A warehouse stores all your finished and unfinished goods until it is ready to be delivered. Some businesses choose to invest in in-house warehouses, while others hire distribution centers or fulfillment services.
Each step of the order fulfillment process should be efficient and this starts with excellent warehouse management.
What is the process of warehousing?
Warehouses go through the different steps of the process to ensure that items are stocked and ready for sale. Companies prioritize various aspects of the method according to their goals and strategies. However, each one will follow some variation of these tasks.
Inventory tracking monitors stock levels at the warehouse and checks if goods are being ordered and delivered to the warehouse. Barcodes and SKUs (stock-keeping units) are used to detect the location of products in the warehouse and inventory levels.
Receiving and Storage
Items delivered to the warehouse need to be checked, entered into the inventory system and stored away. Products are stored in the long term and short term locations until they are bought. Warehouse management systems help to speed up the process and document inventory in real-time.
Picking and Packing
A pick-list is generated once an order is made and sent to the warehouse team. Items are identified by their SKU, located in the warehouse, and taken off the shelf for packing.
All packed items are collected by the shipping carrier from the warehouse to be shipped out. Therefore, warehouse teams systematically prepare shipments for delivery while warehouse management systems send tracking numbers to customers.
Reports are vital in tracking the progress of the warehouse and managing challenges that it may face. For example, reports will detail the accuracy of orders fulfilled, labor management, average order processing timing and help forecast future requirements.
Types of warehouses
Smart warehouses have automated systems to facilitate the order fulfillment processes. It could include software to integrate warehouse and inventory management.
Some warehouses are also equipped with robots to assist with tasks like picking and packing. These warehouses usually utilize RFID (Radio-frequency identification) technology to keep track of inventory in real-time.
Climate controlled warehouses
These warehouses control the temperature range, airflow and humidity to store climate-sensitive products and protect them from damage. These warehouses eliminate the risks of mildew or mold and protect sensitive goods from rotting.
Businesses with products that require extra care such as food companies, furniture or electronics should look out for services like these.
Bonded warehouses store imported goods without paying duties for a period of time. When the products are released to customers, the businesses are liable to pay the duties and taxes. It protects businesses from paying extra fees for products that might not be sold.
These warehouses usually partner with freight companies to handle logistics.
Distributions centers hold items temporarily and move them quickly throughout the supply chain. It is able to handle a large amount of inventory and expedites delivery to resellers and retailers. It is able to take perishable items that might even turn over in a day.
Distribution centers are typically affordable and can accommodate a variety of products.
What is warehouse management?
Warehouse management refers broadly to handling efficient movements of products and materials within the warehouse. The process starts from ordering goods all the way to shipment, and the cycle repeats.
Systematic warehouses also manage human labor effectively and maintain a safe working environment for their staff.
Warehouse management systems are software that helps automate processes to increase accuracy and speed. Digital management tools could potentially be more economical by decreasing labor costs and growing organization within the warehouse.
Types of warehouse management systems (WMS)
The four main types of systems used in a warehouse are as follows:
- Standalone WMS
- Supply Chain Execution Modules (SCM)
- Integrated Enterprise Resource Planning (ERP) Systems
- Cloud-Based WMS
These systems offer a variety of tools that have similar features but function slightly differently.
Standalone systems are usually the most affordable and is ideal for small businesses. However, it does not manage other steps of the logistics process and does not integrate well with other systems.
SCM software is more integrated and is able to manage the entire supply chain process.
On the other hand, Integrated ERP systems include software that is also able to handle management systems outside the order fulfillment process such as human resources and customer relationship management.
Each of these systems usually requires on-premise hardware to be built. Cloud-based WMS are becoming more popular with data being stored in the cloud and easily accessible remotely.
Benefits of warehouse management
A well-managed warehouse increases the productivity and profitability of a business. Labor is well organized, customers’ orders are prepared quickly and damages are minimized. Smooth operations allow you to get the best out of your employees and the resources around you.
Warehouse management systems saves time for businesses and reduces human errors. MultiB2B offers warehousing or integrated fulfillment to simplify the fulfillment of online orders and dropshipping solutions for the manufacturers to sell on major online marketplaces in the USA.
It allows companies to have real-time data and enable quick decision making to resolve any issue that occurs. Better inbound and outbound supply chains result in providing better customer services and more satisfied customers.
Measuring warehouse performance
Warehouse performance can be measured by how efficiently the warehouse operates.
For example, one way to measure performance is to track the average order processing time and efficiency of inventory handling. The more efficient the warehouse, the quicker it is to process items in and out.
Warehouse management issues faced in the US
Ideally, warehouses should run smoothly without any issues. However, realistically, there are often many hiccups when operating a warehouse especially when you are just starting out and shipping to big markets like the US.
Proximity to customer location is a big challenge for warehouses as costs can run higher when operating in prime areas. For manufacturers looking to have warehousing arrangements in the USA, it is desirable to have warehousing facilities both on the east and west coasts. Delivering from strategically located warehouses reduces costs and shipping times.
Cost of warehouse management systems
Automated systems such as smart warehouses increase efficiency dramatically but they can also be expensive. Businesses just venturing into the US may want this competitive advantage to keep up with the demands but may not be able to afford it.
Consider partnering with established logistics and fulfillment partners who might already have these functions.
Demands for goods fluctuate dramatically during festive and sale seasons.
For example, Christmas, Black Friday Sales or Cyber Monday Sales can cause a dramatic spike in sales. Keeping up with these can be difficult and businesses often fail to provide their best service during these times.
Maintaining accurate data collection allows forecasting of what the seasonal spike should look like. Resources can be reallocated to meet the demands and items should be arranged according to popularity to reduce order lead times.
Being able to provide good service during seasonal sales is a sign of an excellent company.
Warehouse space can quickly become limited in a growing company. Accumulated goods can start to pile up and become hazardous if the room starts to run out, especially if inventory is stocked up quicker than its turnover.
Improved systems storage and maximizing shelving units can help keep things systemized and reduce accidents.
Growing businesses should consider midterm and long term goals and handle warehouse solutions accordingly. Moving from an in-house warehouse center to a fulfillment or distribution center can help businesses transition as the market demand increases.
Inaccuracy in the inventory stocks turn into problems when packing items for orders but things are out of stock. Poorly maintained inventory also lowers productivity and potentially builds up reserves that are obsolete.
Integrating inventory management and warehouse management systems provides real-time stock counts and accurate information.
Warehouse management plays a vital role in ensuring that your business is performing at the highest level of quality. The best warehouses are a combination of excellent decision making and software that have precise data collection.
If you are new to the US market, it is advisable to partner with end to end fulfillment agencies that have pre-established warehouses with complete WMS and other facilities.