Warehouses are at the heart of consistently successful fulfillment. Your warehouse needs to be a well-oiled and meticulously organized machine if you are going to minimize the risk of order delays, loss, non-delivery, and cost overruns. To get it right, you must establish the right backbones from the get-go. Your warehouse can only be as effective as the strategies it’s based on.
So what are the fundamental strategies that make warehousing work?
The bigger your warehouse floor space, the higher your space-leasing costs. As activity grows, you will need ever more capacity which would only eat into your profitability. Keep your space leasing expenses low by making the most of available space.
Going vertical is one of the best ways to do that. Install tall storage units. There will be an initial spike in cost when you do that since you have to invest in equipment that aids the retrieval and storage of items at height. But once that one-off expense is out of the way, there will be significant long-term savings even when you factor the cost of routine equipment maintenance.
Depending on the nature of your warehouse, you probably serve one company/client or multiple organizations. Either way, it’s unlikely your entire warehouse will stock one type of product. Also, product types and quantities could vary throughout the year. Incorporate flexibility in your warehouse layout. Such versatility helps you rapidly adapt to accommodate evolving space constraints, workflow needs, customer demands and company requirements.
When planning a flexible layout, engage all key stakeholders to establish their expectations. From clients and suppliers/manufacturers to carriers and warehouse staff. You could go further and tap into simulation modeling of different layout designs to see which one is rapidly adaptable yet cost-efficient.
As warehouse activity grows, operations increase in complexity. While reliance on manual processes may work for a small and low-volume warehouse, it may be unfeasible for medium and large facilities. Technology is critical for creating a fast and effective bridge of information between the different teams, workflows and players. Warehouse management systems (WMS) can help connect customers, suppliers/manufacturers, carriers and warehouse departments.
WMS software centrally manages warehouse resources including labor, inventory, equipment, space and tasks. Integrate tracking technologies such as RFID and bar codes to automate product identification and movement. A good WMS will reduce idle time by identifying and recommending tasks that can be executed simultaneously or in quick succession.
Decentralization vs Consolidation
If you run a warehouse network/company charged with facilitating fulfillment nationwide, the decentralization versus consolidation debate is one you must contend with.
On the one hand, you want your warehouse as near as possible to the customer. Hence, you decentralize by having small and medium-sized warehouses spread out across multiple locations. This means orders can get to the buyer quickly. However, there’ll be higher floor-leasing costs as you take up multiple facilities.
On the other end is consolidation. The most extreme version is a single large warehouse. One or few warehouses mean lower costs of operations due to economies of scale. You need less labor, less equipment, and less space than a decentralized setup. The downside is carriers have to go further to deliver products, which increases the cost of fulfillment.
How do you strike the right balance? Evaluate the labor, space, and transportation implications of each additional warehouse. Do this in the context of where deliveries are mostly destined for. For instance, there is no need to have warehouses spread across the U.S. when 90 percent of orders are headed to just two states.
Make customer satisfaction the center of your warehouse decision-making. The happier clients and customers are with the quality of fulfillment, the more orders you can expect in the future and the more viable the warehouse becomes.
For instance, a customer-centric approach could involve creating opportunities for fulfillment customization. That could be incorporating compliance labeling, final product assembly, packaging, and other value-added services to warehouse operations. This allows clients/companies to rapidly customize basic products while keeping a lid on costs.
Efficient warehouse operations are vital for customer satisfaction. Customers are more likely to get their shipments accurately and quickly. The best warehousing strategies are a combination of common sense, extensive analysis, and proper equipment. Apply these six strategies to get your warehouse running optimally.
About the Author:
Jake Rheude is the Vice President of Marketing for Red Stag Fulfillment, an eCommerce fulfillment warehouse that was born out of eCommerce. He has years of experience in eCommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.