Everything You Need to Know About Streamlining Warehouse Operations
Do you know how to save time, reduce errors, and drive down costs in the warehouse management process? We do.
In the warehousing industry, time is money and simple mistakes are both time-consuming and expensive to correct. But who’s to blame when inventory is lost during the put-away process, when an order is picked incorrectly and shipped to the customer, or when daily operational tasks simply take too long to complete?
More often than not, errors and inefficiencies in the warehouse aren’t caused by slow or inattentive workers – they’re caused by weak operational processes that make it a daily struggle to get things done.
In this ultimate guide to warehouse operations management, we’ll provide an overview of the warehouse management process and explain how to optimize each step so you can drive down warehouse labor costs, boost efficiency, and increase profits in your business.
What is Warehouse Operations Management?
Warehouse operations management deals with the optimization and oversight of six core operational processes in warehousing: receiving inventory, putting inventory away, storing inventory, picking orders, packing orders, and shipping orders.
Warehouses execute on these six processes every day with two main goals: speed and accuracy.
Speed correlates directly with labor and cost efficiency in the warehouse. The faster your workers can put away inventory or pick orders, the lower your labor costs will be and the more profit you’ll earn.
Accuracy is all about reducing or eliminating mistakes that are time-consuming, costly, or negatively impact the customer experience. Errors in put-away lead to misplaced inventory in the warehouse that can’t be sold until found; mistakes in order picking result in poor customer experiences and refunds or returns that cost hundreds of dollars to process and correct.
The goal of warehouse operations management is to maximize profits by optimizing every operational process in the warehouse for speed and accuracy. Before we share how, let’s take a closer look at each of these processes and how they work together.
How Does the Warehouse Management Process Work?
A warehouse has two important operational functions: an inbound function (receiving inventory into storage), and an outbound function (shipping inventory to customers).
These two functions break down into six processes, described below, that make up the operational process flow of a warehouse.
Receiving is the warehousing process where inventory is transferred from a cargo truck and into your warehouse through a receiving dock. This also represents a transfer of responsibility for the goods and a shift in liability for their condition from the transportation company to your warehouse.
As part of the receiving process, and before assuming responsibility for new inventory, warehouses must verify that they have received the right inventory, in the right quantities, and in the appropriate condition to be sold on to consumers.
Once inventory has been received, the next step in the warehouse management process is put-away. Put-away is the warehousing process where newly received inventory is moved from the receiving dock to its optimal storage location in the warehouse.
While the put-away process deals with the physical act of moving inventory to its optimal storage location, the storage process involves configuring your warehouse in a way that supports efficient order picking and put-away while minimizing wasted space (both horizontal and vertical) and leaving enough room for employees to safely move around.
Choosing the right storage system, storage containers, and even the width of aisles in your warehouse can significantly impact overall efficiency.
4. Order Picking
Order picking is the most expensive and labor-intensive part of the warehouse management process, accounting for up to 55% of total operational costs.
In the order-picking process, warehouse employees navigate the warehouse storage area to retrieve the products listed in a customer order. A streamlined order picking process drives customer satisfaction by ensuring that each order is fulfilled accurately and completely before being packed and shipped to the customer.
5. Order Packing
In the order packing process, a warehouse employee takes the picked items for a customer order, packs them in an appropriate box or mailer, adds any required packing materials to protect the items in transit, and attaches a shipping label to ensure that the order reaches its proper destination.
Shipping is the final stage in the warehouse management process. In the shipping process, customer orders that have been packed and labeled will be aggregated at the warehouse loading dock. From there, the packages will be collected by a shipping carrier (e.g. DHL or FedEx), who will ship them to their next destination.
Warehouse Management vs. Inventory Management – What’s the Difference?
Warehouses carry inventory, but warehouse management and inventory management aren’t quite the same thing.
While warehouse management focuses on the high-level processes of receiving inventory, storing it, picking orders, and shipping them to customers, the inventory management process is more narrowly focused on tracking and managing inventory levels in the warehouse.
Your warehouse can monitor inventory levels through physical inventory counts, cycle counts, or using perpetual inventory software. Inventory counts must be updated as inventory enters or leaves the warehouse in the put-away and order-picking processes.
By maintaining accurate inventory counts, you can effectively allocate financial and logistic resources to restock the appropriate items and avoid stock shortages before they delay order processing and negatively impact the customer experience.
Inventory management and warehouse management are not the same, but they certainly work hand-in-hand. Effective inventory management supports the warehouse management process by maintaining the inventory levels needed to fulfill orders without unnecessary delays.
Seven Strategies for Optimizing the Warehouse Management Process
Now that we’ve outlined the warehouse management process, let’s look at seven strategies warehouse managers can use to optimize the warehouse management process for speed, accuracy, and customer satisfaction.
For each strategy, we’ll provide an overview of how it works and which aspect of the warehouse management process can be improved as a result.
1. Align Workforce Supply and Workload Demand
Overview: Every warehouse manager recognizes labor as a key cost driver in the business, but running under-staffed can also lead to inefficient processes and delays that impact customer satisfaction.
Instead of trying to minimize labor hours, warehouse managers should focus on eliminating labor waste by scheduling the right number of employees based on the anticipated workload. When large shipments of cargo are expected, additional labor may be needed to quickly and accurately receive inventory without creating back-ups or delays at the unloading dock. When large amounts of orders are expected, additional labor may be needed to pick those orders in a timely fashion.
Impact: Aligning workforce supply with workload demand helps maximize labor efficiency while ensuring that key processes like receiving, put-away, order picking, and packing proceed smoothly and accurately.
2. Set Up a Dedicated Unloading Area
Overview: When large inventory shipments are inbound, the unloading dock in your warehouse is prime real estate. Warehouse employees need this space to efficiently execute on the inventory receiving process, which includes counting, weighing, and verifying the condition of new inventory before it can be put away in the warehouse.
Setting up a dedicated unloading area means allocating sufficient space for employees to perform these critical tasks. Once the receiving process has been completed, new inventory should be moved away from the unloading area and into a dedicated staging area for the put-away process.
Impact: Establishing a dedicated unloading area in your warehouse helps avoid unwanted accumulation of inventory at your unloading docks so you can keep the receiving process rolling smoothly during periods of high volume.
3. Use Data to Improve Your Storage Layout
Overview: The most efficient warehouses have taken a data-driven approach to optimizing their storage layout. This can include optimizing the width of storage aisles in the warehouse, adding cross-aisles to minimize travel times during the order picking and put-away processes, and choosing the right storage system (e.g. floor/block stacking, pallet-flow racking, push-back racking, etc.) to keep inventory flowing efficiently.
Identifying high-turnover items in your warehouse and storing them in the most accessible areas (e.g. closer to loading/unloading docks) reduces the time it takes for employees to pick or put away those items.
Impact: Optimizing the storage layout in your warehouse accelerates the order picking and put-away processes, resulting in less wasted steps and more productive employees.
4. Focus on Order Picking Optimization
Overview: Order picking is the most costly and time-consuming warehouse management process, so optimizations in this area can have a significant impact on your overall operational efficiency.
You can minimize the walking time and man hours needed for order picking by organizing your warehouse so that high-volume inventory is located near the loading docks, while low-volume inventory is located further away.
You’ll also need to choose the right picking methodology to minimize travel time for warehouse employees in the order picking process. Common picking methodologies include:
- Piece Picking, where a single worker is assigned to pick all items for a specific order before delivering them to the packaging area.
- Batch/Cluster Picking, where a single worker is assigned multiple orders that can be efficiently picked at the same time.
- Zone Picking, where multiple orders can be filled simultaneously by dividing the warehouse into zones and assigning each worker a dedicated zone from which to pick items.
- Wave Picking, where orders are batched and released to pickers at specific times during the day.
Piece picking is the simplest, but the least efficient way to pick orders, while methodologies like cluster and zone picking deliver much greater efficiency – especially for warehouses with a high number of SKUs and many orders to process.
Impact: Optimizing your inventory locations and order picking methodology decreases average order picking time and minimizes worker fatigue, leading to faster throughput and fewer errors.
5. Quality Control Your Order Packing Process
Overview: When an incorrectly fulfilled order ships to the customer, the result is never good for your business.
Errors in the order picking process lead to dissatisfied customers and returned products that are costly and time-consuming to receive and put away – if they can even be sold again. You’ll also need to re-ship the correct item to the customer, often at your own expense. And if you fail to provide a great service experience, there’s a chance you’ll lose that customer for good.
A great way to avoid shipping incorrect orders is to add quality control to your order packing process. Packers can use WMS software to reference the customer’s order and double-check that it was picked accurately.
Impact: Industry experts estimate that error rates in the order picking process are around 1-3% for a typical warehouse, with errors costing between $50 and $300 depending on the order value. For a warehouse that processes 100 orders/day, reducing the rate of picking errors from 3% to 2% could result in savings of more than $100,000.
6. Choose a Digital Warehouse Management Solution
Overview: Digitizing the warehouse management can have a tremendous positive impact on efficiency, but research indicates that less than 30% of warehouses in the United States are operating efficiently and many are still dependent on paper-based warehouse management systems.
In its 2022 Materials Handling Technology Study, the Peerless Research Group found that just 56% of survey respondents used Warehouse Management Software (e.g. warehouse management systems (WMS), inventory management, etc.) to help organize warehouse management processes.
Impact: WMS software solutions (e.g. Infoplus Commerce) empower warehouse managers to increase operational efficiency by digitizing critical functions like inventory, labor, and order management, quality control, warehouse layout planning, and 3PL billing. Adopting a WMS can positively impact the efficiency of all six core warehouse management processes.
7. Bring Software and Technology to the Point of Task
Overview: Employees can use WMS along with digital technologies like barcodes or RFID tags to track the movement of inventory in the warehouse and ensure they’re picking the right items to fulfill each order. But it doesn’t make sense (or save time) for workers to travel back and forth from a stationary workstation to scan barcodes.
Instead, warehouse managers should provide workers with battery-powered mobile computer carts that bring digital picking lists, inventory management systems, and barcode/RFID scanning capabilities directly to the point of task.
Impact: Deploying mobile computer carts in your warehouse unlocks the full power of software-driven warehouse management, driving efficiency in every aspect of the warehouse management process.
In receiving, workers can document the verification process and print barcode labels to ensure accurate inventory management. Workers engaged in putaway can reference the warehouse storage layout to maximize accuracy and prevent lost inventory.
When it’s time for order picking, workers can access digital picking lists and scan barcodes while on the move, eliminating wasted steps and reducing errors in the order picking process. And during packing, workers can easily reference digital orders to verify picking accuracy and ensure downstream customer satisfaction.
Maximize Warehouse Efficiency with DTG Power Mobile Warehouse Carts
The Problem Solver™ cart from DTG Power is a customizable, battery-powered mobile workstation, purpose-built to drive efficiency in every aspect of your warehousing operations – from receiving, putaway, and storage, to picking, packing, and shipping.
Our Problem Solver™ warehouse cart brings people and technology to the point of task, empowering your warehouse employees to execute every process in the warehouse with speed and accuracy. As a result, you’ll benefit from:
- Enhanced Process Efficiency
- Zero Wasted Steps
- Reduced Worker Fatigue
- Fewer Errors
- Faster Processing
- Time Savings and Reduced Operational Costs
- Increased Profitability
Ready to learn more?
Download our Industrial Mobile Workstation Brochure to learn more about streamlining your warehouse processes with mobile computer carts.
You can also check out the Problem Solver Case Study Video on our YouTube channel to see how a top-tier electronics company turned to DTG to improve their shipping processes.
Or, Contact us for a free live virtual demo of the powerful features and customizations available for your DTG Problem Solver™ warehouse cart solution.