Clearly designated staff roles and areas: Receivers, Stockers, Finders, Pickers, Packers, Shippers, and Managers should know where they need to be on any given day
Warehouse design also takes into account legal compliance. You’d be surprised at how many specific requirements there are for how a warehouse is stocked!
For example, some states have regulations for how high you can stock products so as to allow fire sprinklers to do their job, should the need arise.
Every warehouse should have:
- A receiving area where items are received and checked for quality and integrity before they are added to the inventory.
- A storage area where items are put away and picked from. Bins/Palettes can be used for storage depending on the type and size of the product being sold.
- Packing and dispatching area where picked items are scanned, packed, assigned a shipper and shipped out from. This is the pickup contact point for your shipping partner as well.
- A damaged goods area where damaged items are moved from the storage area to be repaired or discarded.
The layout should allow for easy flow between these.
In addition, warehouses should be extremely well-lit to make them easy to navigate. It will also help the finders locate the right items. Proper lighting has a positive effect on people in the environment. Keep the floors clean and free of stray boxes, trolleys, and equipment.
Check your warehouse space periodically for signs of water damage and other exposure to the elements. Those storing and selling food products and medicines need to pay special attention to this aspect. Products exposed to sunlight and water suffer damage rather quickly. Also, any open produce or other foodstuffs within the warehouse can easily attract pests.
Also, every time you add new shelves or storage areas to your warehouse, consider how this impacts staff movement. Does the new shelf block one area and force people to use a longer route? While these may seem like small things at first, these are the problems that compound very quickly.
Put the warehouse inventory away with one purpose in mind: easy retrieval. Whenever you receive an order, the staff should have no problem finding their exact location in the warehouse.
Here are some ideas you can implement right away:
- Follow a standard system, such as a simple alphanumeric one, or an ABC- analysis based one for inventory storage. Put-away systems save time and effort and allow for a smooth, cohesive workflow.ABC analysis, sometimes also referred to as Selective Inventory Control (SIC), is a popular method of determining optimal placement of goods.A is the category for items that are vital to a business because they move fast and bring in maximum revenue. B is the classification for items of average or middling importance. C is the designation for relatively unimportant items. Therefore, A items should be stored closest to packing stations.
Suggested Reading: More On ABC Counting
- For products that sell fast, consider storing them all in one location close to the second most frequently purchased items. This way, you can schedule frequent stock counts in that one area even as the rest of the warehouse remains operational.
- If you notice that some products move together, such as shoes and socks, stock them in the same location for faster picking. Always work with the assumption that humans make errors when repeating the same task several times.
Simple hacks like these can help reduce these errors significantly.
Once an order comes in, the designated item “picker” is on the clock. You want to save this person’s time in finding the item, and getting it to the packers.
A new picker, or a small retail operation that serves less than 20 customers a day can follow the “single order” system. In this, the picker gathers all the items on one order list before moving on to the next one.
For several low-quantity orders, use a “batch” picking system where the same person can pick up several orders at once.
When you scale up, you can consider two different systems.
Zone Picking and Wave Picking
As the name suggests, zone pickers are assigned a zone in which to operate. Items outside that zone have to be brought in for them by other pickers.
In the wave system, items are picked in their respective zone, then passed on to a packer who will consolidate all the separate picks for each order.
Wave picking is more expensive and time-intensive. It is followed mostly by high-volume retailers shipping multi-item orders, wanting to fulfill orders in record time.
For more details on the order fulfillment process and how you can do it better, take a look at this guide.
4.Warehouse Management And Maintenance:
Safety of stored stock, stock counts, managing damaged products and repairs all fall under this category.
You may have an automated warehouse management system. If so, the best way to keep it up-to-date and ensure it works for you is to take your stock audit very seriously. Stock Reconciliation is a necessary, periodic process of counting and evaluating material/ products. You should ideally do this a few times a year in order to keep the actual physical stock count and the system stock count balanced.
We have a detailed guide on stock reconciliation here. In it, you’ll find information on methods of stock reconciliation, why it is so important and how to keep your operations going even as you conduct a stock audit.
Theft And Damage
Retailers in the US lose about $60 billion to theft and damage in a year. This happens at both the store level and the warehouse level. In a warehouse, there is also the added issue of damaged goods.
It is possible, though, to reduce the amount of stock you lose this way. Stringent security measures, thoughtful storage (keeping electronic goods away from moisture, for example), and training your staff to spot problems can help you.
Managing (And Avoiding) Returns
Usually, customers return a product when it doesn’t meet their expectations.
Introduce a quality check especially in high-return categories. Ideally, such products should be evaluated for damage in the receiving zone, and once again before they are shipped out.
Any product complaints beyond this point can be due to two reasons:
- bad shipping
- wrong specs
If shipping is what’s damaging your product, drop that shipper like a hot potato! It is never worth the headache of returns for the sake of competitive pricing.
Instead, if specifications such as the wrong size are an issue, provide a more comprehensive product description, size guide, and a few extra pictures.
5.Warehouse Management Systems
A warehouse management system is the most important investment you can make in streamlining your warehouse operations. Using this, you always know where stock is, what portion of it is not suitable for selling, how much you have received from vendors and where these received goods need to go.
Using a warehouse management system, you can:
- synchronize inventory across all your storage locations
- set up your physical space for easy navigation
- put away the stock received exactly where it belongs
- fulfill orders from the nearest warehouse that has stock
- optimize your pick-lists for maximum efficiency time and time again
- automate purchase orders so you never run out of stock
- automate transfer orders for better internal movement of stock and more efficient fulfillment
Maybe you aren’t already using a WMS. Perhaps you are, but it isn’t doing all of these things for you. The issue lines in not integrating warehouse management with inventory management.
Systems like Primaseller are built to consolidate all retail operations. This means that your sales data directly ties back to your reorder points, which further impact your purchase orders, which then tie in with how you receive and process stock.
In other words, you get to control every step of the process from a single system, gain better insight into how inventory works for you and cut costs on ordering, storing and holding excess inventory.
You also get to manage your warehouse more efficiently, avoid confusing your staff, and increase the number of orders successfully fulfilled. Isn’t that an investment worth making?
Roles: The Who’s Who of Warehouse Management
Typically, a warehouse manager monitors the flow of goods, warehousing, and shipping operations for each warehouse location. He is supported by a warehouse/ supply chain management team, which comprises of Receivers, Shelf stockers, Finders, Pickers, Packers, Shippers, and Managers.
They look into various aspects such as:
- Optimizing warehouse space to ensure smooth inflow and outflow of products (floor managers)
- Relationships with vendors
- Shipping calendars (administrative)
- No over-stocking or under-stocking/ quality checks (QC execs with the manager)
- Timely shipment and delivery of products (packing executives)
- Minimizing overheads and labor costs(managers)
All About Warehouse Equipment
Warehouse equipment is a world in itself. It should include:
Standard safety equipment as per the Occupational Safety and Health Administration (OSHA) mandates
- Barriers and railings on all elevated areas and stairs as part of the structural design
- Bollards (guideposts for forklift operators) and protective padding or covers for racks, columns, and corners
- Dome or convex mirrors. These safety mirrors provide employees with the necessary visibility when turning corners or moving between high-traffic areas
- Motion sensors or alarm systems
- A first-aid kit (Class A or Class B) as per the risk assessment or safety requirement
- Barricade gates to restrict access wherever needed
- Hard hats
- Safety signs
- Wheel blocks for vehicles
- Surveillance cameras
Efficiency-maximizing tools and equipment:
An automated inventory and warehouse management system is imperative for growing retail businesses.
Apart from software, there are some tools and equipment that can make managing a warehouse easier. These include lift equipment, hand tools, and the like. Mechanized systems such as conveyor belts can also help heavy items get around faster. There should be computers at the receiving and dispatch areas, and bar code scanners for stock-taking and totes for picking.