A Complete Guide to Warehousing in E-commerce

dark warehouse filled with products inventory

The role of warehousing spans the entire supply chain, from delivery of goods to shipping. Here is an inside look at the crucial functions of the fulfillment process.

A Complete Guide to Warehousing in E-commerce​

The role of warehousing spans the entire supply chain, from delivery of goods to shipping. Here is an inside look at the crucial functions of the fulfillment process.

LOCAD warehouse fulfillment service shipping 3pl

An e-commerce business is more than just building a website and watching the sales roll in. Strategic planning and optimized implementation are the two success mantras for a booming e-commerce business in recent times. Learning as much as possible about the business model before leaping into the game is crucial.  One such aspect of e-commerce is determining where to store the stock and how to manage inventory. This is where ‘warehouse and warehousing‘ enters the scene: a core element of e-commerce.

Read on to learn about this crucial part of creating and customizing your e-commerce store to maximize profits. 

inventory shelf inside a warehouse
inventory shelf inside a warehouse

What is Warehousing?

Warehousing is the acquiring and storing of physical goods and materials in a storage facility or a warehouse for further movement down the supply chain. Almost all types of businesses use warehousing to store their products in bulk before shipping them to other locations or to end customers.

Over the past few years, e-commerce has multiplied throughout the warehousing industry. Statistics show the market has doubled in the last decade as businesses around the globe began investing heavily in the supply chain process to make their businesses a lot faster and more efficient.

What is a Warehouse?

A warehouse is a planned facility for efficient storage and handling of physical goods and materials. Warehouses are the central locations to manage both inbound and outbound products. For any company selling physical goods, warehouses are crucial. The need for physical spaces to store and maintain the products rises proportionately with the growth of the business.

automated robotic arm sorting parcels boxes inventory

Types of Warehouses

Depending upon a company’s size, need, and preferences, there are different types of warehouses. Though all e-commerce warehouses serve essential functions, each type of warehouse offers distinct benefits for different types of businesses. The main types of warehouses are:

Retail Warehouse

Retail warehouses are typical warehouses with a single-story building and a maximum of 1000 square meters of space. Retail warehouses showcase the products stored there. These warehouses are only allowed to store non-sensitive and non-medical products.

Hazmat Warehouse

Hazmat warehouses are specifically designed for hazardous materials like flammable products, chemicals, and stuff that need utmost care and a safe environment. The government especially permits hazmat warehouses.

Public Warehouse

Public warehouses are the storage facilities owned by a governmental body and the most affordable choice for small business owners for short time usage. These warehouses aren’t technically sound and just cover up the basic functionalities.

Private Warehouse

Private warehouses are spaces typically owned by private wholesalers, distributors, and larger retailers, and they are more cost-efficient than public warehouses. These warehouses are technically refined with advanced warehouse management systems and hence are strategically sound for any small business to create a strong presence in any particular niche.

Government Warehouse

Government warehouses are the facilities directly owned and controlled by governmental bodies. Government warehouses are more advanced than public warehouses with greater control. It is an affordable option for businesses selling high-value products. However, if the company cannot make its payment, the government has the full authority to recoup the lost revenue by selling the inventory.

Cooperative Warehouse

Cooperative warehouses are typically owned and operated by collective bodies that share a vertical and other warehousing essentials. For example, wineries and farmers. Members of the cooperative organization can readily access these facilities for discounted rates, but non-members can also rent cooperative warehouses at the full rate.

warehouse guy checking his tablet inside a warehouse
warehouse guy checking his tablet inside a warehouse

Fulfillment Centers

These storage spaces are built with specific requirements. Also known as distribution centers, these storage facilities are often temporary and used by businesses that need to move their inventory throughout the supply chain.

Fulfillment centers work in two ways. Firstly, in the case of direct distribution, the fulfillment centers receive large inventory and distribute it to retailers and resellers within some days. And in the case of perishable products, the fulfillment centers further spread the items within 24-48 hours in the supply chain.

Smart Warehouse

These storage spaces use automation to improve the overall warehouse performance efficiency. This smart warehouse uses artificial Intelligence to handle storage, management, and order fulfillment. They use the latest and advanced technologies and software like inventory management systems and automated machinery to store and manage the warehouse. Prominent examples of smart warehouses include Amazon, Alibaba, etc.

Bonded Warehouse

Bonded warehouse allows a company to store imported goods before they are required to pay customs duties. Companies can acquire the warehouse with special bonds that ensure a company doesn’t lose money when the products are released. These storage facilities are safe, secure, and an effective option for cross-border trading companies.

Consolidated Warehouse

Consolidated facilities offer small and medium businesses a more affordable warehousing option. These warehouses gather small shipments from several suppliers and group them into larger shipments before final distribution to retailers and customers.

Cold Warehouse

Cold warehouses deal with temperature-sensitive products like meat, seasonal fruits, dairy, medical products, etc. Cold warehouses are structured to keep temperature, humidity, and microorganisms away.
LOCAD warehouse fulfillment service shipping 3pl
LOCAD warehouse fulfillment service shipping 3pl

Warehouse vs. Distribution Center

A warehouse is a physical building to store products and materials regardless of the purpose. Warehouses are primarily used to store goods procured by the company. A distribution center is a type of warehouse designed to further process the products and materials down the supply chain.

Distribution centers help move the products to other facilities or directly to the customer. While a warehouse serves the fundamental purpose of storage and inventory, a distribution center must be designed and optimized for efficient supply chain operations like sorting, picking, packing, and shipping.

automated robotic arm sorting parcels boxes inventory

Why is Warehousing Critical?

Warehousing is a critical aspect of the supply chain for all types of businesses that sell physical products.

  • For consumer business, warehousing stores a product that eventually ends with a retail customer. In the case of B2B companies, the stored products are sent to other business customers for further processing.

  • In the case of retail and e-commerce businesses, warehousing allows the company to purchase a bulk amount of goods at negotiated prices from the suppliers. This increases the selling margins of the companies and keeps the inventory available per market demand.

  • Warehousing provides strategic geographical storage for businesses to reduce delivery time and shipping costs. For example, a company selling a product directly to customers across the US must store it in multiple locations in different regions. But if the business sells globally, they need to strategically place its warehousing conditions to keep the fulfillment process going smoothly.

The Elements of Warehousing

vector of a delivery 3PL guy

Like the different steps of supply chain management, warehouse management requires certain practices to keep operations active and improve overall performance with positive outcomes.

Critical aspects in warehousing are:

Optimized Capacity Utilization

Space is the fundamental resource in a warehouse. Thus proper optimized planning is required for efficient storage space.

 

Easy Accessibility

A warehouse needs to be optimized with racks and shelves and proper mechanisms for easy storage and access of the required products.

Security

Implementation of proper safety and security mechanisms are equally crucial to protect the warehouse against thefts or natural disasters.

Efficient Warehouse Management Systems

Warehouse management systems helps take complete control over warehouse operations and inventory while keeping track of the employee performance, ensuring spontaneity and improvement for future changes.

Climate Control System

For perishable products like foods, medical products, or products that need to stay fresh or frozen, a warehouse must have the proper infrastructure to regulate temperature, humidity, and pressure.

Proper Warehouse Equipment

Pieces of equipment related to the movement of products like forklifts, conveyor belts, dock seals, pallet jacks, rack protectors, truck restraints, etc., must be present for reasonable moving and storage.

Reorganizing

Constant monitoring and reorganization process is vital to ensure the best utilization of the warehouse spaces. Any changes need to be updated and tracked in the database of the warehouse management systems.

Effective Inbound and Outbound Transport

Easy and cost-effective transportation system is needed for better procurement and retrieval of products in a warehouse.

Warehousing
two people with hard hats talking inside a warehouse filled with inventory

Warehousing in Supply Chain Management

Warehousing is a small integral part of a broader supply chain process in e-commerce. Not only does a warehouse act as intermediary storage, but it also provides a valuable tool for businesses to reduce overall costs by optimizing purchases, rendering shipping costs, and speeding up delivery times.

As a warehouse is fundamental to any business, companies need to be sure that it is integrated with the e-commerce platform to keep track of the rest of the operations in a supply chain. It includes placing orders, coordinating fulfillment, packaging, shipping, and so on. The warehouse allows a company to carry out procedures for different marketing processes and ensure the products get through the supply chain to the end customer with the best possible experience on behalf of the company. 

How Warehouses Fit into E-Commerce Operations

asian online sellers packing items ready for shipping

E-commerce warehousing is primarily related to storing products in a warehouse to be specifically sold online.

The steps associated with an e-commerce warehouse include:

Storing Inventory

Storing Inventory refers to the storage of specific products in designated locations. The benefits are :

  • Identify the exact location of any item in the inventory
  • Comprehensive product calculation
  • Improved stock turnover

Shipping and Receiving

Suppliers send inventory to the warehouse, where products are received, sorted, and arranged for efficient warehouse movements to keep operations running smoothly. Warehousing operations are optimized to accept incoming inventory and carry on further operations with minimum or zero error. Shipping is the final step where products are sorted, packed, and shipped via shipping carriers to their next destination. 

Distribution Centers

Major companies typically use distribution centers with both a physical and an online presence. Distribution centers are best for providing short-term storage until the products are shipped to further processing units or directly to the consumers. Typically, distribution centers are demand-driven with fast warehouse logistics. 

Returns

Efficient warehouse operations include being able to receive, assess and process each returned item, especially when there is no in-store return facility available. 

What are the Functions of Warehousing?

stack of boxes inside a warehouse

Though the primary function of warehousing is to efficiently store products before moving them further down the supply chain, the secondary tasks of warehousing include:

stack of boxes inside a warehouse

Storage of Excess Stock

 Efficient warehouses offer a storage facility for the different products in a company. Goods are produced in anticipation of the company’s demand, and products are made available in the market in case of scarcity or high market demand.

Price Stabilization

Warehousing helps stabilize the prices of products in the market. When the supply of a particular product is excess in the market, the fall in prices of the respective goods can be avoided by storing some stocks in the warehouse. Similarly, in case of increasing demand for any product, the inflation in price can be controlled by releasing some stock from the storage facilities. Warehouse helps in cost stabilization and insures the business against the danger of market fluctuations. 

Risk Management

Risk bearing is one of the crucial functions of warehousing. When a retailer or a supplier hands over the goods to the warehouse, the warehouse becomes responsible for any risk or damage related to the stored goods.

Shipment Hub

Optimized warehouses in strategic locations also act as shipping hubs to receive and send shipments until they are moved to other storage facilities.

Rental Storage

If any business has warehouses too big for their stock at the moment or in case of down sales, renting out the storage space to small businesses or companies in need always is a good option.

Assembly Line

 In the case of the products being delivered in several parts by the supplier, companies can allot different spaces within the existing warehouse to assemble the products for further processing, retailers, or the customers. 

Warehousing
Warehousing

The Advantages of Warehousing

Warehousing provides a list of benefits for the e-commerce community. Some of the advantages of warehousing include:

Regular Flow of Goods

Efficient warehousing ensures a steady supply of goods, including seasonal commodities like rice, wheat, and so on, throughout the year.

Protection and Preservation of Products

Warehousing provides necessary facilities for efficiently storing the goods until they are sold. The safety measures minimize the losses, quality deterioration, breakage, and spoilage, as effectively as possible.

Spontaneity in Production

Warehouses allow the manufacturers to carry on with their production without bothering about the storage. This enables continuity of the flow of goods down the supply chain.

Location

Warehouses are generally located at readily accessible places to reduce transportation costs.

Quick Customer Service

Warehouses allow businesses to send products ordered to the customers at reduced costs.

Increased Employment

Warehousing helps provide employment opportunities to skilled and semi-skilled people interested in working.

Loan Facility

 Efficient warehouses provide the opportunity for hypothecation of the stored goods. This enables a manufacturer to raise loans with the goods stored as security deposits.

Easy Payment of Heavy Custom Duties

Warehousing offers the importer the option to pay only for the number of products being released. This enables an importer to pay the heavy customs duties in parts instead of a huge transaction.

Quality Assurance

As the warehouse management system exclusively maintains the products stored in a warehouse along with other operations like picking, packing, blending, labeling, etc. It helps preserve the quality and standard of the products before reaching the end customer.

Income to State

Bonded warehouses are mainly associated with the state’s government. Every importer and exporter must pay the required duty for the goods being stored in a bonded warehouse, thus providing revenue to the state through warehouse taxes.

The Disadvantages of Warehousing

Warehousing

Although warehouses provide many benefits for businesses, they also have inevitable drawbacks. The foremost disadvantages of a warehouse are:

Warehousing

Partial Control Issues

Businesses can face control issues in the overall warehouse operations and management if outsourced to poor service providers. Problems like delayed Shipment, product damage, etc., may result in irreparable damage and extra expenses.

Expensive Setup

 Initial warehouse setup can be costly for new and small-scale businesses. A company may need to initially hire a third-party service provider for its fulfillment process.

High-Priced Operational Units

In addition to the initial setup costs, operations like automation, warehouse management system, employee management, rent, bills, and taxes add to the administrative costs.

Risks and Accidents

Warehouse operational units may use equipment and other materials that are potentially dangerous. Inappropriate handling of the operational units without skilled employees may increase the risk of unwanted accidents.

Probability of Product Wastage

 A large storage facility doesn’t guarantee the selling factor of the products. Without proper knowledge and forecast, a company can generate a lot of product waste because of unfavorable market patterns. Thus, a business must implement correct market strategies before storing many products in the warehouse. 

What is Warehouse Logistics?

Warehouse logistics encompasses the entire chain of activities involved in storing and moving goods in a warehouse from the procurement point to shipping. Efficient warehouse logistics provide a competitive advantage to e-commerce businesses by improving their performance and reducing overall operating costs. Warehouse logistics also imparts insight into the data connected to the warehouse operations, and information flow is as crucial as other operations in a supply chain.

robot carrying boxes inside an automated warehouse
robot carrying boxes inside an automated warehouse

Fundamentals of Warehouse Logistics

Warehouse logistics comprises a network of operations dealing with receiving, storing, and dispatching goods. It is pertinent that every aspect of the warehouse logistics needs to be optimized to ensure the effectiveness of each of the warehouse operations. The fundamentals of warehouse logistics include:

Warehouse Layout and Design

You can keep track of what’s in inventory and purchase whatever you need for custom orders with good inventory management.

Management of Stock and Inventory

Inventory management facilitates the tracking of what’s in stock and on hold, ensuring that you don’t oversell items.

Warehouse Safety

You can keep track of what’s in inventory and purchase whatever you need for custom orders with good inventory management.

Equipment Handling and Storage Systems

Inventory management facilitates the tracking of what’s in stock and on hold, ensuring that you don’t oversell items.

Benefits of Efficient Warehouse Logistics

The primary objective of effective warehouse logistics is to deliver the right products to the right customers at the right time with the least possible expense. 

Other significant benefits of a potent warehouse logistics include:

  • Minimizes costs and other extra investments by identifying the most efficient, cost-effective services.
  • Helps businesses forecast change and minimize risks by developing strategies to combat the challenges.
  • Allows companies to adapt to the constant market changes while maintaining overall efficiency. 

Warehouse Management

woman with a hard hat inspecting a warehouse

Warehouse management is a complex network working on strategic improvements to upgrade the overall process and boost profitability for a business. Efficient warehouse management allows a company to gain a better insight into the necessary resources and optimize the warehouse functions for better warehouse performance, transparency, and productivity with absolute low expense. 

Benefits of Warehouse Management

man with a clipboard checking inventory items inside a warehouse

Effective and efficient warehouse management is beneficial to business growth in many ways, including:

man with a clipboard checking inventory items inside a warehouse

Better Inventory Management

An effective warehouse management provides insight into accurate and real-time inventory operations to help the companies estimate supplies securely and avoid errors and backorders.

Optimized Storage Space and Lower Operating System

Warehouse management helps optimize warehouse flow with the best possible analytics based on availability and demand. With practical management system implementations, the optimized space is determined to provide the best possible ways of product storage and reducing waste. This also lessens potential expenses from excessive material movements, time-consuming placements and retrieval, and overall operating costs. 

Skilled Labor Base

A warehouse management system can effectively assign the right task to the right person based on their skill levels. Warehouse optimization is one of the most incredible benefits of improved labor utilization and work efficiency.  

Better Storage Visibility

Warehouse materials can easily be traced with an efficient and effective warehouse management process. Automating warehouse management lowers redundancy, enables accurate inventory, and provides accurate data and information for future traceability and maintenance of service. 

Optimized Supply Chain

An optimized warehouse management results in the overall optimization of the supply chain. The warehouse management system streamlines the entire process from inbound shipments to outbound deliveries simultaneously, improving operational efficiencies and lowering expenses. With better optimization leading to improved data, it reduces the risk and ascends reliability at every level of the supply chain. 

Effective Shipment

As inbound and outbound logistics are directly linked with a warehouse, effective warehouse management can efficiently manage the logistics with accurate data and lower the chance of error or wrong process. 

Sustains Risk Management

Better warehouse management reduces risks. Not only do they provide protection against price fluctuations, but safe storage of products, depending upon market demand. Moreover, products in warehouses are typically insured. Thus reducing overall risks from any kind of unwanted incidents, thefts, or accidents. 

Improved Customer Service

Last but not least, effective and efficient warehouse management allows a company to stick to its word of timely delivery and optimized distribution. This helps in increasing labor productivity and improves overall customer satisfaction. 

Improving Warehouse Management

Some practical ways to improve warehouse management are:

  • Optimize warehouse spaces – Adopting strategic optimization ways like using vertical spaces, expanding storage units, using Advanced technologies, installing the right equipment, etc., will provide a better infrastructure for the warehouse operations.
  • Simplify warehouse management – Warehousing is an integral part of the supply chain. Simplifying the intricacies of warehousing results in a smaller error and increases a company’s service, efficiency, productivity, and overall performance.
  • Utilize technology – Effective warehouse management systems or an ERP system with WMS modules can improve efficiency with lower manual intervention and more accurate results.

What is a Warehouse Management System?

A warehouse management system is a software solution designed to optimize the operations in a warehouse. Efficient warehouse management systems provide better visibility into the storage and inventory and allow a business to maximize their exertion and utilize the spaces by coordinating and optimizing material usage and resource flows. Warehouse management systems are ergonomically devised to reduce human errors and provide error-free Operations. 

locad shipping engine fulfillment service
locad shipping engine fulfillment service

Types of Warehouse Management System

Warehouse management systems are implemented based on a company’s unique necessities and requirements. Physical factors like size, infrastructure, location, type, and budget of the business play an essential role in structuring the warehouse management system requirements for each of them.

The different types of warehouse management systems (WMS) are:

Standalone

The most basic system designed only to handle the warehouse without a complex network. This system only deals with functions related to the movement of the products inside the warehouse.

Supply Chain Module

This WMS system encompasses all aspects of the supply chain. It deals with vendor management, business process, risk management, and several warehousing functions.

On-Premise

This warehouse management system requires more internal resources to work, support, and maintain. It is usually installed in the company’s native hardware and network to provide greater control of the overall performance.

ERP-Integrated

This WMS system is the most potent option for providing a complete business management solution. It connects to every aspect of a business, streamlines end-to-end processes, and provides insights into growing and increasing competitiveness with a single data source.

Cloud-Based Management

 It is the most efficient warehouse management system that doesn’t require hardware or server synchronization. This web-based management system is quicker to implement, easily accessible, easier to upgrade, and simple to use. It can be scaled up and down according to the needs of the business. 

Benefits of Warehouse Management Systems

While implementing an efficient warehouse management system may seem like a long and expensive process, the benefits of WMS are:

  • Better understanding and optimal use of the storage
  • Optimized and controlled movement of the supplies
  • Flexibility in handling orders of different sizes
  • Improved efficiency and accuracy of the order fulfillment process
  • High productivity
  • Reduced costs
  • Improved employee management
  • Improved safety and security
  • Transparent tracking and shipping
  • Improved customer service

Essential Criteria to Follow While Choosing an Effective Warehouse Management System ​

happy asian woman online seller looking at her laptop while holding a parcel

The basic principle of warehouse management is to help a business focus on its efforts to improve the overall supply chain performance. As warehousing is integral to the bigger picture, specific criteria must be followed when choosing and implementing an efficient Warehouse Management System. 

happy asian woman online seller looking at her laptop while holding a parcel

Objective

An efficient warehouse management must be aware of its purpose of operation for an efficient warehouse in a company.

Complete Control

Warehouse management is a complex process involving several levels of coordination. Thus the managers need to be able to track each process for better understanding and ensure the spontaneity of the whole process. Quality control provides a smooth operation chain with minimum problem points for accurate order fulfillment.

Decisions Based on Data

Optimized warehouse management systems allow businesses to identify and analyze the areas needing improvement. Data-driven decisions provide accurate information for the supply chain to run without a hitch.

Flexibility

 Due to the ever-changing market pattern, warehouse management systems must be flexible as per the need. It is equally essential to adjust to the change of plans and act accordingly.

Customer Service

When it comes to effective customer service and satisfaction, correct fulfillment with on-time delivery emerges as the most critical principle in the whole process. 

Warehouse Replenishment

Warehouse replenishment defines the process of refilling a warehouse with regular products from several external sources like suppliers and manufacturers. It typically works between a company and the associated vendors or suppliers. Replenishment is usually a short process of a few steps depending on the company's vendor or supplier relationship.

an warehouse employee moving inventory items and boxes
an warehouse employee moving inventory items and boxes

Fundamentals of Warehouse Replenishment

Warehouse replenishment is one of the crucial processes of the Supply Chain Process. While warehouse replenishment practice helps a company optimize its supply chain positively, specific base components help a  business implement the best practices for best return benefits. 

The fundamentals of warehouse replenishment are:

Demand Forecasting

Demand forecasting is replenishment’s most basic yet influential component. A business can optimize and react quickly to changing market scenarios with a continuous forecast update. It allows a company to reveal the demand variance of the products in the present market and increase the accuracy of stock requirements in case of emergency variances. Demand forecasting helps synchronize store and market patterns effectively, leading to accurate replenishment ordering.

Lead Time Forecasting

Lead time refers to the number of days required between order placement and generation of the order receipt. Lead time forecasting is just as crucial a component as demand forecasting. It helps estimate the time needed to fulfill the upcoming orders and the probability of the time for the future orders to be placed. Accurate predictions can reduce lead time variance and improve services and sales.

Service Level Goal Analytics

While an effective vendor compliance protocol can minimize the lead time variance, a business needs a way to profitably compensate for the ever-changing market demands with the demand forecast variance. A service level goal makes way for that compensation. Higher service level goals lead to higher sales opportunities.

Order Cycle Analysis

The amount of time between two order receipts from the supplier or manufacturer is commonly referred to as the order cycle. This helps a business determine the number of products needed to be stocked or preserved until the following receipt is expected.

Order Validity

Order validity refers to the ordering rules established by the suppliers and vendors. Order validity includes items or order minimums, maximum orders, truckloads, case packs, layers or pallets, shipments, etc. An effective replenishment solution provides profit-driven logic in this step. This allows a company to implement promotions, pricing, and assortment strategies based on replenishment analysis.

Special Orders

Special orders are the additional orders a business needs on top of the regular replenishments to meet the increasing market demand. Special orders can also refer to further orders for promotional activities, sales, new store openings, or transferring additional stocks from one location to another with no extra warehousing space.

With efficient replenishment teams, it becomes easier for a business to figure out a solution for the impending incremental needs and create a safe space for the replenishment process ahead of time.

Methods of Warehouse Replenishment

man in a forklift carrying boxes of inventory

While there are several optimized approaches for determining the best practices for the benefits of a business, a company can choose to implement replenishment methods based on its specifications. 

Some notable warehouse replenishment methods are:

man in a forklift carrying boxes of inventory

Re-Order Point Method

When a specific item in an inventory falls to a certain threshold point, reorder point method triggers replenishment against the specified product. Reorder point method enables a business to order fresh merchandise before the existing amount drops below the predetermined safety stock level.

Periodic Stock Replenishment Method

This method allows a company to review inventory levels at specified set intervals instead of regular replenishment analysis. Businesses with larger capacity often use periodic stock replenishment depending upon demand forecast, low risk of stockouts, and warehouse capacity.

Top-Off Method

This replenishment method allows picking racks during downtimes or slow periods. This is a popular method practiced by distributors and retailers to ensure fast stock-selling before restocking their warehouse.

On-Demand Method

This method primarily works according to customer demand. Certain companies are only required to fill in their inventory according to the current orders to ensure enough stock is available to fulfill the market demand and avoid any demand fluctuations. 

Warehousing
happy african woman 3PL employee carrying boxes to her delivery van

Optimizing the Warehouse Replenishment Process

Some practical and efficient strategies that can improve warehouse replenishment processes include :

Setting Up a Real-Time Warehouse Management System

Real-time warehouse management systems (WMS) can automatically access and order the required products and stocks at scheduled intervals to ensure spontaneous warehouse and inventory operations. It enables a business to carry a seamless fulfillment process.

Analyze Predictive Analytics

Predictive analytics helps a business estimate the total number of sales per day according to both demand and seasonality. A company can further choose to replenish its warehouse depending on the predictive analysis report.

Constant Monitoring of Fast-Moving Inventory

 If some products have known backorders and obvious demands, it is safe to directly replenish the inventory from the receiving dock. This means a company may reorder the same products in demand at the same time as receiving their previous orders. Constant monitoring ensures the correct amount of stock in the warehouse every time and saves the business from sudden market fluctuations.

Enhance Picking Accuracy

Implementing automated systems helps in accurate order picking and fewer errors. Automating the whole warehouse management system eliminates replenishment issues and restores spontaneity in the fulfillment activity.

Set Realistic Key Performance Indicators (KPIs)

Implementing realistic metrics allows a business to understand and interpret the numbers efficiently and keeps the employees motivated. Realistic KPIs are inspiring, challenging, and achievable. 

3PL Warehousing

A third party (3PL) warehousing is a service that allows businesses to outsource supply chain operations, including transportation, warehousing, sorting, picking, packing, and shipping to further facilities or the end customer.

An efficient 3PL warehousing includes:

  • Efficient Warehouse / Inventory Management
  • Procurement and product storage
  • Picking and Packing
  • Product shipping
  • Freight Shipping
  • Return/ Reverse Logistics handling.

How does 3PL Warehousing Work?

3PL, as the name suggests, is a third-party logistics provider a company hires to carry out the order fulfillment process. How a 3PL warehouse works with a company to complete the orders to the end customer is outlined below:

  • The company first orders or manufactures the products
  • The finished products are then shipped to a 3PL Warehouse
  • The 3PL company receives and warehouses the products in the respective inventories
  • The orders placed by customers or further retailers are placed directly in the 3PL warehouse.
  • The 3PL company picks and packs the products of the orders
  • The final product is shipped and delivered by a 3PL logistics provider to the end customers/destination.

Advantages of a 3PL Warehouse

LOCAD warehouse fulfillment service shipping 3pl

A third-party provider is the most efficient solution for a company to streamline supply chain operations and reduce costs without affecting overall supply chain performance. 

The benefits of a 3PL Warehouse are:

LOCAD warehouse fulfillment service shipping 3pl

Reduced Costs

An efficient 3PL provider can significantly lower the shipping rates and other additional warehouse expenses associated with operations and maintenance.

Flexibility and Scalability

The market is an ever-changing scenario. While most businesses have to deal with the continuous fluctuations in the market, 3PL providers help a company deal with the market uncertainty by effectively managing demand peaks and data analysis.

Lowers Risk

Occasional delays are inevitable in a supply chain. 3PL providers allow a seamless fulfillment process by making alternative arrangements with complete protection against lost or damaged goods.

Improves Overall Customer Service

Occasional delays are inevitable in a supply chain. 3PL providers allow a seamless fulfillment process by making alternative arrangements with complete protection against lost or damaged goods.

How to Choose an Efficient 3PL Warehouse?

Warehousing

With the massive bandwidth of 3PL options, choosing the right 3PL provider can be overwhelming for certain businesses. A few things to consider while selecting the right 3PL partner include:

Cost Efficiency

The primary goal of a business outsourcing its supply chain management is to curb unwanted costs. Though the services and prices significantly vary among different providers, a business needs to focus on the outsourcing options required for the company the most.

Geographical Location

Location plays an essential role in the overall performance of a company. Thus choosing a 3PL provider that can serve on the same home ground can benefit a business in many ways. Depending upon the location of the customer base, a company can opt for a regional, national, or international service provider.

Flexibility

A 3PL partner should be flexible and scalable to manage the entire supply chain with the current volume, with an unexpected rise in stock or sudden market fluctuations.

Automation

Automation is the future of e-commerce. A business needs to choose a 3PL partner who can integrate seamlessly with the warehouse management system. An efficient 3PL with knowledge about the latest technology and industry standards is more successful in upgrading and providing services through new techniques and technologies.

Warehousing

Benefits of Choosing an External Warehouse Service Provider

External or 3PL service providers allow a company to enjoy some impressive benefits. The benefits of choosing an external service provider don’t only limit to several warehouses to choose from or reduced shipping costs. The other benefits provided by an efficient 3PL warehouse provider are:

Warehousing

Easy Accessibility and Organized Warehouse

3PL Warehouse provides more space with better organizational systems. It allows a company to easily track and manage the essential warehouse functions. An external service provider curbs the heavy management process and helps a company improve its strategy with the latest e-commerce trends. 

Accuracy in Picking, Packing, and Shipping

In addition to efficient storage and warehousing, 3PL providers also include essential functions of order fulfillment like Product picking, packing, and shipping. The expert staff associated with each part of the fulfillment process ensures accurate product picking, Shipping, and delivery to the end customer. 

More Time for Business Growth

A successful business demands significant time, attention, planning, and resources. With an efficient external service provider assisting, a company can invest more time in its growth strategy and scale up quickly. 

Important Criteria to Keep in Mind While Choosing Effective Warehouse Solutions

Though several factors influence warehouse operations and management, finding the best reasons can be overwhelming for a business to choose. Some of the basic yet effective criteria involved with an efficient warehouse solution are:

SKUs and Storage Costs

Stock-keeping units not only help keep track of the inventory but also helps a business calculate the potential storage operations in a warehouse. Warehouse fees can vary depending upon the per SKU or per unit storage, enabling a business only to pay for the space used.

Location and number of warehouses

With the simultaneous growth of a business, the supply chain operations will require expansion with the growing complexities. Thus, a favorable location is of utmost importance in optimizing a supply chain and reducing shipping. Ensuring enough storage caters to current needs and assists future growth without extra investment or outgrowth of the warehouse.

Seasonability of the Business

Seasonal fluctuations in business can significantly impact supply chain management and warehousing. Thus, a company is advised to lease a dedicated space on a seasonal basis as Warehouse costs can lead to extra expenses during low seasons. Additionally, the business can rent out additional storage spaces during peak seasons or holidays in case of a shortage of space and colossal inventory.

value-added services

Additional tasks beyond normal warehouse operations are termed value-added services. Warehouse service providers engage in value-added services to withhold their competitiveness and offer superior results to the clients. Businesses in need can add to their overall performance without any extra expense and can very well choose an effective Service provider to handle their needs. 

Conclusion

Maintaining an efficient warehouse is crucial for any business that deals with physical goods. While warehousing can seem tricky, the need for storing space and maintaining Warehouse operations has grown with continuous growth. Every business, irrespective of size, needs an efficient e-commerce warehouse to improve its performance and scale up its businesses.

A well-designed warehouse can save a ton of money, optimize warehouse functions, control inventory purchases, reduce shipping costs, and expedite delivery times to ensure customer satisfaction, increase efficiency to meet demand, and enhance customer service.

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Frequently Asked Questions

The process of storing products in physical storage or inventory for further sale or distribution is called warehousing.

The basic functions of warehousing include: 

  •         Storage of products
  •         Price stabilization
  •         Risk bearing
  •         Loan facility
  •         Import and export advantages

A company can implement an effectual warehouse management strategy with the following warehouse practices:

  •         Using an efficient warehouse management system
  •         Integrate significant pieces of machinery
  •         Expand their inventory across several distribution centers
  •         Implement multiple picking systems
  •         Outsource operations to 3PLs

The activities associated with managing the process of storing and delivering products from warehouse to end customers are called warehouse management. The activities in warehouse management are:

  • Receiving goods
  • Inventory management
  • Documentation / Data collection
  • Shipping products
  • Customer service

 

The basic warehousing procedures encompass:

  • Entry procedures handle the safety of the warehouse by selected authorization.
  • Return procedures handle the products returned by the end customer for any reason. 
  • Release procedures are associated with the placement of an order.
  • Delivery procedures handle the delivery of the products when it is released from the warehouse and is ready to be shipped.
  • Warehouse management procedures handle the warehouse or inventory management systems. 
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