Warehouses play a key role in the supply chain. A lean, efficient warehouse keeps businesses running efficiently; therefore, warehouse organization can make or break a business’ bottom line. Effective warehouse design certainly encompasses layout and space optimization, but it also includes warehouse labeling and racking, warehouse management software systems and technology, and designated picking and receiving areas. Warehouses that are clean and well organized are ready to receive merchandise, prepare orders, load and ship containers, and keep customers happy.
Unfortunately, organizing a warehouse efficiently is easier said than done. Each decision should support the organization’s goals while being aimed at increasing productivity, optimizing space, reducing costs, and delivering superior customer service. If you’re struggling with how to organize your warehouse more efficiently, consider the following tips from industry leaders and warehouse authorities. While we have listed the tips in no particular order, we have grouped them into categories to make it easier for you to jump to the tips that of most interest to you.
- General Warehouse Organization Tips
- Warehouse Labeling and Technology Tips
- Warehouse Layout Tips
- Warehouse Picking Tips
- Warehouse Receiving Tips
General Warehouse Organization Ideas and Tips
1. Keep your warehouse clean. “Allocating an hour or two per week, or even per month, to cleaning the warehouse can lead to amazing improvement in your efficiency. You never know what missing or misplaced orders you might find. [In addition] a clean warehouse means employees can move around more quickly and get things done easier. It’s just common sense.” – Lee House, 5 Basic Ways to Improve Efficiency in Warehouse Management, Business2Community; Twitter: @B2Community
2. Reduce clutter. “An unorganized or messy warehouse indicates to visitors, suppliers, and staff that efficiency is lacking. It might even communicate that potential revenue is being lost, warehouse staff members are overwhelmed, or even that company morale is suffering.” – Getting a Handle on Inventory with Good Warehousekeeping, PathGuide; Twitter: @PathGuide
3. Adopt lean inventory practices. “Maintaining a lean inventory means that you only keep around what you actually need and nothing more. This gives your workers fewer products to sift through when organizing freight, completing order fulfillment services, and more. Try reducing your safety stocks, if possible, or see if you can get your suppliers to deliver smaller loads on a more frequent basis. As long as the costs add up correctly, you can greatly improve your efficiency with a lean inventory.” – 4 Ways to Improve Warehouse Operating Efficiency, Overflo Warehouse; Twitter: @Overflo3010
4. Organize for safety. “When it comes down to it, safety is priority when it comes to a warehouse – after safety, you can think about efficiency. The last thing you want to do is put your warehouse workers in danger – just to boost your profit margins. When it comes down to it, a safe warehouse is an efficient warehouse.” – Set Up the Company Warehouse for Organization and Safety, Business First Family.com; Twitter: @BusinessFF_com
5. Assess Shelf and Space Utilization. “When trying to look for ways to improve the efficiency of your warehouse, a good plan is to understand the way that shelves and space are being utilized. The placement of shelves and containers, along with the traffic patterns and total design of the building ultimately affects the ability for you to utilize any space available.” – Selina Gough, Three Ways to Improve Warehouse Efficiency, DELMIA Apriso; Twitter: @Apriso
6. Customize organization based on your industry. “Every organization system should be customized for a business’s specific industry. Sometimes multiple items will be shipped at the same time to the same destination; keeping all of those items in the same area [helps] all employees quickly locate their entire shipment and load it on the truck. On the other hand, if individual packages need to be sent out to different destinations try out different organizational systems to find what works best for your operation.” – Improving Warehouse Efficiency, Manufacturing Talk Radio; Twitter: @MFGTalkRadio
7. Reduce the amount of shipping containers. “Minimizing the number of shipping containers used in the warehouse seems like a small step in the process to streamline your operations, though it is an important one to increase staff productivity. You may think that having several different sizes and shapes for shipping containers can eliminate waste, but it can also slow down the workers who have to pick and choose which containers will be the right size for certain products.” – Danny Hammack, Top 5 Ways for a More Efficient Warehouse Operation, SupplyChainBrain; Twitter: @SCBrain
8. Keep track of inventory error rates. “Even in the most efficient and organized warehouse, pick and pack errors will be made from time to time. Keeping track of what kinds of mistakes are being made, and how often, can provide key insights into areas where there might be room for improvement.” – Improving Picking and Packing Efficiency, NPFulfilment; Twitter: @NPFulfilmentAu
9. Focus on creating a clean, accurate warehouse. “One of the things I noticed and appreciated was just how clean the warehouse was kept. Everything was clearly labeled and arranged on the vast amounts of shelves in an easy-to-find manner. In short, it all made sense. And the warehouse supervisor there actively encouraged his staff to clean their areas at the end of every workday. This emphasis on cleanliness was impressive to the carriers that came in to pick up the orders, as I heard a few say on more than one occasion. It was easy to find exactly what I was looking for and their inventory management was impressive. It is a credit to the people and the emphasis on a clean, accurate warehouse that made our operational efficiency the impressive process it was.” – Andy Jankowski, Benefits of an Organized Warehouse, LinkedIn
10. Use stackable shelf bins. “Stackable shelf bins are also an easy solution for small parts storage. Warehouse pickers can use them to organize and access small products that are in high demand. Conversely, every warehouse department can use them because smaller stackable shelf bins can be stored on desks and shelves. As a result, even the shipping department can use them to store printed tags or transportation invoices.” – Anica Oaks, 4 Traditional Organization Techniques for Your Warehouse, Fishbowl Inventory; Twitter: @fishbowl
11. Organize the shipping station for efficiency. “Time yourself or a partner going through the process of packing a product for shipment. Are the scissors, packaging and tape materials all together in a bin for easy access? Are the FedEx boxes in the right place? Do you need to move the scale, or pre-build some boxes? Do you find there is a lot of physical backtracking through the process from start to final label, or are you able to have a streamlined assembly? Where can you cut steps, literally and figuratively, to save time and money?” – Erika, Is Your Shipping Area Deisnged to Save Your Business Time and Money?, ShipStation; Twitter: @ShipStation
12. Place like items together. “Have 10 different types of armless office chairs in inventory? Make sure that when looking for items, your employees know that once they find one office chair they’ve found your entire inventory.” – 5 Warehouse Organization Tips, Koke Inc.
13. Regularly train warehouse staff. “There are two solutions required to keep a warehouse organized. The first is to do regular trainings with your warehouse staff on the importance of keeping the warehouse organized, and using the tools in place to keep the inventory system up to date. Keeping the warehouse organized becomes part of the corporate culture when it is the subject of mandatory training sessions.” – Warehouse Bottlenecks that Need Your Attention, Newcastle Systems; Twitter: @NewcastleSys
14. Implement cycle counts. “Instead of taking a single large inventory once a year, adopt a cycle counting system where inventory is routinely counted one or more times in a given cycle. The cycle can be each month, each quarter, or any other time period you choose. This helps keep inventory numbers far more accurate as well as helps identify missing stock and putaway errors.” – Reid Curley, 8 Tips for Maintaining Warehouse Stock Organization, Archon Interactive; Twitter: @WaveTrak
15. Eliminate non-value added actions. “The journey to lean consists of a relentless pursuit and elimination of waste. Examine all of your processes, at least annually, to ensure that unnecessary steps haven’t crept in. It also makes sense to review product mix to confirm that newly popular items are stored near the front rather than at a distance. If the warehouse is equipped with data collection, ensure there are enough stations and that they are positioned to make it easy to perform transaction entries. Check for shortages and open orders when material arrives, so the team doesn’t put it away and pick it again immediately.” – Mike Kruggel, 9 Ways to Gain Efficiency in Warehouse Management, DELMIA Apriso; Twitter: @Apriso
Warehouse Labeling and Technology Tips
16. Use information labels on all products. “This ensures that when you are going through your inventory, you can easily track and store it. For example, if your inventory is labeled by SKU (stock-keeping unit) number and labeled as such, along with the type of product and a description, then when you are searching for products, you can look according to labels, instead of guessing at what you need.” – Lynda Moultry Belcher, How to Organize the Storage of Inventory in a Warehouse, Houston Chronicle; Twitter: @HoustonChron
17. Implement a labeling system. “If you haven’t already implemented one, it’s important that you create some sort of organizational system that’s easy to label products in your warehouse. Don’t be afraid to embrace technology – sometimes the best organizational structures are based on using barcodes and scanners or other modern forms of tech.” – Tips for Organizing and Managing Your Warehouse Inventory, Max Material Handling; Twitter: @MaxMaterial
18. Adopt technology. “Your competitors are using every technological angle to optimize their operations to gain a competitive edge. From WMS software that is organizing orders to convert belt solutions to fill orders faster, these technologies all have a place in your warehouse – if you are wiling to take the time to determine which repetitive tasks could benefit from automation.” – Denny Hammack, Top 5 Ways for a More Efficient Warehouse Operation, SupplyChainBrain; Twitter: @SCBrain
19. Use a good inventory control system. “Once your goods are in the optimal location, it’s important to keep detailed records with a good inventory control system, which is a process for managing the location, stock on hand, and movement history of all items in the warehouse.” – Tim Aldred, How to Manage an Effective Warehouse, The Guardian; Twitter: @GuardianUS
20. Sequence orders with software. “You can save a lot of time by using software to sequence orders. You can choose to sequence orders in function of the pick path, group orders by zones, group some orders together or put aside the orders that include non-conveyable items. Use WMS software that allows you to organize workflow in a way that makes sense for your organization and optimize the way orders are sequenced.” – How to Organize a Warehouse Efficiently; SweetStartups; Twitter: @sweetstartups
21. Take advantage of automatic data collection technology. “An area that technology has advanced significantly in the past decade is in the area of automatic data collection. Far from the days of writing down a long number by hand or even keying them into a keyboard, most warehouse and distribution centers are now running RF barcode and RFID systems that remove the human error element from the tracking process. Any step that can be automated means one less step to manage—plus you are able to collect more accurate and timely data that helps you make smart supply chain decisions.” – 11 Warehouse and Distribution Center Best Practices for Your Supply Chain, Legacy Supply Chain Services; Twitter: @LEGACYscs
22. Use proper warehouse location labels. “Using easy to read and organized location labels within the pick path and floor stack areas of a warehouse keep both the operators and products organized. Additionally, aisle and dock signage can greatly improve the flow of traffic within a warehouse environment. Warehouse labels and signage should be designed to allow for a linear flow from the dock to the pick area and back to the dock. The labeling sequence should be intuitive and expandable in the case of adding more slots or storage system re-configurations. The labels should be both bar code and man readable.” – Steve Cappella, Warehouse Improvements, Distribution Property Solutions, Inc.; Twitter: @DistPropSol
23. Automate processes with barcoding software. “If you don’t do anything else, make sure that you implement a barcoding solution. Barcoding software… reduces the amount of time spent between production and shipping and improves order accuracy. Most barcoding software solutions connect directly to your WMS or ERP system so company executives have real-time visibility into the warehouse.” – Tips for Creating a More Efficient Warehouse, Scanco; Twitter: @ScancoLLC
24. Invest in labels and signs. “Once the warehouse is organized, make it easy to navigate with clear labels. Come up with a system to label everything from products to rows of shelving or sections of the warehouse. Create a floor plan or map. Clear signage and organization will turn an otherwise unnavigable maze into an organized system.” – 7 Ways to Improve Warehouse Efficiency, Storee Construction; Twitter: @Storeeconstruct
25. Barcode everything. “Barcoding your stock ensures ease and accuracy of moving, counting, and picking the product down the line. It’s reliable and at least 75% faster than manual data entry – even by the most skilled typist. And, by cutting out the middle man, it completely eliminates human error.
“It’s essential to know where your inventory is from the moment it enters the warehouse and barcoding is a process that will help you precisely keep track of your stock. It also allows you to know how much stock you have at all times, meaning inventory can be reduced, and warehouse space and overheads decreased.” – Sam Moses, 3 Simple Ways to Improve Your Inventory Management System Today, RetailOps; Twitter: @Retail_Ops
26. Integrate rugged mobile devices to read labels. “Create an efficient system by optimizing your picking process. Keeping a clearly labeled warehouse with best-selling products near the front, to get them out quick, creates an efficient warehouse. Additionally, integrating rugged mobile devices… can decrease picking times and increase overall warehouse efficiencies.” – Megan Skala, Keep Your Warehouse Organized and Efficient with These Five Tips, MobileDemand; Twitter: @RuggedTabletPC
Warehouse Layout Tips
27. Reevaluate your design. “No matter how organized you may be, if your company sales are increasing each year, you will eventually need a new warehouse design layout or even a whole new warehouse to relocate to. It is recommended that this space evaluation takes place about every three to five years, depending on the rate at which your company notably increases sales. As your company’s sales (hopefully) increase every year, this means space requirements in your warehouse will naturally need revising over time.” – 7 Ways to Organize Your Warehouse, PHSWire
28. Profile your orders. “Your most popular SKUs likely change with the seasons, so re-slot your warehouse to accommodate your business model, and review the setup at least once a year. This ensures that your “A” SKUs are in the correct storage media and physical location, reducing unnecessary travel for your order pickers. Your warehouse management system (WMS) should have a dynamic “slotting” module.” – 10 Ideas for a More Efficient Warehouse Operation, ShelfPlus
29. Eliminate traffic barriers. “This may seem like an obvious one, but be sure that you are constantly keeping things out of the main traffic area. It can be easy to put off organizing old shipping boxes or unpacking items, but if you keep stacking large barriers that keep you from fulfilling orders, you’re going to have a major backup. No one likes rush hour traffic blocks. Free your employees from captivity and release them from immobile stock rooms!” – Breena Fain, 6 Ways to Optimize Your Warehouse Management System, StitchLabs; Twitter: @StitchLabs
30. Utilize your space properly. “Poorly utilized space is a common occurrence that happens in all warehouses occasionally and is non-exclusive of the inventory type or storage conditions in the warehouse.
“Traditionally, warehouses are built and equipped to handle projected volumes, a set number of products and limited unit loads. Then they are expected to adjust to customer demands as well as be more efficient over time. To accomplish these conflicting goals, warehouses generally accept long-term penalties to accomplish short-term goals like creating customized floor-ready merchandise for end-cap displays, hand-pricing a key customer’s merchandise at the piece level, or creating mixed loads to simplify customer processing when goods traditionally ship in full case or full pallet quantities.
“… These types of problems should be addressed with physical layout and workstation design changes.” – Brian Hudock, How to Maximize Warehouse Space When Expansion Isn’t an Option, Tompkins International; Twitter: @jimtompkins
31. Maximize available space. “Rather than expand the footprint of your warehouse, consider better use of vertical space. Adding taller storage units and the right equipment to pick and store material can help you keep more in the same square footage, rather than adding expansion costs. In addition, think about the type and variety of shelving used. Storing small items on pallet racks wastes space, and makes it easy to misplace items. Rather than using the same racks throughout your warehouse, you may need various types of shelving for different materials. Also, try using standardised bins to help keep shelves neat and orderly.” – Danny Hammack, Five Simple Ways to Improve Warehouse Efficiency, Supply Management; Twitter: @supplymgmt
32. Create organized workstations. “The Occupational Safety & Health Administration (OSHA) reports that musculoskeletal disorders (carpal tunnel syndrome, tendinitis, muscle strains, lower back injuries, etc.) are one of the leading causes of workplace injuries and illnesses. To reduce the risk of such injuries in repetitive, manual tasks, it’s important to design workstations according to the specific task and worker (for example, ensuring work surface height is the height of the conveyor or roller from floor level). Doing so increases ergonomic benefits and drives greater efficiency and productivity in everyday work.” – Jennie Dannecker, 10 Ideas for More Efficient & Productive Warehouse Operations, Cerasis; Twitter: @Cerasis
33. Create zones based on pick type. “Divide your facility by zones based on the pick type. This simplifies order picking and reslotting because similar items with similar storage and picking methods are grouped together.” – Scott Stone, 13 Best Practices for Warehouse Productivity, Cisco-Eagle; Twitter: @CiscoEagle
34. Track results and evolve your warehouse organization. “Companies are expecting more from their warehouse and distribution centers operations. Real-time visibility to inventory, order status, and task statuses are expected. Increased use of available technology will provide you with visibility, better metrics, warehouse data, and improved productivity. Organizing your warehouse and changing equipment to increase the amount of usable production space will allow you to grow sales while keeping inventory onsite. Building cross-trained and cross-functional teams will allow flexibility to react to the fluctuations in business and seasonal businesses. Measure results, implement changes, analyze the data, and ultimately create a more efficient warehouse.” – Carl Lamb, 4 Ways to Improve Warehouse Operations & Efficiency, Building-Products.com; Twitter: @BPDMERCH
35. Consider vertical storage. “Floor space is finite, but vertical storage can offer a huge increase in the amount of product that can be stored. Vertical storage requires the right type of shelving for the products with a focus on safety and easy access. Using available warehouse space poorly is a common problem, and it is easily resolved with custom industrial shelving systems.” – Alex White, How to Maximize Warehouse Space and Efficiency, Beyond Supply Chains; Twitter: @NetworkEffectSC
36. Classify inventory. “How precisely the inventory should be classified depends on a whole range of factors. The key features to consider are the size and weight of the stored goods and the frequency with which they are retrieved. In doing so, it proves to be especially efficient to review ALL stored goods and not just concentrate on optimizing fast-moving goods. The 80/20 rule often used by companies as a criterion, which states that 20 percent of goods account for 80 percent of sales, falls short here, because conversely this would mean that the company fails to take into consideration 80 percent of its goods – and thus the greater part of the total storage space – in the optimization process.” – Efficient Storage in Six Steps – How Companies Can Better Manage Their Inventories, Intralogistics
37. Ensure adequate aisle space. “Yes, you want to squeeze as much inventory into your warehouse as possible. But remember that when you’re moving your products around, you need room to maneuver. If you’ve squeezed the aisles too narrow by placing the shelving too close together, moving merchandise could take minutes instead of seconds.
“Keeping the aisles themselves clean and open will also save you time and money. Your workers can trip and damage the inventory they’re transporting when items are left in the middle of an aisle. You may want to assign one person to aisle cleanup to make sure this crucial element is taken care of.” – How to Organize the Storage of Apparel Inventory in a Warehouse, FDM4; Twitter: @fdm4
38. Create designated spaces within the warehouse and label them. ” Keeping areas defined and separate can help keep them clutter-free and focus your team on their tasks. It also helps those areas run more efficiently and stay organized. Make sure these areas don’t mingle unless necessary to avoid errors.” – Tips on Getting Your Warehouse Equipment Organized, DAK Equipment & Engineering; Twitter: @dakequipment
39. Use slotting. “Slotting your inventory will provide great benefits in the form of increasing throughput and providing increased accuracy levels. Slotting is the process of keeping similar types of inventory items together. The similarity of the inventory can be categorized as velocity, physical size, frequency of picking the same items together, seasonality and other characteristics which lend themselves to some intelligent grouping… Slotting increases your accuracy by eliminating operator walk and search time searching for SKUs in distant parts of your warehouse.” – Ed Romaine, 11 Steps to Perfect Accuracy for Order Picking & Packing Operations, LinkedIn; Twitter: @SISystemsLLC
40. Pack goods tightly without compromising access speed. “One of the myths of warehousing states that all goods must be directly accessible all the time. This leads to a situation where all goods are surrounded by empty space in order to allow direct access by fork lifts or personnel. Even traditional automated picking systems need direct access to every single item because they are not capable of shuffling goods around.
“While making goods inaccessible does not seem to be an obvious step to more efficiency it does allow the closer stacking of goods. And since in real world scenarios some goods have a faster turnover than others the penalty for indirect access is neglectable as long as the sorting order reflect the access frequency.” – Mathias, Reclaiming Storage Space, AutoStore System
Warehouse Picking Tips
41. Apply logic to pick processes. “Whether your warehouse is small or large, the amount of time spent picking orders is a large portion of your costs. If your warehouse is organized efficiently, you can organize pick lists for better time control.
“If you normally only ship a small number of orders with large quantities of products, arrange the lists so the picker can work from one material location to the next and avoid the constant back-and-forth process.
“If you ship numerous small orders, create pick lists in groups and then divide the materials by customer order when it reaches the verification stage.” – Warehouse Management: 10 Tips for Smooth Operations in 2015, Digitalist Magazine; Twitter: @digitalistmag
42. Evaluate picking methods. “In order to streamline your processes and make the picking process easier for your staff, you should consider implementing software that will help you sequence orders so that they are grouped by pick path or areas within your warehouse. Re-evaluate your picking methods and make sure that they are still appropriate. Consider the following picking options you have to choose from should you need to switch methods: single order, multi-order, batch picking, and zone picking.” – Robert Baran, 3 Steps to Improving Warehouse Efficiency and Inventory Control, PositiveVision; Twitter: @PositiveVision_
43. Reduce travel time. “Reducing travel time improves order picking productivity. This is why batch and cluster order picking strategies are used in warehouses. It is also why some companies invest into conveyor systems.
“Travel time can easily account for 50% or more of order picking hours. By combining orders into a single travel instance the time spent travelling is greatly reduced. The smaller the order, the better the opportunity to combine multiple orders into a single travel instance.” – 5 Ways to Improve Order Picking Productivity, SupplyChain247; Twitter: @SupplyChain247
44. Develop appropriate pick locations. “As much as 70 percent of a picker’s work hours may be spent walking. Consider product velocity (sales movement) and size (cube) when selecting the picking slots sizes and location. Many operations replenish forward picking too often. Set up a system in which you can store at least one week’s average unit movement in the pick slot and a hot pick area for extremely fast movers. Provide various slot sizes.” – 10 Ways to Improve Efficiency and Reduce Costs in Your Warehouse Operations, F. Curtis Barry & Company; Twitter: @FCurtisBarryCo
45. Ensure easy access to picking bins. “If you use picking bins, make sure they are easy to access and move about the warehouse. Much time and energy can be wasted just getting the bin to the storage location of a needed SKU. Remember that anything that looks difficult or awkward presents a risk of injury, and the cost and loss of efficiency injury brings.
“Make sure your pickers can see into the bins easily. Even if you have an automated process and everything is scanned, a visual check can catch a lot of potential errors.” – Four Ways to Make Your Pick and Pack Operations More Customer-Focused and Efficient, Fairway Fulfilment & Logistics; Twitter: @Fairwaylogistic
46. Assign storage locations based on pick frequency. “Applying the 80/20 rule, it is safe to assume that 20 percent of the items represent 80 percent of the picking activity. These are referred to as A items. The remaining 80 percent are B and C items, with lower pick frequencies.
“The items in each category with the highest pick frequency should be stocked as close as possible to the packing station. If some items require secondary operations before packing, the ideal situation would be to locate secondary operations area in close proximity to the packing station. If that is not feasible, those items requiring secondary operations should be stocked near the secondary operations area by order of pick frequency.” – Frank Rubury, Improving Warehouse Operations for Tube, Pipe, TheFabricator.com; Twitter: @TubePipeJournal
Warehouse Receiving Tips
47. Make room for receiving. “A lot of inventory errors can happen at receiving if your inventory management personnel don’t have enough space to work. Avoid giving them a small office at the end of the room. Eliminating receiving errors will relieve you from all kinds of ugly issues later in the selling cycle, like losing time, money, and credibility.” – Emilie Fritsch, 10 Ways to Improve Warehouse Inventory Management With & Without Software, SKUVault; Twitter: @skuvault
48. Create a receiving policy and procedure sheet. “Write a policy and procedure sheet on how the inventory process works for your business. For example, the inventory may arrive in the receiving area of the warehouse, so describe how the inventory goes from receiving, who is responsible for logging the inventory into your inventory tracking system and then how the inventory is placed on the storage shelves.” – Kristie Lorette, How to Set Up Inventory in a Warehouse, Houston Chronicle; Twitter: @HoustonChron
49. Super-Size the receiving area. “Receiving is arguably the most critical function of the warehouse. It is important to ensure you have enough room for your staff to carry out all of the necessary activities from breaking down pallets to counting items. The more space there is in the receiving area, then the easier it is for your staff to complete the job efficiently.” – Improving the Layout of Your Warehouse, Adaptalift Hyster; Twitter: @aalhyster
50. Have portions of orders arrive simultaneously on the dock. “Various portions of orders—full pallet, case pick, and loose pick—should arrive as closely as possible on the dock, so the order goes directly to the trailer rather than being set down.” – Leslie Hansen, Best Practices in Today’s Distribution Center, InboudLogistics; Twitter: @ILMagazine
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