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Warehouse logistics is an integral part of the e-commerce supply chain. It encompasses the entire spectrum of activities involving the storage and movement of goods in a warehouse, from receiving inventory to shipping. Organized warehouse logistics impart a significant competitive advantage to e-commerce businesses by saving employees’ time, helping deliver products and services to the market faster, and reducing warehouse operating costs.
Since a warehouse is central to regulating the flow of goods between supply and demand, understanding warehouse logistics is the key to optimizing warehouse space.
Dive in to know all about warehouse logistics and how it impacts the entire supply chain.
What is warehouse logistics?
The term warehouse logistics is a combination of two terms: warehousing and logistics. While warehousing is the storage of physical inventory for sale or distribution, logistics is the part of the supply chain dealing with the planning, implementation, and control of the movement of goods and services between the source and the destination.
In other words, warehouse logistics is the physical flow of goods, from inventory receiving to shipping. Once products are received at the warehouse, they are stored at the put-away bay and transferred to a storage location. On receipt of a sales order, the products are located within the warehouse, packed, and shipped to consumers, completing the physical flow.
In addition, warehouse logistics also includes the data connected to the flow of goods, including product information and fulfillment times. Information flow refers to analyzing product demand and determining the time it will take to fulfill a customer’s order. The optimization and synchronization of physical and information flow help an e-commerce supply chain operate smoothly.
Warehousing Logistics Objectives
The objectives of warehouse logistics broadly include:
- Catering to the marketing needs of a company through the deployment of marketable goods
- Meeting consumption requirements as per production, raw material, availability of labor, and market trends
- Minimizing operating costs without compromising the quality of service
- Maximizing the use of storage space
- Ensuring optimal organization of the warehouse employees and staff
- Stocking against anticipated demands in the future
- Maintaining the necessary security measures to preserve the quality and integrity of goods
Warehouse Logistics Operations
Next, we will briefly discuss the six core operations in warehouse logistics.
The first and one of the most crucial warehouse processes is receiving the incoming inventory. It transfers the responsibility of the goods to the warehouse and makes it accountable for the condition of the products until they are shipped. Hence, the warehouse must verify that it has received the right product in the proper condition, in the correct quantity, and at the right time.
Putting away products
Once received, the inventory must be moved from the receiving dock to the appropriate warehouse storage location. Improper handling at this stage can significantly impede the productivity of overall warehouse operations. On the contrary, proper putting away of products ensures quick and efficient storage, easier cargo tracking and retrieval, maximum space utilization, and safety of staff and goods.
In the storage process, goods are stored at the optimal warehouse location. Proper storage maximizes the available warehouse space utilization, eases inventory tracking and retrieval, and increases labor efficiency.
The warehouse picking process involves collecting products from designated locations to fulfill customer orders. Picking begins after customers place an online order. In the picking process, the warehouse staff locates and pulls the proper quantity of products from their respective locations in the warehouse.
Once the warehouse staff picks the items in a sales order, they consolidate the products and send them to the packing station to prepare for shipment to the customer. One of the primary goals of packaging is to ensure minimum product damage once it leaves the warehouse. Moreover, the packaging must be light enough to lower packaging and transportation costs.
The final leg in the chain of warehouse logistics processes is shipping goods to the consumer. Successful shipping means sorting and loading the right order, dispatching it, and delivering it to the right customer safely and on time. Other core warehouse operations such as receiving, putting awa
Warehousing Logistics: Areas of Work
Warehouse logistics is about receiving and storing inventory, packing goods as per orders, and dispatching shipments. To ensure the effectiveness of each of these operations, it is pertinent that every aspect of the warehouse logistics is optimized by considering the following broad areas of work:
The strategy for a warehouse layout design depends on whether you revamp an already functional warehouse or create a new facility from scratch. Besides, the available storage space and the volume of products to be stored also determine the warehouse layout design. Other factors include material flow and stock turnover, warehouse management systems, and workforce dynamics.
Managing equipment and storage systems
The next core area of work in warehouse logistics is materials management, or the processes involved in locating, storing, and moving products. Warehouses have industrial racks for storage. The storage system you choose ideally depends on the target storage capacity, the type of product, the product unit load, and the costs involved. Apart from storage, materials management involves various handling equipment that significantly affects a warehouse’s layout distribution. Handling equipment can be automated systems run by control software or manually controlled devices such as pallet trucks and traditional forklifts.
Picking and preparation of orders
Picking and order preparation is one of the major work areas in warehouse logistics and involves pulling out products from warehouse racks, order sorting, packaging, and dispatch. Various considerations come into play when determining warehouse picking methodologies, including the direction of goods movement, the height of the racks from which the products are extracted, and the picking method used. Selecting the most efficient and effective picking method for a warehouse requires an exhaustive analysis of its activities and the number of orders it processes per day.
Managing stock and inventory
Stock and inventory management is concerned with optimizing the stock levels in the facility. Modern warehouses leverage software to track inventory levels in real-time. A warehouse management system (WMS) integrates with enterprise resource planning (ERP) to organize operations. Apart from real-time inventory tracking and document management, WMS optimizes location assignments, picking operations, and more. Data reading and transmission gadgets such as voice picking connect computer systems.
Warehouse safety is one of the most crucial areas of work in warehouse logistics and covers the safety of workers against operational risks, warehouse maintenance, and security systems. Since warehouse logistics involves risky and physically demanding tasks such as manual load handling and prolonged standing hours, a job safety analysis can help workers work safely, comfortably, and with precautions. Likewise, proper maintenance and periodic technical inspections of the facility and devices are vital for safety reasons. It is advisable to frame good equipment operation practices, draw up traffic rules, and install signage throughout the warehouse to prevent potential damage to goods, equipment, and operating staff.
Developing a Warehouse Logistics Plan
Warehouse logistics planning keeps operations on the right track and plays a pivotal role in defining a company’s success. A comprehensive warehouse logistics strategy must encompass both operational and tactical levels of planning, covering the critical points in the supply chain, including facility locations, inventory, transportation, and customer service.
- A strategic logistics plan should include the following components:
- A general overview of the logistics strategy and how it impacts business functions
- Description of each strategy in the overall logistics plan, including those related to inventory, order fulfillment, transportation, and customer service
- The objectives of the warehouse logistics and how they impact the product and customer in terms of cost and service
- A detailed description of each logistic plan, including its timing, cost of implementation, and impact on the business
- Forecasts of capital and workforce requirements and other essential assets
- A financial statement describing operating costs, capital requirements, and cash flow for concerned stakeholders
Below is a list of things you must consider before and after drawing up your warehouse plan:
Before setting up a warehouse
- Ensure you have adequate capital to set up the warehouse
- Factor in transportation costs and areas of high demand before choosing the warehouse location
- Optimize the warehouse floor plan to maximize storage space and prevent accidents
- Invest in the right warehouse equipment and machinery
- Hire trained and qualified professionals to handle warehouse activities
After setting up a warehouse
- Leverage the right software to manage warehouse operations
- Prepare for customer demands by analyzing product trends and forecasts
- Plan daily operational costs
- Draw up a relevant strategy to handle returns from customers
- Enforce appropriate warehouse safety policy to avoid accidents and prepare for contingencies
Benefits of an efficient warehouse logistics plan
The primary objective of warehouse logistics planning is to deliver the right products to the right customers at the right time and at the least possible cost.
But how does effective warehouse logistics planning benefit businesses? Here’s a look into the most significant benefits of an efficient warehouse logistics plan.
- Helps minimize costs and other investments by defining the most cost-effective service levels
- Minimizes risk by helping companies forecast change and develop strategies to adjust to those changes
- Enables companies to adapt to market changes impacting one geographic region or customer segment while maintaining efficiency across others
Common Challenges in Warehouse Logistics and Tips to Overcome Them
Errors and challenges amount to high warehousing costs and affect the entire warehouse’s efficiency, speed, and productivity. In the worst-case scenario, errors are identified too late, and the problem is beyond salvation.
Below we cover some of the common challenges in warehouse logistics and what you can do to overcome them:
Cluttered warehouse layout
Lack of storage because of inefficient use of space is a challenge in most warehouses. However, an optimal warehouse layout can solve this problem through maximum vertical and floor space use while leaving enough room for warehouse personnel to move around.
Addressing a messy warehouse layout also involves reducing labor and labor costs through automation and equipment, the systematic categorization of inventory, safe inventory storage, and improved accessibility to warehouse products. Technology such as warehouse management systems and automated storage and retrieval systems (AS/RS) can help improve the speed and efficiency of warehouse processes.
A warehouse typically performs multiple operations on each item, resulting in a string of actions known as workflows. However, unintentional redundancy results in the same process being executed multiple times. Thus, reversing the mistake means increased labor costs and significant wastage of time.
Accidental redundancy is pretty common in the order picking process of large warehouses, where multiple people work together to fulfill a single order. Investing in proper technology such as a warehouse execution system (WES) can help automate redundant, error-prone processes. For example, barcode technology can help prevent redundancies in order picking by alerting staff of duplicates.
Poor inventory management
Not maintaining accurate inventory records or updating them is a primary cause of problems such as misplaced products, stock-outs, and space crunch. Manual inventory checking or outdated software worsen the problems, making room for human error.
The best way to prevent the consequences of poor inventory management is by adopting new solutions that offer real-time inventory management features. A typical inventory management system collects inventory data through a device such as a barcode scanner and sends it to the software solution for inventory cataloging and tracking.
Inefficient order management
Order management includes all the processes occurring after receiving an order, including picking, packing, and shipping. One of the most critical operations in a warehouse, order management is also prone to the most errors, resulting in a waste of time and money and poor customer experience.
An order management system can help businesses manage the overall order management and fulfillment processes and keep their orders running smoothly. Apart from saving time and preventing errors, order management systems ensure higher fulfillment accuracy rates, which, in turn, boosts profitability.
Unprepared for seasonal demands
While some products have the same demand all year round, others experience a seasonal surge in orders or at specific times of the year. A warehouse that is not adequately stocked, unprepared to manage changing stock levels, or ignorant of current market fluctuations and trends will be overwhelmed with a sudden rush in demands.
Warehouses can stay in touch with manufacturers, distributors, retailers, and other industry sources to be alert to seasonal demands. Likewise, forecasting techniques can help warehouses determine the products they need to meet the season’s demand. Product arrangement and organization and warehouse equipment and automation tools like AS/RS forklift trucks and pallet flow rack systems enable quicker and better processes.
Poor damage control
Lastly, damage control is a big issue in warehouses, especially those dealing with heavy-duty equipment and a large amount of inventory. While it is not feasible to eliminate damage entirely, warehouses can always try and reduce the impact.
For instance, warehouses can protect their employees, equipment, and inventory and prevent accidents by installing protective gear such as accumulation conveyor systems, anti-slip tape, guard rails, lockout systems, and pallet rack protectors. It is equally important to ensure that warehouse pathways are adequately lit and wide enough for the comfortable movement of staff and goods. In addition, regular warehouse inspections can help spot early signs of damage and lead to better damage control.
Measuring Warehouse Logistics Performance
There are several ways to measure warehouse performance, from using business metrics and conducting performance reviews to evaluating financial statements. However, one of the most effective and popular methods is to develop warehouse key performance indicators or KPIs to measure how far warehouse processes reach their goals and objectives.
Each warehouse KPI analyzes a specific operation by comparing it with benchmarks to show how well the operation or process is doing.
Below we list some essential warehouse KPIs to measure performance and efficiency. While this list is not exhaustive, it does provide a glimpse of what goes into measuring standard warehouse and distribution center processes:
- Inventory accuracy: A measure of the inventory physically present in a warehouse and the inventory that has been tracked.
- Carrying cost of inventory: The total amount of money a company spends to own, store, and hold inventory.
- Cost of receiving per line: The total expense a warehouse incurs on receiving a line of products from vendors.
- Receiving cycle time: The average time taken to process each received stock.
- Carrying cost of inventory: The cost of storing inventory over a span of time.
- Space utilization: The percentage of warehouse space inventory occupies out of the total available space.
- Putaway accuracy: The percentage of items put away correctly at the designated warehouse location.
- Putaway cycle time: The average time it takes to put away a single item of the inventory.
Pick and Pack KPIs
- Picking productivity: The number of order line pickings per hour.
- Picking and packing cost: The cost involved per order line, including handling, labeling, and packing.
- Order lead time: The average time it takes for an order to reach a customer once an order has been placed.
- Back order rate: The rate of incoming orders for out-of-stock items.
Optimizing for Effective Warehouse Logistics
Optimizing core warehouse logistics operations help businesses streamline processes, minimize costs, reduce errors, and achieve high order rates.
Below we list some general recommendations on how to optimize for effective warehouse logistics:
- Solutions such as conveyors and power pallet trucks for efficient and faster cargo unloading
- Software such as labor management systems and dock schedulers for proper personnel allocation
- Slotting and space management systems for streamlined putaway and optimal cargo storage
- Mobile and wearable devices to streamline the picking process
- Software to optimize and guide the packing process
- Mobile applications and devices for real-time access to shipping information and tracking
Warehouse logistics is a vital component of the supply chain, and it is not an area where you can afford to make too many mistakes. Since most warehouse logistics operations are interlinked, an error at one step will amplify and impair the productivity and efficiency of the entire warehouse. By educating yourself about the nitty-gritty of warehouse logistics, you can streamline the operations and take appropriate measures to avoid potential errors and accidents.
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Logistics in warehousing refers to the physical flow of goods in, around, and through the warehouse and the people and processes involved.
The four types of warehouses are public, private, bonded, and government.
Warehouses are used to store goods for sale or distribution. The storage is typically for a temporary period before being shipped to other locations or end consumers.
Warehousing refers to the safe and secure storage of inventory in a warehouse or building. On the other hand, logistics is concerned with the functional aspects of the stored goods, including internal movement, transportation, and delivery.
Some significant benefits of warehouse logistics include better inventory management, quick accessibility to inventory, maximum storage space utilization, increased productivity, faster inventory turnover, and lower labor costs.