If your business sells goods, you need a place to store them. Most often, this is in a fulfillment center, distribution center, or warehouse.
You can purchase land, lease a facility, hire staff, buy equipment, and get customers to buy from you — but it doesn’t stop there. Proper warehouse management is what will determine how successful a business will be.
It won’t matter if you have the most modern state-of-the-art warehouse if it’s not operating efficiently. You will be stuck with poor performing staff, a low-profit margin, high operating and logistics costs, ineffective leadership, and damaged relationships with customers.
Inbound and outbound logistics are some of the most complex functions of running a business with many literal moving pieces. Learn how warehouse operations affect supply chain management and how to set your business up for success.
What is warehouse management?
Warehouse management refers to the oversight of operations in a warehouse. This includes receiving, tracking, and storing inventory, as well as training staff, managing shipping, workload planning, and monitoring the movement of goods.
What is a warehouse management system?
A warehouse management system (WMS) is software designed to optimize operational processes in a warehouse. By implementing a WMS you have full visibility into real-time inventory levels and storage, staff productivity, demand forecasting, and order fulfillment workflows within a warehouse.
Warehouse management systems are important as they eliminate manual processes and guesswork and instead streamline processes that, save time and provide a more accurate snapshot of what’s going on inside a facility without needing to conduct continuous warehouse audits.
This information helps warehouse managers identify areas of improvement and track progress to drive optimizations throughout the supply chain, from when inventory hits the loading docks to when it’s shipped out to its next destination.
Warehouse management software provides the tools to drive strategic big picture improvements as well as those to monitor the day-to-day. What a management team sees in the warehouse management system will be different from a picker or packer who relies on the system to know what to pick or pack next on the warehouse floor.
Each warehouse management system may have different functionality deployed depending on the business it serves (e.g., what a direct-to-consumer ecommerce seller needs isn’t the same as a large brick and mortar store chain).
5 essential warehouse management processes
Warehouse management is one facet of supply chain management. It affects retail order fulfillment, storage, inventory management, shipping, and distribution. Having an all-in-one solution lets you see what’s happening across different functions of the warehouse in real-time such as inventory being received, orders being packed, shipments being labeled, and any other movement of goods.
1. Inventory tracking
Inventory tracking is monitoring stock levels so you know which SKUs you have in your warehouse and the exact locations in which you store them, or if they are in transit from a manufacturer or en route to a store.
Inventory management lets you know how much product is ready to be shipped if a customer ordered an item now, as well as when you should order more based on projected volume.
As you grow, you will likely turn inventory over quicker, expand into new locations, and increase your product lines. This makes inventory accuracy and tracking all the more important.
2. Picking and packing
Picking and packing are two core functions performed in a warehouse. A warehouse management system should generate pick lists for each picker to retrieve items in the most efficient way. This may include zone picking, wave picking, or batch picking.
For each new order, the picker will receive a packing slip of the items ordered and storage locations at the warehouse. The picker will collect the ordered products from their respective locations.
Once an order is picked, it is handed off to a packer, who is responsible for securely placing the items in a box or poly mailer, adding in any needed packing materials, and putting a shipping label on it.
3. Receiving and stowing
Any warehousing operation must be able to receive inventory or freight from trucks at loading docks and then stow them away in a storage location. A warehouse management system will need to be able to scan in each new box received with the inventory quantities it has.
Then, it will be brought to its short-term or long-term inventory storage location, where it will be scanned again. Warehouse management software should provide clear instructions for each user so they know how to receive, unpack, retrieve, pick, pack, and ship inventory.
Based on the delivery options and shipping services you offer to customers, shipping carriers like DHL, USPS, FedEx, and UPS will pick up orders from the warehouse to ship packages to their next destination.
Once the order ships, your warehouse management system should be able to automatically send ecommerce order tracking information back to your store so your customers can track their shipments.
A warehouse management system should provide out-of-the-box operational and inventory reports across the warehouse. This may include accuracy in fulfilling orders (total mis-picks, mis-packs, etc.), total orders fulfilled by the hour to measure efficiency of staff, orders shipped on time, and much more.
There are also reports relating to people’s operations including inventory forecasting to understand labor management and staffing needs. With a warehouse management tracking system you can quickly find out which employees have completed safety training, and those who have licenses and certifications to operate certain equipment, and other regulatory requirements you must meet to operate a safe warehouse.
3 ways growing ecommerce stores rely on warehouse management
If you’re experiencing growth and fulfilling orders in an ecommerce warehouse, you need proper warehouse management and oversight in place. This requires experienced experts to manage the warehouse along with the tools and facilities to support not only your volume today but projected growth as well.
1. Enable logistical growth
With growth comes new challenges related to fulfillment logistics. Fast-growing brands understand the impact of warehouse efficiencies, from the number of dock doors that can be used at once and the use of space in the facility, to the number of pickers and packers you have on the floor each hour of the day.
Warehouse management should choose the right technology, shipping carriers, and delivery options to use as well as secure the best warehouse that will meet your future growth without you outgrowing the space immediately. Together, these things help you receive inventory more efficiently, pack boxes quicker, and deliver more orders on time.
2. Packages are processed and shipped faster
Warehouse management makes operations leaner and more efficient. Stations are designated in each area of the warehouse for each step of the fulfillment process (e.g., separate areas for picking, packing, labeling, returns, etc.). Each fulfillment associate is focused on one task per shift to maximize their output.
Setting up each functional area for success also means reducing the physical steps needed to get from one place to the next and routing everything in a streamlined way. The faster all of this work is done, the sooner packages are ready to go out the door.
3. Better storage allocation
Warehouse management helps you store each SKU in a separate dedicated storage location (e.g., in a shelf, bin, or on a pallet) that makes the most sense for the layout of the warehouse and item in question. Once the inventory is in its place, a warehouse management system helps pinpoint the exact location of any SKU so it can be retrieved quickly.
Accurate warehouse management also helps you keep tabs on real-time inventory levels, so you never run out of stock or run out of space. If you sell products that have expiration dates or are subject to recall, you can also store them by lot number and ship the oldest goods out first.