21 Aug Warehouse Optimization Best Practices for Efficiency and Profitability
When your warehouse is fully stocked and running smoothly, it’s easy to think that you’ve got it made. But all it can take is one inventory miscount or one unexpected delay to leave you and your team scrambling to fill orders. Now — before you get behind the eight ball — is the time to head off any fulfillment issues by planning for warehouse optimization.
In this article, we will examine what the term “warehouse optimization” means, the challenges that can stand in your way, and how you can create your own warehouse optimization plan.
What is Warehouse Optimization?
Warehouse optimization is the process of using time, space, and resources to help make a warehouse more efficient. The method uses automation and careful planning with the goal of improving customer satisfaction and enhancing the overall customer experience.
Fully optimized warehouses are flexible and agile enough to come out ahead of their competition on every level. Optimized warehouses also are safer for employees and able to operate at a higher profitability margin.
Automation is at the heart of warehouse optimization. Other considerations include:
- Improved communication
- Warehouse flow
- Product placement
- Storage systems
- Retrieval practices
What Are the Challenges of Warehouse Optimization?
What existing factors are standing in your way? Here are the five primary hurdles that you and your team must overcome to optimize your warehouse.
- Inventory accuracy. It can be challenging to know exactly how much product you have in stock and how much you have on order if you lack an up-to-date automated system.
- Inventory location. Next, you need to know precisely where your product is located within your warehouse and how it can be located, loaded, and sent to your shipping area.
- Space utilization. An optimized warehouse uses its space to its best advantage with storage systems and warehouse racking that make storage and retrieval seamless.
- Redundancy. In order to be fully optimized, you want to reduce the number of times a product is touched within your warehouse. Redundant steps and multiple touches reveal an inefficiency that can hurt your bottom line.
- Picking optimization. An optimized warehouse has common routes for picking items for shipment and a workforce that is trained in safe picking practices.
8 Warehouse Optimization Best Practices
Now that you know more about the potential roadblocks to warehouse optimization, let’s examine the best practices that can boost your warehouse’s efficiency.
1 – Map out an efficient layout.
A few new robots cannot on their own make a poorly designed warehouse more efficient. That’s because a carefully planned warehouse layout is the foundation of any well-running warehouse.
In making your new plan, consider your overall available space, your fulfillment strategy, picking abilities, and the type, size, and frequency of your orders.
Here are some areas to keep in mind when planning your layout.
- Minimize the travel time between picking and sorting stations.
- Allow proper spacing for robots, machines, and humans to move inventory smoothly throughout the warehouse.
- Aim to utilize every inch of floor space, keeping in mind that your space runs up and down, not just side to side.
2 – Zone your inventory.
Another way to boost your warehouse productivity is by zoning your inventory. For example, where are your picking areas with respect to your storage, packing, and shipping areas? Does the workflow run smoothly from one location to the next?
Placing your most frequently picked items near shipping areas can speed up fulfillment activities. Additionally, fast-moving items should be in areas that offer the easiest access.
3 – Offer a streamlined returns process.
Did you know that U.S. consumers return at least 30% of all the products they purchase online? That percentage means that the management of returns is a critical part of your warehouse operations.
Look for software solutions that offer integrated returns processing functions. With these tools, you can store and track your returns, notice any patterns in why items are returned, and better understand your customers’ buying habits and preferences by studying returns data.
4 – Use the right equipment and technology for your warehouse.
The recent advancements in robotics and warehouse management systems are exciting. But not all technology is a good fit for every operation.
In fact, some types of automation require you to overhaul your existing warehouse structure before you can use them. You’ll also want to prepare for warehouse management systems that initially disrupt your order fulfillment and distribution operations.
We recommend starting with flexible solutions – such as collaborative mobile robots — that can fit into the infrastructure you have now. Then, you can make changes according to a timeline that suits your business.
5 – Keep a close eye on inventory.
Choose an inventory management software system that allows you the ability to monitor inventory closely and provides an accurate record of all goods going in or coming out of the warehouse. Monitoring your inventory helps you keep popular items in stock and avoid overstocking slow-moving products.
6 – Automate your data collection methods.
A fast-moving warehouse generates a huge amount of data. Fortunately, there are plenty of options for the automated collection and transfer of data.
Automated data is less time-consuming and tedious than manual data collection. It also helps eliminate human error, speeds up the timeframe for getting results, and seamlessly coordinates data from different parts of your operation.
For example, you can track customer shipping preferences using data from multiple sources and gain supply chain insights through automated data analysis.
7 – Have a backup plan.
The pandemic has shown us how supply chains can be disrupted when we least expect it. Additionally, ongoing labor shortages are forcing business owners to turn to automation more and more as a way to fulfill orders and keep customers satisfied.
8 – Make safety a priority.
Automated systems do not run themselves, and the workers who run them require training to operate and maintain them.
However, human equipment operators can become distracted and put themselves and others at risk. Clothing can become caught in rollers. Storage racks can become destabilized. Ongoing safety training and supervision are critical to effective warehouse optimization.
On the other hand, a machine can do more work without getting tired or risking injury. It will not drop a pallet or run into a rack with a forklift. Therefore, an optimized warehouse provides a safer work environment in the long run.
The right racking is essential to a smooth warehouse operation
Where does your warehouse fall on the “first in, first out” (FIFO) and “first in, last out” (FILO) spectrum? Or is your warehouse governed by the “last in, first out” (LIFO) rule? This designation will help you find the right kinds of storage racks and warehouse shelving for warehouse space optimization.
A warehouse with an FIFO system needs a pallet flow system that allows you to load the newest product in the back of the rack, where it will wait to be used. If you use FILO or LIFO, you can choose the basic selective pallet rack or a push-back rack. The push-back rack uses a front-load format.
You also could automate your pallet handling system with a radio shuttle rack car, a robotic car that brings the pallet to the front on a track system for pick-up.
Each of these systems allows you to maximize your warehouse space by building up (vertically), not out (horizontally). Of course, local regulations vary, and you may need to apply for permits from the fire department when you build up.
Talk to a Warehouse Optimization Expert
If you have questions about building up or any other aspect of warehouse optimization, our knowledgeable team at Speedrack West is ready to help. Contact us today, and let’s begin your customized warehouse optimization plan.