Effective warehouse management is essential to delivering products on time while keeping operational costs down and driving profitability. Organization, of course, is key. But there are dozens of ways to optimize warehouse operations and improve a business’s bottom line, from considering warehouse organization and layout to choosing the right order picking strategies and KPIs to track.
In this article, we’ll cover a number of best practices that can lead to real business benefits.
What Is Warehouse Management?
Warehouse management refers to all the processes and decision-making involved in daily warehouse operations, the breadth of which includes inventory management, warehouse organization, order picking, workforce management and shipping coordination. The goal of warehouse management is to effectively integrate all of these factors, strip out complexity, improve efficiency and reduce costs — without sacrificing accuracy or quality.
How to Organize Warehouses
Organizing a warehouse involves multiple variables and is key to ensuring smooth operations and accurate, on-time order fulfillment. In addition to establishing the best layout and spacing for items, it’s important to appropriately store items so they can be easily identified. Visible labels, efficient racking and bins, clean aisles and designated picking and receiving zones are all elements that contribute to an organized warehouse operation.
Warehouse managers increasingly use warehouse management systems (WMS) to improve operations, especially as tasks and responsibilities grow and become more complex. For example, if an online retailer broadens its product offerings, a WMS can provide organizational strategies that help the company better utilize its existing space to accommodate growing demand and more complex customer needs.
How to Organize Inventory
Inventory management refers to the way companies manage their entire stock, sometimes across multiple warehouses. This includes how goods are stored, handled, tracked, ordered and shipped. The aim of inventory management is to strike the right balance between stock levels and consumer demand while simultaneously saving space, money and cutting back on waste. Inventory management software can help businesses prevent loss no matter how complex their warehouse operation becomes, in addition to streamlining inventory processes and order fulfilment.
51 Warehouse Management Tips
Warehouse management is complex, multifaceted and demanding. Making sure everything is optimally organized and all items are where they’re supposed to be is just one piece of the puzzle. Warehouse managers must also consider other factors, such as how they organize and lay out their space, how to label and store items, which KPIs to track, how to manage their workforce, which WMS to use and more.
Below is a comprehensive list of tips to help warehouse managers make their operations more time- and cost-efficient, while ensuring the best conditions for employees. By following these tips, warehouse managers will also position themselves to refine and improve their approach over time.
General Warehouse Operations Tips
No matter their size or the industries they serve, all warehouse operations can benefit by focusing on five key principles. Together, these help operational leaders run efficient and profitable supply chains while helping their teams become more productive.
Know your purpose. To be successful, a warehouse operation must know its objectives. Consider the factors that will have the greatest impact on your warehouse management strategy. This might include things like incorporating storage for items that need refrigeration or considering specific delivery requirements for customers.
Keep safety a top priority. Most warehouse accidents are avoidable, occurring when employees are in a hurry and lose sight of safety protocols. Staff should be trained on how to avoid dangerous behaviors and feel they work for a business that places their safety first. For warehouse managers, vigilance is key, especially in an environment where slips and falls are common. What’s more, muscle strains, lower back injury and other musculoskeletal disorders are common in warehouses that require repetitive manual labor. Companies can reduce the risk of injury by prioritizing ergonomics and the importance of short rest breaks.
Track KPIs. The only way to measurably improve warehouse and warehouse staff performance is to continually monitor and measure metrics. Be sure to track the right key performance indicators (KPIs), both general metrics, such as cost per order shipped, and more specific goals, like inventory error rates. By measuring and rewarding these types of KPIs, warehouse managers can create a culture of accountability and self-improvement that will lead to a more productive and efficient operation.
Regularly reevaluate KPI metrics. The right KPIs help businesses understand how their warehouses are performing, whether they are meeting specific goals and how they can improve. That said, it is just as important to keep KPIs up to date and aligned with the organization’s ever-evolving strategy. For instance, an ecommerce platform that adopts a next-day delivery policy should set KPIs that promote speed and efficiency above all else.
Be flexible. The only constant in warehouse operations is that no two days are the same. Flexibility is the key to staying productive in the face of change. From optimized layouts to strategic inventory reserves, warehouse managers have many ways to keep their operations flexible.
Warehouse Organization Tips
An organized warehouse is easier to navigate, makes picking faster and is better prepared to handle orders efficiently, even as volumes rise. Conversely, a cluttered and inefficient warehouse can lead to time delays and higher fulfilment costs, and it can put employee safety at risk.
Keep it clean. A clean warehouse greatly contributes to warehouse organization. People often find misplaced or forgotten items when cleaning or clearing obstructions that would otherwise get in employees’ way. Weekly cleaning is ideal, but deep cleans can be stretched to monthly if teams are generally tidy in their daily work.
Reduce clutter and waste. Avoiding clutter and waste serves three purposes. First, it creates a safer and more efficient environment for warehouse employees, who won’t stumble over messes while working. Second, it inspires confidence by showing visitors that warehouse operations are under control. Finally, staff may take more pride in their work when operating in a clean, uncluttered space.
Use stackable bins. Stackable bins are one of the most versatile pieces of equipment in a warehouse. They are perfect for storing small products, especially high-demand products that must be easily accessible. They are also small enough for warehouse staff to keep on their desks or personal work areas, which is why they are regularly used to safely store labels, invoices and other documentation. Bins can also protect items from dirt and debris.
Label all products. A relatively small investment in labels pays major dividends for warehouse efficiency and employee morale. By labeling items according to industry standards, companies ensure that pickers can easily find and pick the correct inventory. This cuts labor costs and eliminates the frustration of not being able to find the right items or losing orders. Labeling technology has advanced considerably in recent years, and businesses can now obtain heat- and cold-resistant labels that can be read electronically and tracked in their WMS.
Use labeling systems. Labeling systems, especially barcode labeling systems, are an efficient and cost-effective way to label warehouse items while reducing human error. Warehouses are under significant pressure to run smoothly in the face of growing demand and complexity, and code-based systems like SKUs remove the burden of workers having to label and document every product that passes through the warehouse’s walls. Barcoding software also links to the business’s WMS, giving warehouse managers real-time visibility into their products and inventory.
Organize for efficiency. Organizing for efficiency isn’t just about item location. There is room to streamline at every stage of the picking, packing and shipping process. For example, an efficient warehouse will store packing materials like boxes, scissors and tape in the same location, with clear labels for employees. Packing materials can also be separated based on size, the types of products being packed and specific requirements for different shipping partners (such as appropriate boxes and labels for UPS, USPS and FedEx orders). Together, these small efficiency gains can deliver significant savings.
Organize with your industry in mind. Decisions about item location in a warehouse should be dictated by who buys the products and how frequently they are picked, which varies by industry. For example, a wholesaler might regularly ship large quantities of multiple items to the same location at the same time, whereas a small retailer might only send out one or two different products to customers on occasion.
Place like items together. It may sound like common sense, but similar items should not be placed far away from each other. For instance, an office supply megastore should store all of its binders and organizers in one location, electronics in another and so on.
Use ABC analysis. ABC analysis is a method used by businesses to set a hierarchy of the products in their warehouse. A-level items are considered high value because they deliver the highest revenue. They’re typically big sellers or expensive items and stored in smaller volumes close to the packing area. On the other end of the spectrum are C-level items, which are slower-moving or lower value. Examples might include spare light bulbs for a lamp manufacturer or tote bags for a footwear retailer. These items may be stored further from the packing area.
Organize items according to order frequency. Just as some items are higher value than others (A items vs. B and C items), some products are also more popular than others. The more popular an item, the closer it should be to packing areas. For example, during summer months, a children’s toy company might put its swimming pool toys closer to the packing area and move its winter sleds far away until the seasons change again.
Warehouse Layout Tips
An organized warehouse reduces clutter and makes the space easier to travel in, but a logical warehouse layout can increase the strategic advantage. By optimizing how products are received, stored, picked and prepared for shipment, warehouse teams can gain major efficiencies during receiving, putaway, picking and packing.
Consider flow and traffic patterns. In an ideal warehouse, inventory is easily accessible and products move freely between receiving, storage, packing and shipping. The result is a smooth, cost-effective operation that creates minimal waste and maximum fulfilment. There are different layouts and traffic patterns to use based on each business’s specific needs. Some might choose to place the fastest-moving items close to shipping areas to minimize travel time. Others may group items that are frequently picked together at the same location; this is why ecommerce businesses often have warehouses that appear on the surface to be stocked with racks of random products.
Get employee input. Warehouse managers have a big-picture view of their operations, but only employees on the front lines see the little obstacles that repeatedly stand in the way of productivity. With this insight, managers can pinpoint the cause of traffic jams, address issues in areas that are running inefficiently and improve potentially unsafe processes.
Create workstations. Designated workstations serve two purposes: They ensure employees always have access to the right equipment to perform their job, making them more efficient and engaged, and they can help prevent injury. For instance, work surfaces built at standing height are generally more ergonomic for staff in shipping, packing and receiving.
Create zones based on order picking type. Different picking methods are suited to different storage solutions. For example, zone picking logically divides SKUs into different zones throughout the warehouse. Workers are assigned to a zone, and a picking bin is passed from zone to zone to fulfill orders.
Organize aisles for efficiency. While it can be tempting to squeeze as much inventory as possible into a limited space, there comes a point of diminishing returns. Once aisles become too crowded to navigate easily, the time needed to retrieve inventory outweighs the benefit of having slightly more product available. Aisles should also be clearly identified and electronically labeled. Being able to locate stock is a key challenge of inventory management, to ensure that items are correctly located in your warehouse management system upon their receipt.
Eliminate barriers and maximize available space. A small obstacle, like a rogue shipping carton or box, can quickly turn into a major barrier if it’s left in the way. Every time a box is left in the middle of an aisle or a newly received shipment is only put away in part, these small barriers create bottlenecks that combine to back up operations, especially during busy periods. A proactive approach is best, with all boxes and inventory well organized so that employees have space to move around and be as productive as possible.
Make room for receiving. Inventory receiving should not be treated as an afterthought or be relegated to a small receiving area in a cramped corner of the warehouse. This can lead to bottlenecks and errors in inventory management, not to mention time and money wasted on inefficient receiving processes. Receiving spaces should be big enough to receive shipments of all sizes and adequately equipped to ensure each item is logged accurately, stored quickly and tracked closely from the moment it arrives.
Use all available space. There is a balance to be struck between using warehouse space and ensuring pickers can easily move through the aisles, but efforts should always lean toward making the most of every square foot.
Use vertical storage solutions. Before expansion or relocation, consider building upward with vertical inventory solutions. As in a major city, stackable bins and shelving act like a warehouse’s high rises, allowing businesses to house more inventory without eating up roadways. Another option is to use vertical lift modules (VLMs), which act like industrial vending machines. They can be stacked more than 12 meters high, each of which is electronically labeled and can be automatically retrieved by a programmable moving shuttle.
Condense space usage when possible. Storing items in the right place is only part of the battle. Real efficiency comes when using the right storage solutions to make the most of the warehouse footprint. For instance, warehouse managers should adapt the size and type of shelving they use to the products in their inventory, rather than putting everything on the same pallet racks. Another solution is to store items vertically in taller or stackable storage, using specially adapted machinery to pick these items if necessary. The goal is to consolidate and avoid sprawl.
Warehouse Technology Tips
Warehouse technologies, particularly warehouse management and inventory management systems, can reduce the risk of error and delays by eliminating paper-based processes and data entry. This gives warehouse managers the peace of mind that all systems and decisions are based on the latest accurate data, so they can instead focus on speed, efficiency and finding new ways to improve their fulfilment approach.
Leave paper behind and go digital. With a paper-based system, missing paperwork is common, and it can be challenging to translate information for digital storage. By entering data directly into a digital platform, warehouse managers reduce the risk of lost information. As a bonus, digital platforms eliminate the cost of paper and writing supply, which can be considerable in a large warehouse operation relying on these manual methods.
Automate processes. The boom in online sales and commerce has put pressure on warehouses to transform their operations. Automation is the only way to manage the push to scale up and meet growing demands. Consider automated tools like robotic picking or cartonization software that chooses the ideal packaging for every item based on its size, shape, weight and other specific requirements.
Use inventory management software (IMS). Businesses can ensure they have enough inventory available at the right locations to meet demand with an inventory management system. Demand can come from customer needs, such as high order volumes during busy retail periods, or internally from work orders within the company’s manufacturing facility. Many inventory management systems can scale as a warehouse operation grows, so businesses can use the same system even as they build new facilities, launch new product lines or change their fulfilment approach and KPIs.
Use a warehouse management system (WMS). Warehouse management systems help warehouse managers streamline fulfillment processes. A WMS includes key features that manage receiving and putaway, inventory management and order fulfillment, as well as real-time visibility and control over warehouse processes. Fundamentally, warehouse managers draw on their WMS to design the best workflows for everything that happens in their warehouses and similar facilities.
Use an enterprise resource planning (ERP) solution. The advantage of ERP software is it allows businesses to connect their warehouse management and inventory management systems, as well as a range of other critical software systems like those from accounting to human resources, on a single platform. As a result, warehouse managers get a complete view not only of their operations, but of the entire business. They can easily find whatever information they might need with a few clicks.
Invest in pick assisting technology. Automated and technology-driven picking systems speed up the picking process while reducing travel time and human error. From advanced picking robots and aerial drones, to mobile barcode scanning and pick-to-light technology, pick assisting technology continues to evolve each day.
Use carousels, sorters and conveyor belts. Carousels, sorters and conveyor belts may not be right for all warehouse operations. For instance, warehouses where products are stacked high might prefer vertical lift modules (VLM). That said, these automation technologies are attractive for a number of reasons: They are relatively inexpensive, easy to maintain and, among other things, are particularly useful in warehouses that handle product assembly and need an effective transportation mechanism between assembly areas.
Warehouse Picking and Packing Tips
The right picking strategies ensure a warehouse runs as smoothly during peak demand as during quiet periods. Instead of a single, rigid approach to serve all needs, which can lead to labor shortages during rush periods and too many resources during slow order cycles, businesses should aim to take an agile approach to order picking and change strategies as needed. Software-driven processes can adjust to changing warehouse conditions, ensuring demand is met without forcing employees to scramble.
Use the right order picking methods. There is no one-size-fits-all picking method. Each warehouse operation and order type will be suited to one of the following approaches:
Picker-to-part: Pickers travel around the warehouse to collect all the items required for a specific order. Items can be collected directly into totes, carts or shipping cartons.
Pick-to-carton: A subset of picker-to-part, pickers note the weight and dimensions of orders before picking. From there, they choose the appropriate shipping carton and pick orders directly into it.
Pick-to-tote: Another subset of picker-to-part, under this approach workers pick and place items for an order directly into a tote. Orders are then moved to the correct packing station, sorted and packed for shipment.
Part-to-picker: With the help of pick-assisting technologies, such as robots and sorting systems, products are moved from storage areas to dedicated picking bays, where the picking operator collects them.
Determine the right order picking types. In addition to choosing the right picking method, companies can adopt a variety of picking strategies to strike the ideal balance between speed, cost and accuracy. Some include:
Single order picking: Each worker picks all the items for a single order before taking them all to a shipping zone.
Batch picking: Multiple orders are grouped into small batches. Workers then pick multiples of every item on their lists for each batch of each order they receive, one SKU at a time. This prevents revisiting the same picking locations over and over.
Zone picking: Order pickers are split up to work within discrete zones and only pick products within their assigned area.
Wave picking: Workers complete picks at scheduled intervals, or waves, throughout the day. Waves tend to align with other warehouse objectives, such as shipping departures.
Continually evaluate picking strategies. Picking strategies should be re-evaluated regularly to make sure they are still the best option under current picking conditions, based on customer demands and inventory requirements. For instance, the launch of a new product range might call for a multi-order picking approach, as opposed to a single order approach.
Reduce travel time. On average, more than half of order pickers’ time is spent traveling or moving items around a warehouse. Having to backtrack a few feet to add a missed SKU might seem insignificant in the moment, but it can add up significantly over time, especially if multiple employees have to do this. It’s time wasted for the business, and a drain on order pickers themselves that drives up expenses. Picking processes should be optimized to cut down travel time.
Sequence picking orders logically and automate pick paths. Warehouse employees can certainly sequence pick lists themselves, but the scale and speed required in a modern warehouse operation requires a software-based approach. WMS can automatically devise optimal pick paths and types no matter how large or diversified orders become. This saves workers both calculation and travel time, which in turn drives productivity.
Reduce the variety of shipping containers. It may be tempting to use different shipping containers in various sizes to reduce waste (such as avoiding large packaging for smaller items), but this can make shipping cartons more difficult to store in a standardized way. It also forces warehouse employees to take the time to decide which container is best to store individual items. The time drain caused by going overboard on containers may not be worth the effort, especially when it slows down operations.
Pick-to-carton when possible. When picking to carton, pickers note the dimensions and weight of each order before picking. The appropriate shipping carton is then chosen based on that information, and the item is packed directly into it. This saves the business money on materials and picking labor, though it’s important to implement this process strategically. For instance, pickers should start with heavier items and work their way down to lighter ones that are more fragile to avoid damaging boxes or products.
Warehouse Inventory and Receiving Tips
The way warehouses receive and store inventory is no less important than the way they pick and ship orders. Especially for companies with global supply chains that move products through multiple warehouses on their way to a final destination, the goal is to receive and store items strategically. This ensures products are always ready to move to their next destination without creating clutter or impeding on the warehouse’s other picking and shipping activities.
Establish receiving policies and procedures. Effective inventory management starts with a clear process for how products should be received and stored once they arrive in the warehouse. A simple policy sheet may do the job, but it is better to lay out a rigorous procedure (preferably in the company’s inventory management software). As an example, if a shipment of car parts arrives in the receiving area, the policy guide would indicate who is responsible for logging the inventory, where each piece should be stored, how it should be placed on the appropriate shelf and any other specifics that will ensure an accurate log and management of that shipment.
Prioritize inventory control and accuracy. To make the most of a well-organized warehouse, businesses should put as much energy into managing and tracking inventory as they do into their product layouts. Good inventory control practices include keeping detailed records in an inventory management system. This can provide users with a complete view of which products they have in stock, their locations and their histories, ensuring that warehouse managers have an accurate snapshot of their inventory needs and performance at any given time.
Use cycle counting. It is a poor practice to depend only on taking inventory once per year, especially in a world where product offerings and customer demand fluctuate more than ever. Instead, warehouse managers should opt for a cycle counting system whereby inventory is counted multiple times during each sales cycle. The length of the cycle will vary depending on the company’s specific operating conditions, but this approach will ensure a more accurate approach to inventory management and planning, in addition to helping businesses quickly catch and address errors.
Practice lean inventory strategies. When inventory management follows lean practices, workers spend less time searching for items when picking or preparing orders. Lean inventory strategies also make a warehouse operation more agile, with a focus on stocking smaller quantities of in-demand products instead of excessive stock of slow-moving items. For instance, instead of planning supplier deliveries based on expected demand for the next three months, it might be more prudent to agree on three separate shipments once per month over the same period, with volumes adjusted as customer demand and market conditions change.
Prioritize replenishment of frequently ordered items. During busy periods or certain seasons, a company’s stock of popular items is depleted rapidly as workers pick those products. To avoid stoppages or costly downtime, warehouse managers need to stay one step ahead and keep these storage areas stocked. Depending on demand, they might even schedule special shifts in these zones for workers to solely focus on replenishment.
Track inventory error rates. Errors are inevitable, especially in a large and complex warehouse environment. For instance, a small item may fall out of its storage container during a pick and be forgotten somewhere on the warehouse floor. The important thing is to keep track of inventory errors, learn from them and uncover ways to reduce their likelihood in the future. This is crucial for retailers vying for customer loyalty, to ensure their available inventory accurately matches shopper expectations.
Repurpose dead stock. Dead stock — the items a company no longer expects to sell — can be a major expense. Rather than pay the high price of dead weight, businesses can clear this dead stock by offering it as a free gift with popular purchases, bundling forgotten items with complementary products or partnering with other companies to offload it at a reduced price.
Warehouse Staffing Tips
A successful warehouse operation hinges on the productivity and resources available to its employees. This in turn comes down to three crucial factors: training, safety and clear metrics that can directly inspire employee growth and development.
Train staff on policies and procedures. A warehouse is only as efficient and organized as its staff. It’s important to provide comprehensive training sessions so employees can learn procedures, understand how to use warehouse technologies and gain appreciation for the value of organization. When warehouse management is ingrained in corporate culture, people see training and policy as an opportunity to learn and evolve, rather than a box-ticking exercise.
Stay on top of staff training. Training should never be a one-and-done task. Well-planned, regular training and upskilling is key to keeping warehouse employees safe and ensuring they can take full advantage of the tools, machinery and technologies at their disposal. There is no hard-and-fast rule for frequency, but staff should be trained on new tools or technologies before using them and routinely undergo refresher courses to ensure they follow best practices.
Set benchmarks. Benchmarks are the key to setting goals for warehouse performance. By striving for best practices, warehouse managers and their teams can transcend their current limits. For instance, instead of aiming for a 10% increase in efficiency, a team might strive to set a new record for shipments in a quarter to motivate staffers and facilitate continuous improvement.
Incentivize staff. Speed and efficiency are the linchpins of a warehouse’s success, and both variables come down to motivated employees. Rewards and incentive-driven payment structures go a long way in making staff more productive. For example, offering bonuses to inspire workers in pick and pack areas, which see high traffic and must operate smoothly, can help ramp up activity and foster a healthy level of competition among colleagues.
Improve staff comfort. Worries about burnout and exhaustion are common in high-intensity warehouses, and it’s up to the business to ensure staff don’t reach this point. Rest and rest areas should be a fixture of every warehouse operation, as well as access to a kitchen. In spaces where the temperature can rise quickly, fans and air conditioning systems can make the working environment more comfortable.
Invest in a Warehouse Management System for Increased Efficiency
There are many advantages to a WMS solution, especially when it is integrated with a business’s supply chain management systems as part of its ERP platform. For instance, businesses with multi-location warehouses can add warehouse-specific conditions to their inventory management to further optimize product storage.
Key benefits of an integrated WMS also include warehouse activity dashboards, expiration and shelf-life tracking for perishable goods, as well as barcode labeling, which increases picking and packing efficiency. Modern platforms are also accessible by phone, tablet and other digital devices, allowing warehouse managers to track performance on the fly and check operations in other warehouse locations without having to visit them. Together, these capabilities give users holistic oversight and control of their warehouses, inventory and staff.
Having a defined set of physical warehouse locations while ensuring that purchase receipts are transacted accurately will prevent perceived material shortages and needless inventory adjustments because items could not be physically located.
With customer demand growing and boardrooms increasingly concerned with warehouse productivity and efficiency, warehouse managers must become faster and more agile in their daily operations. Warehouse management systems, inventory management systems and a range of supporting business technologies are helping organizations achieve peak performance by automating processes and taking human error out of the equation.
Warehouse Management FAQs
What is a warehouse management process?A warehouse management process is any process involved in the oversight of warehouse operations. Some examples include receiving and storing inventory, developing picking strategies, managing shipments and training warehouse staff.
What are the basic warehouse operations?There are six basic functions in most warehouse operations. These are receiving, putaway, inventory storage, picking, packing and shipment, each of which can be optimized with the help of warehouse management software.
What skills should a warehouse manager have?Warehouse managers have a broad skill set that varies between individuals, but they tend to share the following skills: strong leadership, strategic decision-making and reasoning, high-level numerical understanding, effective time management and team building.