Strategies for an efficient warehouse management

Managing a warehouse has never been an easy task and the growth of e-trade, which gives clients the chance to buy products from anywhere in the world at any time and every day, has made it even harder.

A warehouse goes far beyond the shelves housing and protecting the merchandise; it is the guarantee clients will receive their orders in time and correctly.

Every link in a supply chain —raw materials suppliers, manufacturers, distributors, retailers, wholesalers — have something in common, they have warehouses in need of management and facing the same challenges, usually deriving from obsolete systems and manual processes such as:

• Incorrect placement of goods, which creates the need for more staff and processes.
• Products with short lifecycles, which complicates the planning of demand.
• Redundant processes for in-store and online orders, which result in delivery inaccuracy.
• Inadequate use of space, which decreases staff safety and demands more time to complete the orders.

To avoid and face these and other challenges, you may use a series of best practices from world-leading companies:

Manage spaces correctly

How well you use space is far more important than how much space you have at your disposal. To make the best use of space, you need to improve your storage systems and the layouts of shelves and pallets, create default selection routes, and make sure you have the necessary space to carry out your operations fast. We suggest having the high-sales, high-turnover merchandise in the front area of the warehouse so your staff doesn’t lose time moving around the warehouse.

Implement efficient communications

Efficient communications increase productivity. When all those involved in a supply chain – above all, the manufacturing, procurement, and logistics departments – share the same information, you can plan and execute shipments faster and with greater coordination. To achieve this, we suggest giving the diverse players access to special software and cloud-based platforms.

Optimize processes

Eliminate, simplify, and automate the logistics processes; mainly during the picking stage. To expedite and standardize processes, we recommend implementing tech tools such as orders management systems and barcodes.

Foresee the demand

When companies cannot see their inventories well, they risk erring their demand forecast and either run out of stock or risk overstocking, which decreases cash flow and increases storage expenses. Likewise, if information is manually input, accuracy issues may arise. This may be solved with a cloud-based administration software that helps us create accurate and transparent orders. Promotional campaigns and bargains destabilize logistics and these systems help guarantee supply for retailers.

Place stock correctly 

Misplacing products may result in accumulating obsolete items, which slows operations down and increases costs. Warehouse staff must know precisely where the goods are stored so as to not slow down the loading process. There are several methods you can use to help place merchandise correctly:

• ABC or 80/20: Orders products according to the quantity and value they represent. Class A items usually represent 20% of the stock while their value can reach 80%; Class B items represent 40% of items while their value may reach 15%; and Class C items consist of the remaining 40% of items while their value reach 5%.
• First In, First Out (FIFO): Defines which are the first goods to enter the warehouse so they will be the first to leave it for sale or manufacturing; this helps perishable items from expiring.
• EOQ or Economic Order Quantity: Determines the order amount that may better reduce inventory costs as per demand, frequency of use, and the time it takes for products to get to zero.
• Cycle Count: Consists in frequently tallying part of the inventory (sample) to ensure everything is counted at least once in a certain period.

Set a veritable quality control

Because the warehouse is the last link in the supply chain before products reach clients, quality is of the utmost importance; therefore, we recommend setting the standards we aim for in process handbooks and procedure manuals. For example:

• 5S methodology: Helps sort and clean the warehouse and avoid waste.
• Kaizen methodology: Implements small and constant improvements in procedures.
• Lean philosophy: Helps waste disposal.
• International standards: NOM and ISO.

Train your team

Every company has the obligation to train the staff of its logistics department, both in administration and operational issues and in how to use technology tools and specialized software. Having a team that shares the same goals and commitment to achieve them may make the difference. The importance of this issue has led universities, institutes, and technical training centers to offer careers, post-graduate degrees, and continuous education programs to foster professionalization by acquiring knowledge and experience that allow people to incorporate world-class practices, optimize operations, and manage indicators.

Ally with strategic partners

For companies to be able to focus exclusively on their core business and be more productive, experts strongly suggest hiring the services of specialized logistics companies such as Solistica, which offer administration and operational solutions tailor-made for the companies’ needs and add value for their clients, for example by:

• Designing and managing omnichannel warehouses that protect the inventories of several channels.
• Assessing the efficiency of resources.
• Carrying out operational warehouse audits.
• Classifying or categorizing the inventory.
• Automating processes that result in increased production and accuracy.
• Setting the gathering methodology.
• Improving communication between departments and systems when sharing information.
• Using advanced and cutting-edge technological devices and tools that companies do not generally buy because of their steep price tags.
• Providing real-time reports with correct metrics showing the level of productivity and costs.
• Minimizing mistakes such as mislabeled or misplaced products, and incomplete or incorrect orders.
• Scheduling maintenance.
• Implementing the cross-docking technique.

These best practices may help manage a warehouse better; nevertheless, you should always consider the company’s internal and external data so you can foresee interruptions in the supply chain and have a better demand forecasting.

The challenges of managing a warehouse may be complex; therefore, we recommend to always plan and execute using high-capacity software and make the best use of the experience and knowledge accumulated by a specialized logistics partner.

*This blog was originally published on January 22 2019 and modified on July 8 2022.