Effective warehouse management allows businesses to save money, time, and human resources. One of the first steps to achieving proper warehouse management is understanding the warehouse management processes – you know what they say, “it all comes back to the basics”.
There are six key warehouse management processes – each plays a vital role in keeping the warehousing system running smoothly.
The first step takes place when the products reach the warehouse. This step is all about handling the receipt procedure and verifying information, including:
- The quantity – is the number of products received correct?
- The products – are these the correct products?
- The quality/ condition – are the goods in the right condition?
- The time – did the products arrive at the warehouse at the right time?
There are smaller steps in this process of warehouse management, including:
- Placing the purchase order
- Checking warehouse space and storage
- Manual or automated unloading
- Data entry and so on.
Depending on the customer’s requirements or the system’s setup, the products will go straight into inventory – it could be long-term or short-term inventory) or arrive at a specific location first. According to Logistics Bureau, it is best to receive products using an Advance Shipping Notice (ASN) from the supplier.
Gartner defined an advanced shipment notice as “an electronic data interchange (EDI) message sent from the shipper to the receiver before the departure of the shipment from the shipper’s facility”. This type of EDI is often known as the EDI 856 Advance Ship Notice (we will talk more about this topic in another article). ASN states the full information one needs to know about the received goods. Barcode scanning allows the warehouse staff to determine the next step in the process.
It is also worth noting that each stage in the process may be operated differently as each warehouse management system has its unique conditions.
Last but not least, warehouses need to be well aware of their available storage to avoid product overcrowding. Any unwanted damage may cause the costs to go up exponentially.
This process starts with a put-away notification to the operators. The staffs need to move the items to their optimal storage locations from the receiving dock.
Once the notification is received, the operators manually enter the data to confirm the item has been identified. Then, goods are taken to their slot in the warehouse. Another data entry needs to be made to confirm the item’s location and create a record of the current location.
By using the warehouse management system (WMS), however, these tedious processes are simplified and automated, avoiding any error-prone manual data entry. The process starts out the same way – the operator receives a put-away notification, but this time, it is through the warehouse management system. Next, they will scan the stock-keeping unit. Investopedia defines a stock-keeping unit (SKU) as a “scannable bar code, most often seen printed on product labels in a retail store. The label allows vendors to automatically track the movement of inventory”.
After scanning the relevant barcode, the system will direct the staff to the correct storage location – WMS automatically organizes and optimizes the storage space within the warehouse, saving a lot of time and human resources. Once the location has been identified, the barcode is once again scanned to update the warehouse management system in real-time and create a record of the item’s location. Whether a warehouse management system is used or not, the process is complete when the goods are placed in their correct location.
Space management is crucial, as it ensures storage space is utilized and unwanted accidents are avoided. The warehouse condition matters, too, since inappropriate execution may damage the goods, leading to increased costs.
First, let’s go over picking methodologies:
- Primary picking: the order is picked and sent straight to the packing table to be dispatched.
- Secondary picking: the picked items are allotted to particular order groups or individual items. This type of picking is becoming more and more common as online shopping is rapidly expanding.
- Real-time picking: orders are picked up as soon as they reach the warehouse.
- Cluster picking: this picking methodology refers to multiple orders fulfillment at the same time.
- Zone picking: staffs pick the required orders in their assigned “zone” in the warehouse.
- Wave picking: orders are grouped into batches and often released for picking once – known as a “wave”.
Picking is often considered to be the most error-prone, priciest, and most time-consuming process. As picking is a labor-intensive process, it is important that you leverage your available labor and material by choosing the correct picking method.
Other than the picking methodologies, other types of technologies are implemented to allow the picking process to operate as smoothly as possible such as: put walls, put-to-light systems, cross-belt systems, and goods-to-person systems. Using a robust warehouse management system also makes the whole process easier and lessens any unwanted errors.
Once the item is picked, it is time to get it ready for shipment.
By this stage, the necessary data should be readily available for the packing: the type or amount of packing material, the packing slip, etc. This process can be automated by using a warehouse management system, too. The WMS will analyze the available data and determine the appropriate packaging material for each item.
A proper packing process should follow the following five rules:
- Items must be traceable
- Package must be traceable
- The process must include quality checks
- Despite the different warehouse “zones”, goods must easily be combined to complete the order fulfillment
- Appropriate packing for each item
Customer satisfaction is crucial; therefore, proper packing builds trust in your relationship with the customer.
5. Shipping (Dispatching)
It is only from this point that a customer interacts with your services, so it is important to deliver the goods safely and on time.
Other than the finalized goods, you need to ensure the right transportation means, proper documentation, and correct timing. A tracking system should also be set up so that both you and your customer can track the shipment.
To make sure everything is in place as mentioned, the staff needs to make accurate forecasts to balance the time of the packing and dispatching. Should the items finish packing too early and not be shipped, the warehouse may be overcrowded, possibly affecting the goods’ quality. If the time for delivery has come and the goods are not ready, however, the entire process will be delayed, and late delivery would be almost inevitable. Consequently, the company’s image would be negatively impacted. All in all, timing is crucial for this very warehouse management process.
When an item is returned – whether it is because of an unsatisfied customer or due to the product’s deficiencies – a clear process needs to be established. Businesses need to ensure they receive the product while the refund is issued to the customer.
This process also plays a role in ensuring customer satisfaction, even though most companies wish this would never happen. CNBC claims that retailers predict a return of 16.6% of purchased merchandise in 2021 – which is a significant increase from 10.6% in 2020. However, this is part of the warehouse management process and it needs to be handled properly, even when the items are only returned once at a time.
Once picked up from the customers, it needs to be determined whether the product should be discarded, destroyed, repaired, resold or if it should go back to inventory. If the goods should go back to stock, then a new record for its location should be logged in, along with the reason for its return to minimize any unwanted returns in the future. Once again, this warehouse process will be easily handled using a WMS – you will have a comprehensive view of storage space and a lot of raw data regarding the reasons for returns to improve the service.
Although businesses have different storage capacities, regulations, standards cultures, order volume, etc. it is crucial to understand the basics of the warehouse management processes. To truly optimize your warehouse management system and gain an edge in the increasingly competitive market, pinpointing the problems in the bottom line would offer an early payoff. You know what they say, “it all goes back to the basics.”