Order fulfillment is the key to success when it comes to eCommerce companies. One of the most critical factors in your long-term performance is the pace and precision of filling orders. If you want to be effective, you must properly store and arrange your inventory to be selected, packed, and delivered with the utmost quality, pace, and accuracy. It is where warehouse optimization steps in.
Warehouses come in a variety of sizes and forms, and many are used for particular purposes. Cold storage warehouses, for example, excel in temperature-controlled processing for perishable items, so the procedures and practices vary from those of a warehouse relating to a particular retail company, an electronic goods warehouse, or a commercial storage warehouse. As a result, there is no one-size-fits-all warehouse layout optimization solution. Nonetheless, there are several common steps in the method to follow and best practices to follow.
Warehouse optimization improves customer loyalty and experience by using time, space, and resources in a warehouse more productive through efficiency and meticulous planning. Warehouse optimization is not a method that you should undertake hastily. Before you can refine your warehousing layout and operation, you must first recognize what you're dealing with and its limitations. After you've identified your shortcomings and unmet needs, you can get into the specifics of improving your new warehouse layout.
Recognizing that you could improve the warehouse operations is just half the struggle: the next move is to examine the current state and determine concrete actions to improve. Every warehouse is unique, but there are some things you can do straight away to start making a significant improvement in your operations.
Since the primary purpose is to store inventory, it logically follows that determining available space should be the first measure in warehouse layout optimization. It is preferable to have a custom room designed for the warehouse's particular use case. However, some businesses settle for using an established warehouse or reusing another building for warehousing due to various constraints such as time constraints and cost considerations. Companies should evaluate the building and surrounding space before placing any inventory inside. You should assess the local area to ensure that it meets the needs of the company.
If the warehouse must store sensitive inventory, including food or pharmaceutical products, the type of HVAC used by the building must be evaluated. Even if the warehouse does not contain any consumable or temperature-sensitive products, the HVAC system's performance must be adequate because staff will be present. A building with sufficient heating, ventilation, and air conditioning is needed to create a comfortable working atmosphere. Furthermore, you must evaluate the current lighting, doorways, loading bays, and racks.
The next step in warehouse layout optimization is to perform a proper inventory audit to identify specific storage requirements if you've found a suitable location. It includes items needing advanced racking or shelving, goods that need low-humidity or other climate requirements, and the clear available space for each inventory item based on your typical inventory cohesion.
After you've audited your inventory, you can start establishing storage zones or parts.
Related article: eCommerce Inventory Management Tips & Tricks
A conventional warehouse is typically more than 180,000 square feet in size. It is a never-ending collection of tall tables, shelves, and bins that can be challenging for staff to traverse efficiently if warehouse layout optimization, management, and signage are not implemented. An excellent place to start is to divide the warehouse into levels or parts. Divide each section into aisles, bays, racks, rows, and bins based on the scale of the warehouse and the number of aisles.
Sections of drive-in pallet racking that can handle forklifts, for example, should be allocated for the storage of pallets. At the same time, cantilever racks should be designated for the storage of longer, heavier pieces. Discuss your inventory audit to split the warehouse into properly sized areas and have the proper environmental conditions for your inventory.
You must now label the divided space. The levels, aisles, bays, racks, rows, and bins are assigned a number or letter identifier. It is easier to understand if each subdivision is labeled with alpha and numeric characters alternately. To accommodate various types of products, some parts can have different types of racks or storage.
Related: What's the Difference Between Warehousing and Storage
Items do not travel simultaneously in a warehouse; certain goods may have a higher turnover rate than others. If these high-velocity goods are placed far from the sorting or packing station, warehouse employees will have to walk further to retrieve items from these locations. Storing fast-moving inventory near sorting, packaging, and shipping stations eliminate walking and saves time and effort.
Similarly, calculating the turnover for all goods in the facility's inventory helps you assign a room for products based on velocity while also optimizing the time it takes to select the items. Don't just rely on inventory and supply chain data to predict potential product demand; sales and marketing data are critical parts of the demand forecasting puzzle.
Incorporating data from various sources yields valuable insight and allows for more effective demand forecasting. This information can strategically assign warehouse space to decrease the overall walking distance and time needed for order selection.
Every year, warehouses and distribution centers must accommodate a growing amount of SKUs. Manually handling inventory for a big warehouse with many SKUs leaves space for human errors, resulting in inconsistencies and inefficiencies. Most warehouses nowadays use inventory management tools.
With the right software system, you can monitor physical warehouse locations and the inventory assigned to each site. This aids in order optimization and inventory replenishment procedures, ensuring that forward pick places have enough stock to satisfy demand.
Analyses can determine if the current product layout is ideal by considering the distance traveled and the frequency at which the goods are ordered. The analysis results can be used to adjust the design to improve performance. This increases efficiency decreases the time taken to fulfill orders and saves money on order picking and inventory replenishment.
Making these and other changes to your warehouse layout may be expensive in terms of both time and resources in the short term. Depending on how much needs to be changed, you might need to suspend operations for a few days. Do all of your thinking ahead of time before you have a detailed strategy to put in place as quickly and effectively as possible to mitigate the harm and optimize your benefits. Though you will lose revenue when implementing these improvements, the payoff will be well worth the effort.
Next article: How to Choose the Best Fulfillment Warehouse Locations Near Me
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