Warehouse Management

Warehouse Management

Any business that stores items in a warehouse knows that effective management is the difference between fulfilling customer orders quickly and accurately while keeping costs down versus hearing complaints about delayed or inaccurate shipments and higher operating costs.

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 labor, 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.

Video: What Is a Warehouse Management System?

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.

What Is a Warehouse Management System?

A warehouse management system (WMS) is a software solution that aims to simplify the complexity of managing a warehouse. Often provided as part of an integrated enterprise resource planning (ERP) suite of business applications, a WMS can support and help to optimize every aspect of warehouse management. For example, a WMS can:

  1. Leverage data and automation to conduct demand analyses, forecast sales and create efficient daily operating plans.

  2. Provide real-time insight into inventory location and quantity.

  3. Share data with other ERP modules or standalone software products, such as accounting software and transportation management solutions, to increase the efficiency of business operations.

  4. Monitor and report productivity to offer a deeper understanding of how efficiently your warehouse is operating and where you can make improvements to warehouse geography and optimize space.

  5. Create step by step directions to guide users through daily processes—such as receiving, picking and packing orders—using predefined rules.

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:

  1. Know your purpose: A warehouse operation must first and foremost know its objectives. For example, do your customers have specific delivery requirements? Does your inventory need specialized storage? Additionally, all warehouse operations aim to use warehouse space, labor and equipment as efficiently as possible.

  2. Comprehensive control: Warehouse management involves coordinating complex processes involving many moving parts: people, equipment, orders and inventory. Warehouse managers need to be able to track each process in order to ensure it’s running smoothly and solve the problems that inevitably occur. Quality control is critical to ensure orders are fulfilled accurately.

  3. Flexibility and resilience: Warehouse managers have to be able to change plans on the fly, whether it’s because materials have arrived damaged or because inclement weather is delaying shipments. It’s also important to be able to adjust workflows to maximize efficiency, whether that involves rearranging warehouse space or reimagining picking processes.

  4. Customer focus: On-time delivery, with the correct product, is one of the most important metrics when it comes to customer service and satisfaction. To deliver on time, you need to be able to fulfill orders quickly and accurately.

  5. Data-driven decision making: Even if every warehouse process appears to be running without a hitch, it doesn’t mean processes are operating as efficiently as possible. A WMS can help you pinpoint and analyze areas that need improvement.

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:

  1. Receiving: Check in and log incoming items. Verify that you’re receiving the right quantity, in the right condition, at the right time.

  2. Put-away: Move items from the receiving dock to their correct storage locations.

  3. Storage: Safely store and logically arrange inventory to enable fast and accurate picking.

  4. Picking: Collect the items needed to fulfill sales orders.

  5. Packing: Prepare the picked items for shipment. They must be safely packed into the correct packaging with an accurate packing slip.

  6. Shipping: Send out the finalized sales orders, ensuring that they are on the right vehicle, at the right time, with the correct documentation, so customers receive their orders on time.

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