Warehouse Software Management
You can purchase land, lease a facility, hire staff, buy equipment, and get customers to buy from you — but it doesn’t stop there. Proper warehouse management is what will determine how successful a business will be.
What Is Warehouse Management?
Warehouse management encompasses the principles and processes involved in running the day-to-day operations of a warehouse. At a high level, this includes receiving and organizing warehouse space, scheduling labour, managing inventory and fulfilling orders. Zoom in closer and you’ll see that effective warehouse management involves optimizing and integrating each of those processes to ensure all aspects of a warehouse operation work together to increase productivity and keep costs low.
Benefits of Warehouse Management
Warehouse operations are generally invisible to customers, but they play a vital behind-the-scenes role in ensuring on-time delivery. To achieve this goal, good warehouse management ensures all warehouse processes run as efficiently and accurately as possible. For example, warehouse management involves optimizing the use of warehouse space to maximize inventory storage; making inventory easy for staff to find; ensuring adequate staffing; efficiently fulfilling orders; and coordinating communication with suppliers and transportation companies so materials arrive and orders ship on time.
The benefits of good warehouse management—namely fast, high-quality service at low cost—can ripple out to the entire supply chain, strengthening relationships with suppliers as well as customers.
But given the many elements involved, optimizing warehouse management can be a complex task. That’s why many organizations are turning to warehouse management systems for help.
Principles of Warehouse Management
Understanding the general principles of warehouse management can help you focus your efforts to optimize the way your warehouse operates. These principles include:
Know your purpose
Comprehensive control
Flexibility & resilience
On-time delivery to customer
Data-driven decision making
Warehouse Management Processes
Warehouse management includes six core processes. Each process influences the efficiency of the next, so every step must be optimized for the warehouse operation to run like a well-oiled machine:
Receiving
Put-away
Storage
Picking
Packing
Shipping
Warehouse Management Fulfillment Strategies
Selecting fulfillment strategies that match the business’s size and the volume and type of orders it receives can help the organization ship products faster, minimize waste and improve customer satisfaction. Applying picking strategies that match the type of orders that you receive can help maintain the most effective workflow. For example:
- Batch picking is a technique that can help you quickly fulfill multiple orders for the same product without wasting time by continually revisiting the same inventory location.
- Zone picking assigns pickers to different zones of SKUs. For each order, pickers are resonpsible for picking all SKUs from their designated zone.
- First expired, first-out (FEFO) picking ensures perishable products and items make it to customers before specified expiration or sell-by dates. With FEFO, the products set to expire first are shipped first.
- First in, first-out (FIFO) picking ensures the first products to come into the warehouse are the first to be distributed, which can help make sure older items are shipped before they can become obsolete.
Technology is also an important part of any warehouse management fulfillment strategy. Handled mobile devices that display packing lists with item locations, serial numbers and lot numbers can help increase picking speed and accuracy. The software can recommend safe and cost-effective packing based on product dimensions to ensure each item gets shipped securely, with as little waste—and wasted space—as possible.
Warehouse Monitoring & Reporting
Measuring and tracking key performance indicators (KPIs)—operational statistics that indicate how well the warehouse is operating—can help pinpoint problems and highlight opportunities to improve efficiency and fulfill customer orders more quickly and accurately. For example, you can set a target for improved picking and packing accuracy, then make changes to your picking processes and measure whether those changes are effective in helping you achieve your goal.
Warehouse KPIs
Warehouse managers often track the following KPIs, among others:
Receiving efficiency or productivity
The volume of goods received per warehouse operator, per hour. Higher scores indicate greater receiving efficiency, while lower scores indicate that there may be problems that should be investigated.
Picking accuracy
The number of orders accurately picked is divided by the total number of orders picked (including incorrect or short orders). The closer to 100% accuracy, the better.
Order lead time
The average time it takes for an order to reach a customer once the order has been placed. For the highest customer satisfaction, the shorter the lead time, the better.
Rate of product return
The rate at which sold goods are returned by customers, calculated by dividing the number of items returned by the number of items sold. To get a full picture of this KPI, it’s important to consider why products are being returned—a customer accidentally ordering the wrong product might not signify warehouse operation issues, but there is room for improvement if customers often receive incorrect products or damaged goods.
Inventory turnover
How much inventory is sold and replaced in a given period of time? It’s calculated by dividing the total cost of goods sold during the period by the average cost of inventory during that period. This KPI reflects how efficiently a warehouse manages inventory to meet demand. In general, higher inventory turnover is better. If a warehouse overestimates demand, inventory turnover may be low. Too much slow-selling inventory can be costly—especially for businesses dealing with goods that have a predetermined self life.
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