7 Keys to Improving Warehouse Efficiency
Finding the right combination of resources, tools, and practices to optimize productivity.
The concept of warehousing dates back to the ancient mud brick and stone structures used to store grain, metal, wood, and other valuable commodities 3,000 years ago. The only barometer of warehouse performance that mattered was protection from the elements. Today, modern warehouses containing millions of discrete items must operate efficiently to keep up with smart factories, complex distribution networks, and escalating multi-channel commerce demands.
Warehouse management software and warehouse management apps dramatically improve efficiency and inventory accuracy by feeding real-time cycle count, receipt, picking, and shipping data back to the inventory management database, but they are just part of the efficiency puzzle. Optimized warehouse efficiency comes from strategically aligning warehouse technology and common-sense practices.
“You can make a lot of mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient.” – Sam Walton
Defining warehouse management
Warehouse management is defined as the process of overseeing the day-to-day operations of a warehouse. This includes organizing and controlling work performed in the warehouse or distribution center so that storage, picking, packing, and space utilization are optimized. Additional facets of warehouse management include:
- Receiving and inspection – Handling, inspecting, and dispositioning incoming goods while monitoring their quality performance.
- Inventory management – The tracking of inventory from manufacturers to inventory locations.
- Order management – The systems established to control and monitor customer order processing and fulfillment.
- Shipping and logistics – Coordinating outbound shipments and working with carriers to optimize routes.
- Equipment and technology – Tracking, monitoring, and maintaining items including barcode and RFID tag scanners, forklifts, sorting equipment, and automated guided vehicles (AGVs).
With these important elements in mind, warehouse efficiency is best described as a measure of the effectiveness with which these processes are managed and executed, and their impact on timely order fulfillment, accurate inventory management, productivity, and overall cost optimization.
7 keys to improving warehouse efficiency
Even the most pristine warehouse layout or accurate order processing system has room for improvement. The concept of warehouse efficiency is all about knowing where you stand so you can decide how to reach your next level of productivity.
1. Optimize your layout
Most warehouse managers realize that a poorly designed layout can impact warehouse efficiency, along with safety, quality, and even employee morale. However, problems with the layout that impact efficiency are not always apparent. Optimizing the warehouse layout starts with addressing obvious issues like narrow aisles, clutter on the floor, and storage configurations that place large or commonly moved items in inconvenient locations.
Inventory management software makes it easier to implement an intelligent warehouse layout that includes a space utilization study and SKU velocity review to identify the most appropriate and efficient locations for each item. It is important to remember that the product mix and dynamics of your business are continually evolving, so your ideal warehouse layout is likely to change with each passing day.
2. Perform an ABC analysis
A warehouse best practice that impacts inventory management, warehouse efficiency, and the warehouse layout is the setting of inventory priority levels. When inventory items are prioritized according to value, demand, shelf life, and other factors, they can be located in the warehouse strategically to minimize time spent and distances covered during stocking and order fulfillment processes.
The most popular inventory prioritization method is known as ABC analysis. This practice is used to divide items into three categories, with category A reserved for high-dollar, high-margin, or long lead time items, while the other two categories include lesser value items with lower demand. This straightforward method allows you to allocate resources for monitoring, cycle counting, and replenishment more logically and efficiently.
3. Apply standard measures and KPIs
The efficiency of a warehouse operation cannot improve unless you measure and track it consistently. Unlike an assembly line, the tasks performed within a warehouse vary significantly, which can make it more difficult to baseline and track efficiency metrics. Operations that can be tracked to monitor performance and establish warehouse key performance indicators (KPIs) include:
- Picking, packing, and replenishment times
- Overall warehouse throughput
- Receiving and unloading times
- Average order fulfillment rate
- Storage space utilization
Utilizing inventory management software in conjunction with a warehouse management app enables you to calculate and analyze warehouse metrics consistently as you create trend reports and goals to share with warehouse employees and other stakeholders.
4. Utilize automation wisely
Automation has become a popular buzzword as we enter the age of the smart warehouse and Industry 4.0. Not all businesses can implement advanced robotic systems for 24/7 part stocking, picking, and inspection, but there are layers of automation that can be implemented step-by-step as the business and its warehouse operation evolves.
Basic automation tools like barcode scanners, conveyors, and mobile inventory management software can be enough for many warehouse operations to see a significant jump in efficiency. From there, process and system automation tools, such as automated guided vehicles (AGVs) and automated sorting stations, can be incorporated gradually to leverage more time-saving technology.
5. Prioritize safety
The connections between warehouse safety and warehouse productivity may not be obvious, but an unsafe warehouse can also become an inefficient one. When employees feel safe in their work environment, they can focus on the task at hand rather than worrying about potential hazards and accidents. Warehouse safety also contributes to improved efficiency by:
- Decreasing staff turnover and training tasks
- Reducing equipment down time and unexpected repairs
- Minimizing legal risks and insurance rates
- Eliminating distractions that disrupt workflows
Regular safety inspections, open communication with employees, and safety training classes are among the practices that contribute to improved safety and efficiency. Keeping equipment like forklifts and conveyors well-maintained at all times also improves safety while preventing time-consuming breakdowns.
“Safety has to be everyone’s responsibility. Everyone needs to know that they are empowered to speak up if there’s an issue.” – Scott Kelly
6. Focus on training
The human contribution to warehouse efficiency is also evident through the value of training. Well-trained employees perform their tasks safely and consistently and make fewer errors, thereby contributing to more efficient warehouse operations. The most effective warehouse employee training methods include on-the-job training, classroom-based instruction, and e-learning modules that focus on proper equipment use and standard work practices.
Cross-training improves efficiency since it allows others to fill in when key employees are ill or on vacation. Well-rounded employees make everyday tasks like receiving and picking less dependent on specific individuals so that efficiency metrics remain consistent. Cross-training also improves morale and retention by allowing employees to develop their skills without being locked into specific tasks.
7. Use warehouse management software
Warehouse management software ties together all the elements of an efficient warehouse in one user-friendly platform by harnessing important information and metrics like floor space utilization, order processing times, variances between workers, part movement within the warehouse, and truck loading times that allow you to keep a finger on the pulse of warehouse efficiency at all times.
Mobile warehouse management apps are ideal for tracking and managing tasks like receiving, picking, packing, shipping, and cycle counts that reflect the flow of materials within the warehouse. Real-time inventory data improves efficiency by minimizing trips through the warehouse searching for parts and picking operation interruptions due to unexpected shortages, both of which can lead to delays in order fulfillment.
Improving warehouse efficiency: Final thoughts
Warehouses continue to grow larger and more complex as customer expectations for timely and accurate order fulfillment grow, making an ongoing commitment to warehouse efficiency essential. With the right blend of modern technology, effective monitoring, and employee awareness, warehouse efficiency can become a continuous improvement process.
The comprehensive, cloud-based Agiliron product suite supports an integrated, multifaceted approach to inventory and warehouse management. Mobile-friendly apps scale with your business and connect seamlessly with all leading E-commerce platforms. Customer relationship management (CRM) and mobile point of sale (POS) solutions round out the versatile platform by allowing you to sell in more places while managing from one.
Information is the common thread running through efficient warehouse practices. Warehouse management software puts the most important warehouse data, trends, and metrics at your fingertips to optimize efficiency and safeguard order fulfillment. Contact us today and allow our solutions experts to explain how warehouse management and inventory management software put next-level warehouse efficiency within reach.
