Your ecommerce business relies on efficient backend operations—and one of the most important aspects is your warehouse. As your business grows, it’s vital to consider whether or not your warehouse systems and processes continue to meet your needs.
Even if your supply chain, ordering and delivery processes are operating seamlessly, everything can quickly go wrong if your warehouse is not organized properly.
If your staff are unsure where particular items are kept, they may take too long to pick, pack and ship orders. If you don’t follow warehousing best practices, you may discover entire rows of expired items behind newer stock.
These are just some of the scenarios that can lead to customer dissatisfaction, decreased profits, and ultimately, affect your brand’s overall success. But—there are plenty of strategies you can start implementing to transform your warehouse into a systematic and structured space that can support your growing business.
We’ve rounded up six ways to improve warehouse efficiency to get everything running as smoothly as possible.
1. Map your warehouse into zones
Warehouse layout has an important role in warehouse management efficiency, so take the time to work out how to achieve the best layout for your specific business needs. Optimizing your warehouse layout can reduce stock losses, make the best use of your space, and help to improve the flow of your inventory. And with 60% of warehouse workers’ time being spent moving around the warehouse, splitting your products into zones can save a significant amount of time.
Organizing your goods into specific zones, groups, and bin types can work particularly well. If you stock many different products, you may decide to set up different zones for different product categories or group products that are regularly ordered together for faster picking. Consider how the workflow of your warehouse connects different areas, and remember to create clear zones for receiving stock, with areas for checking inventory from each shipment.
You may decide to use different picking strategies depending on how you’ve zoned your warehouse.
Batch picking involves fulfilling multiple orders simultaneously and can work well for multiple orders of the same items.
Zone picking involves an assigned picker staying within a specific zone and collecting items for just one order. If additional items from another zone are required, the order is then passed to another picker in another zone. If you stock seasonal products, you might decide to create zones for specific seasons, or split your warehouse into one zone for products that can be hand-picked and another for those that require equipment like forklifts.
Wave picking combines batch and zone picking and involves each picker staying within their zone but collecting items for multiple orders. If you need to meet a specific shipping deadline, wave picking can be an efficient way to process a high volume of numbers in a short amount of time. It works less effectively for last-minute or urgent orders though.
The last strategy, discrete picking, involves collecting all items for one order from any zone. This is generally best suited to smaller warehouses with fewer products.
2. Improve your supply chain operations
When running an efficient warehouse, accurately tracking your inventory is crucial. Global ecommerce sales are predicted to grow by 50% by 2025, but in order to take advantage of this, your supply chain needs to be solid. And with supply chain challenges affecting the majority of ecommerce retailers, it’s important to consider how to minimize these disruptions as you aim to keep your warehouse optimally stocked at all times.
Demand forecasting—or being able to predict what items your customers will be ordering at what time—is key. Using historical sales data can help you decide which items you should order when to meet future demand.
You could also look into diversifying your supply chain to include additional suppliers of key items. This way, if a particular supplier has specific items on backorder, you’ll have another option on hand to make sure you can keep those items in stock and at optimal levels. Customers these days don’t just expect convenience and fast orders—they demand them. Being able to meet your customers’ expectations for fast delivery relies on a resilient and reliable supply chain. You may decide to focus on advertising core products you know you can deliver, while behind the scenes you diversify your supply chain to include multiple suppliers in both international and domestic locations.
Developing and then implementing a contingency plan is also a wise business move. Consider your critical business functions, and then decide how you’ll maintain seamless operations for each of these if disaster hits. How will you continue to ship orders if your supply chain is disrupted? How will you meet an unexpected increase in sales while still maintaining fast shipping times? If you’re not sure, it’s time to sit down and map out a plan for these kinds of scenarios.
3. Follow the FIFO inventory method
The First In First Out (FIFO) method is one of the most efficient ways to manage your supply chain and inventory. It helps you accurately:
- Decrease product wastage. The longer an item sits in your warehouse, the higher the likelihood that it becomes obsolete or damaged, leading to wastage. Expired products or those with damaged packaging can’t be sold. By following the FIFO system, you reduce the chances of products becoming obsolete while they sit in your warehouse.
- Decrease the impact of inflation. By selling your oldest stock first, it’s easier to adjust your prices to match the current market value. This helps buffer any effects of inflation.
- Maximizing your profit. The cost of inventory is, as a general rule, increasing. That means the price you pay for individual batches of the same item will likely vary over time. By applying the current market value to any older stock, you’ll end up with a lower expense and a higher profit.
FIFO is the best option for most ecommerce companies, but specifically those with seasonal inventory like clothing and soft furnishings, or for goods with an expiry date.
It’s easiest to implement the FIFO system by stocking your warehouse based on batch numbers. This allows you to separate multiples of the same item into different batches, so, for example, you can make sure any items with sell-by dates expiring within the next few months, like food or cosmetics, are dispatched first before you move on to the next batch of the same item.
4. Introduce digital picklists
Digital picklists, or pickwaves, are a great way to help reduce human error, plus they make it a lot easier for your warehouse staff to know what they need to pick for each individual order. Instead of having to flip through multiple printed lists, everything is right there on their digital device. This also helps to optimize fulfillment times because the picklist is automatically arranged using the most efficient and quickest route around your warehouse. With 72% of consumers prioritizing stores that offer seamless service and delivery, digital picklists can significantly help reduce order fulfillment times by making it easier for your pickers to find the items they need.
With a digital picklist, you can also include an image of each item, which can help increase picking speed and reduce errors or returns when an item is incorrectly picked. If you stock a lot of different products in similar packaging, like cosmetics, then including an image of the exact packaging for each item can help your employees save time when cross-referencing each product to the picklist.
Choose the right warehouse management system, and you can select different pickwave grouping options to best suit your business, for example:
- Item grouping. Create a digital pickwave grouped by specific items, sorted by a specific sequence of bin racks.
- Order grouping. Groups pickwaves by single item orders first, then multi-item orders.
You can also choose to place all orders into one pickwave, or set a maximum number of orders for each pickwave.
5. Set up barcode scanning
Including a barcode on all your products makes it far easier to identify your inventory and reduces warehouse errors. These codes are often also accompanied by a SKU or stock-keeping unit. SKUs are numeric or alphanumeric codes used to identify distinct products so that they can be distinguished from the rest of your stock. Barcodes can also be used to identify specific racks or containers within your warehouse. This means it’s easier to transfer your inventory between specific locations if needed.
In order to implement a barcode scanning system within your warehouse, you’ll first need to audit all your existing products and sort them into distinct categories. Within each category, you’ll likely need additional detail within each of these. For example, if you sell clothing, you’ll need a category for each color and size of each clothing type.
You’ll then need a way to generate and print barcodes, along with a scanner and a way to decode the information within each individual barcode. Some warehouse management systems can generate barcode labels using the product SKU which saves a significant amount of time.
Once your barcode scanning system is in place, it’s quick and easy to monitor your inventory in real-time, which decreases packing errors and allows for true traceability.
6. Use a warehouse management planning system
The final piece of the puzzle is to use a warehouse management solution to bring all your other strategies together. These software solutions are designed to allow you to seamlessly manage every stage of your operations, from the supply chain, to order fulfillment and more. Using a centralized platform that includes warehouse management helps you stay in control and grow your business at the same time.
With customers expecting a convenient and fast shopping experience, the way your orders are picked plays a vital role. With many warehouses previously relying on paper-based picking lists and manual stock checks, there’s been too much room for error. Choose the right system and improve your operational efficiency while also scaling your operations as your business grows.
By optimizing your warehouse through the use of strategies including effective zoning, digital picklists, and barcode scanning, it’s easier for staff to find the correct item in a shorter amount of time. This means your orders are accurate and dispatched as quickly as possible.
You can choose between an integrated or standalone warehouse management system, although integrated versions offer significant advantages. An integrated warehouse management system allows you to join up your inventory, order, warehouse, and reporting systems. This gives a broad overview of all your business operations but also allows you to zoom in for specific insights about individual processes.
Setting your growing business up for success
As your business grows, the way your warehouse is managed becomes increasingly crucial to your success. While it’s easy to get away with a poorly organized warehouse as a small business, as you grow, it can lead to decreased profits through stock write-offs, fulfillment delays and more.
Whether you’re organizing your existing warehouse or moving into a larger space, there are plenty of ways you can improve your warehouse efficiency. From creating distinct zones to using digital packlists, and barcode scanning systems, the strategies we’ve outlined above will help you create a structured and efficient space.
Arguably the most important part of your strategy will be implementing a warehouse management solution. Doing so will help increase efficiency, ultimately decreasing the time it takes for your customers to receive their orders. And in the age of the effortless economy, that’s more important than ever before.