Table Of Content
- Warehousing Benefits
- Key to Managing and Improving Warehouse Operations
- Best Practices for Efficient Warehouse Management
- Warehouse Management System: When to Use? Benefits
- Managing Multiple Warehouses: Things to consider before opting for it
- Managing Multiple Warehouses
The process of storing inventory or items that are to be distributed to the customers is what we refer to as warehousing. Warehouses can be of different sizes and types based on the requirements of a business. A small-scale business that has just started out can be operated from the owner’s house, a storing unit, basement, or a garage while the larger ones usually rent out a separate area that is specifically meant for storing the inventory.
Warehouse management is one of the most important aspects of eCommerce fulfillment. It is crucial for any eCommerce business to get this part right as it makes or breaks a brand. In general, warehouse management in eCommerce dictates day-to-day warehouse operations that include the following:
- Managing inventory and all the equipment efficiently so as to ensure the safety of all goods.
- Demand forecasting
- Maintaining relationships with courier companies for timely delivery of items to end customers
- Scaling warehouse operations with business growth
- Tracking daily inbound and outbound shipments
- Training warehouse staff members to increase productivity and efficiency
Warehouse management directly impacts customer satisfaction. While brands keep looking for new and improved ways to boost customer satisfaction, the basics are lost in the process. The ground rules always remain that “if a customer is unable to purchase the required stock or finds the order process difficult, they will shift to a different supplier. And, that’s why you need to have an effective warehouse management system.
Like mentioned above, different types of businesses use different warehousing methods. Small or medium sized businesses either outsource to 3PL or 4PL companies or maintain a single warehouse/storing facility. A larger business, on the other hand, could be running multiple warehouses simultaneously. Regardless, warehousing has its advantages and it should be handled efficiently and effectively to ensure smooth functioning of your business. Let’s take a look at some of the major warehousing benefits and the key to managing and improving warehouse operations.
Customers expect fast delivery and brands compete with one another to deliver just that. For a sizable business, when choosing where to store your inventory, it is recommended to consider distributing it to multiple warehouses across locations. This keeps the inventory closer to end customers, thereby, reducing the time and expenses on the delivery. For small businesses, 3PL and 4PL can be engaged to ensure faster delivery to the end customers.
Better Inventory Management
eCommerce warehousing can improve the accuracy of inventory tracking and prevent items from any sort of damage. With the right warehouse management system in place, this can help you track inventory turnover rates and proactively reorder inventory.
Time is money and it holds true for eCommerce business in the most literal sense. Without a proper storing space and a system, it will take forever to go through the pile of items that you can better utilize in scaling your business growth.
As your eCommerce business proliferates, you have to make sure that your warehouse is managed efficiently. The day to day warehouse management operations ensure that inventory is received, stored, picked, packed, shipped, and replenished in the most efficient way possible. When warehouse operations are efficient, your business could significantly cut on the operational costs and keep customers satisfied. But, when improperly managed, there is a delay in your orders, workers will not be as productive as possible, and your company loses money and reliability. So, how can you, as a retailer, make sure that your warehouse operations run smoothly?
The Key to Managing and Improving Warehouse Operations
A strategic warehouse plan should include diagrams such as floor plans and documentation of resources such as space, labor, and equipment and how each warehouse function utilizes what portion of each of these assets. It is quite essential when you want to maximize the use of each component. According to Princeton’s Annual University Press Statistics, these are some of the crucial steps you need to take to develop an efficient master plan:
- Define the function you want or need to accomplish
- Determine how the function will be accomplished.
- Determine the equipment needed to accomplish the function.
- Define the function’s space requirements.
- Estimate the function’s support needs and include changes within your workflow
Even though you have a functioning warehouse management operation in place, there is always room for improvement. Warehouse operations managers can improve warehouse performance by monitoring key performance indicators (KPIs) such as:
- Receiving efficiency
- Picking accuracy
- Carrying costs
- Inventory turnover
- Rate of return
- Backorder rate
- Order lead time
These KPIs will help you gain an optimal performance rate. Supply chain technology and analytics should be used to forecast the demand rate. Having an excellent supply chain visibility is key to eCommerce operations. During eCommerce events like seasonal sales, there should be adequate inventory and suppliers on call due to the spike in demand. You can monitor trends, of course, and prevent yourself from ordering excess inventory but there is always a possibility of storing items above the threshold. It helps in mitigating potential risks in your warehouse and doesn’t affect your eCommerce rankings or business performance.
Best Practices for Efficient Warehouse Management
There is no concrete set of checklists for you to manage your warehouse, however, there are some tried and tested practices that come in handy in streamlining warehouse operations.
- Audit your warehouse operations: One of the tools in managing warehouse operations is conducting an operational audit. Auditing your warehouse every year helps you in updating stock and accounting for all products gone missing. Evaluate whether changes need to be made to make it run more effectively. This also helps you in gauging your supply chain performance.
- Implement cross-docking and labeling: Cross-docking is the practice of unloading materials from an incoming vehicle and immediately loading the same items directly onto the outbound vehicles with minimal warehousing interval in between. It helps in reducing the TAT and increases profits and is of course, time-saving. Mostly, the companies in the pharmaceutical sector use cross-docking to save time and distribute their perishable products to the end consumer. Walmart is also known to implement cross-docking for a lot of their items.
- Labeling also helps in having a fast-moving warehouse. SKU numbers, clear labels, or barcodes can help in the easy identification of your products.
- Implement safe measures in your warehouse: A safe warehouse means implementing regular training and awareness courses. The staff that knows how to use equipment safely and adequately typically keep warehouses running more efficiently and better managed. Safety protocols must be followed sincerely, and danger zones must be marked and noted by the staff.
- Increase staff productivity: Managing a warehouse needs a productive team to make sure orders are not delayed. A warehouse manager can make sure the staff is adequately taken care of and efficiently conducting themselves. Loyalty programs, incentives, and other morale-boosting programs can be set up so that they do not feel burdened. The workers should also be educated and trained correctly to maximize productivity. A lot of brands conduct seminars and workshops for their employees to ensure that their staff is well-trained and informed about the operations.
- Maximize your space: As we said earlier, having proper documentation of your floor plan and warehouse space helps you take care of more inventory. The warehouse should be organized in such a way that the operation flow from receiving to packing is done smoothly. Making use of vertical space and bin locations also helps in maximizing your warehouse space and easy to navigate.
- Track the right metrics: Tracking the right KPIs makes all the difference. It helps you gauge your vendor performance, delivery accuracy, customer satisfaction, and much more. Using data to analyze these metrics are also important. Having a thorough understanding of these numbers is also crucial for the growth of your eCommerce business.
- Invest in a Warehouse Management System: WMS systems are meant to automate and implement tracking in a day to day activities of a warehouse. Locating a particular item within the warehouse can be challenging for a large warehouse with multiple staff members. WMS solves that pain. It is much more beyond that. WMS is capable of monitoring product quantities, cycle counting, picking, packing, shipping, and managing multiple locations. Although a time-consuming process, automating your warehouse operations is super beneficial.
Warehouse Management System: When to use? Benefits
Deploying a warehouse management system allows your company to optimize warehouse operations, cut on any labor expenses, keeping a check on the inventory levels, and maintaining its accuracy. Automating your warehouse operations is important but one should be careful about when and how to go about it.
For a larger warehouse with multiple staff members, one of the major challenges is to locate a particular item. With a WMS, this becomes a matter of seconds. Furthermore, a WMS is capable of monitoring product quantities, cycle counting, picking, packing, shipping, and managing multiple locations.
Here’s a checklist for when you need a warehouse management system for your organization:
- You have a large warehouse or multiple warehouses
- You fail to dispatch orders within specified SLA
- It’s challenging to track your shipments and returns
- You find it extremely time-consuming to search for a product in the warehouse
- You process more than 50 orders a day
- There is more than one team member doing the pick and pack job
Benefits of a Warehouse Management System (WMS)
The WMS system integrates the workers, task handling types of equipment, storage tracker onto a platform called WMS. It majorly prevents manual errors by working on system directed operations of receiving, putaway, picking, and shipping. Let’s look at some of the major benefits of a WMS.
- Complete Inventory tracking
Systematic tracking of inward, outward, and the overall movement of the stock within the warehouse ensures avoid inventory shrinkage. Additionally, item-level barcoding enables the complete history of a particular item. This is particularly helpful when a product is RTO and gets re-shipped.
- Optimizing Space utilization in the warehouse
By handling your inventory in the right manner, you can effectively minimize the situations of overstocking and under-stocking of products. Simply put, it enables accurate slotting, stocking, and order pulling.
- Detailed Quality Control at the Time of Receiving
The system facilitates a detailed QC process at the time of receiving to ensure that the right item gets inwarded into saleable inventory. The remaining items get tracked as rejected and can be later returned to the vendors. This majorly saves costs in the case of miss-shipments by the vendors and further your customer service efforts.
- Increased productivity
The team members know the exact location of the product’s shelf and this reduces the time and risk of stretching the period. The staff gets to pick more orders in less time, increasing efficiency in the order fulfillment process.
- Accurate Inventory planning
Get insight into the most popular items during a specific time period. This will help you decide which products to invest in at that point in time.
- Checking on received products
Keep a record of received products and ordered products handy with GRN report in order to avoid paying extra to the supplier. It ensures all the delivered items are recorded correctly.
- Elevate customer satisfaction
Ensures prompt and accurate product delivery which helps in the reduction of customer complaints and increases timely delivery.
- Enhanced Security
A WMS helps you keep accurate records of inventory, providing you with user-specified logins so that managers can ensure the staff is not slipping extra products on delivery.
- Product-Friendly Model
A WMS should support different distribution methods including FIFO that allows warehouse operators to implement this method when they need to ensure that the expiring and perishable items are picked first.
- Visibility into important metrics
WMS captures various data points that come in handy when running critical reports like Inventory aging, restock calculations, SLA deviations in fulfillment, etc.
Managing Multiple Warehouses: Things to consider before opting for it
We just discussed how you should implement a WMS if you own multiple warehouses. While a WMS helps, handling several warehouses at the same time can be quite challenging. You often question if you should shift all of your attention to the business growth or worry about making space at your in-house storing unit to store more products? You can always consider giving away your warehousing department to a third-party or if you have the team and resources, get on with it on your own. Nonetheless, you should evaluate all your options. For multiple warehouses management, you can opt from any of the following options:
Third-Party and Four-Party Logistics (3PL and 4PL)
These order fulfillment centers are handled by logistics companies who manage end to end business right from stocking to packaging, shipping, etc. These are effective if you don’t want the pain of running your warehouses.
A 3PL company is on the forefront of carriers arrangement and warehousing. They deal directly with the service providers. A 4PL on the other hand, arranges the same services for their clients but instead of direct handling, they engage 3PL companies and other service providers who use their network of carriers and warehousing providers.
Source: Warehouse Anywhere
Company-owned fulfillment warehouses
These distribution centers are owned and maintained by the respective organizations and the order fulfillment centers are operated by channels (e.g., Fulfilment by Amazon, Flipkart Advantage)
These fulfillment warehouses are owned and handled by the channels that store and sell these products. They work in the SOR (Sell or return) model. Here, the channels own the warehouses and manage everything on their own. The sellers have to pay for the warehousing fees, logistics charges, pick pack fees, and commission on sales.
All of these have their own sets of advantages and disadvantages. You can go through them in detail here.
However, there are a few major things that you should check before opting for multiple warehouses or distribution points.
- Operating costs for opening additional warehouses
- The number of SKUs
- Monthly order volume
- ROI on additional expenses
If these aspects are sorted, you are off to a good start. Now, let’s move on to how you handle multiple warehouses after these are up and running.
Managing Multiple Warehouses
Multiple warehouses give you the benefit of time and utility that can’t be easily achieved with a single warehouse. The deliveries to customers get faster, transportation costs are reduced and it provides the business easy accessibility to raw materials and storage.
However, these come with a plethora of operational challenges that might affect the productivity and efficiency of your eCommerce business. Automating WMS with advanced features to assign, redirect, restock inventories on a real-time basis is the most optimal solution. Here is what you look for in a WMS while you have or hope to manage multiple warehouses:
- Cloud-based system
For multiple locations, a WMS that is cloud-based allows you to monitor your inventory from anywhere on a real-time basis.
- Option to set stock level and re-order alerts:
To achieve the optimum level of inventory management, it is important to identify the maximum level, minimum level, average level and reorder level for each SKU per warehouse. This helps in minimizing the cost of overstocking and out-of-stock situations where you lose out on sales.
- Inventory Forecasting tool:
The inventory forecasting tool is fairly vital to understand the pattern of stock movement. It is not necessary to maintain each SKU in every warehouse owned. have backup plans for each aspect of inventory management.
- Make Warehouse wise inventory record:
While keeping records of the available inventory, it is always advised to keep the record warehouse wise so that any overbooking can be redirected to the available warehouse for a successful order fulfillment.
- Automate Warehouse Management
Automation of each warehouse includes cycle count, serialization of stocks, quality check, put away option, shelving, barcode scanning, PO generation, gate pass, and a lot more.
- Identify Stock Demand segregated Geographically
Multiple geographic locations will have different demands, choices. The Omnichannel solution must have an excellent data analytics tool to provide a report on the demand pattern on the basis of warehouse location and season of sale.
- Have multiple supplier management for high demand products
For fast-moving items are items, there is always a concern of shortage that might go unnoticed. Therefore, it’s always safe to have multiple suppliers who can constantly fulfill high-selling items in the stock.
- Audited stocklist Report:
The inventory Count feature in a WMS is used to avoid unexpected stock shortages. All these reports on the dashboard must reflect data that will help you understand your inventory status on a regular basis across the warehouses.
A lean and efficient warehouse keeps your eCommerce business running efficiently and does not hinder your supply chain. Each action should support the organization’s goals while being aimed at increasing productivity and safety, optimizing space, reducing costs, and top-notch customer service. A perfect mixture of automation and manual labor can make managing your warehouse a piece of cake.
EasyEcom’s centralized inventory management solution comes with an advanced state of the art WMS platform which has built-in provisions to handle bulk orders and accounts reconciliation tracking for all your warehouses. Our WMS Solution seamlessly integrates with all the major sales channels. You can sign for a free demo here.
Are you looking for an omnichannel inventory management solution with integrated B2B order management for your eCommerce business? Drop us a line at [email protected] or directly sign up for a demo here.