7 Warehouse Processes and How to Optimize Them

Posted by Chris Scullin

Warehouse Market Leader

in Warehouse

Updated April 9th, 2024

Table of Contents

• 1. Receiving
• 2. Putaway
• 3. Storage
• 4. Picking
• 5. Packing
• 6. Shipping
• 7. Returns

Any warehouse, distribution center, or fulfillment center needs to manage a constant flow of inventory in and out of the facility. Technology has made this process much easier with centralized platforms such as a Warehouse Management System (WMS). These software programs can be connected to asensors, scanners, and barcodes to create a digital and automated work environment.

To optimize the flow of inventory, warehouse managers must break down the distribution of work into specific steps. In this post, we are going to review the seven major processes within a warehouse and discuss how each of them can be optimized. By looking at the entire system overall, it is possible to identify important steps that can be streamlined to make the warehouse more efficient. The ultimate goal of any improvement plan should be to improve inventory accuracy, demand forecast accuracy, and other important site metrics.

1. Receiving

The receiving process is critical in a warehouse environment because it sets the pace for all other activities within the facility. An efficient operation should have a receiving area layout that is well organized to avoid an unnecessary accumulation of deliveries. To optimize receiving activities it may be beneficial to install conveyors and other forms of automated handling equipment.

Handling equipment can be especially helpful if there is a large amount of space between the receiving area and other locations for staging and inventory storage. It is also recommended to automate receiving procedures using barcodes that can be quickly scanned at any time. Another best practice is to pursue Advanced Shipping Notices (ASNs) with your suppliers which can be scanned upon receipt to quickly adds items to inventory.

2. Putaway

The next process in a typical warehouse workflow is putaway, when goods are moved from receiving to storage areas. One of the most important considerations when managing inventory is choosing the right locations for storage. In order to make the putaway process fast and efficient, it is important to define storage locations ahead of time and create clear travel paths for people and forklifts within the warehouse.

These locations can be labeled with warehouse floor labels, retro-reflective warehouse signs and labels, hanging warehouse signs, and warehouse aisle signs that are clearly visible and/or scannable from longer distances, such as from a forklift, to enable workers to quickly locate the correct storage locations for putaway tasks. Pallet barcode labels and tags and barcode labels for returnable totes, trays, and containers can also help warehouse workers organize inventory in the appropriate storage areas. A WMS platform can help tremendously when assigning inventory locations and scanning items in and out of storage.

3. Storage

To properly plan storage locations in a factory the layout must be carefully considered to maximize the amount of useable space. The specific organization plan for each warehouse will be unique based on the business needs, facility structure, and onsite systems that are used.

One of the best ways to optimize storage is to define clear metrics that can track utilization and efficiency for different types of goods. This will help identify improvements such as relocating slow-moving inventory to a storage location that’s positioned away from busy travel lanes.

4. Picking

Picking is a necessary process in any warehouse for selecting goods that need to be shipped out to fulfill orders. A significant amount of cost and time is devoted to picking tasks, and it is one of the most important steps to optimize. An efficient picking process today must be enabled by technology.

While there are many picking methodologies that can be employed, warehouse rack labels integrated with a software system will allow you to track efficiency across several individual steps and find ways to drive further improvements. Cold storage rack labels and cold storage rack placards make labeling warehouse racks possible even in climate-controlled warehouse areas. Understanding the accuracy of picking in your warehouse can also help when making decisions regarding adjustments to the picking strategy and needs for individual orders.

5. Packing

When a sales order is received by the warehouse and items have been picked, they must then be packed and prepared for shipment. Optimization for this process often involves streamlining packing materials and increasing the speed of inspections. It is also important that each item has a complete chain of custody within the warehouse so that the movement can be traced back if an issue is identified.

6. Shipping

The shipping, or dispatch, process is the last step before items leave the warehouse. To minimize delays on the loading docks, orders must be carefully coordinated with distribution center management to ensure that goods are picked up as soon as they are ready. One of the best ways to optimize shipping is to organize picking activities in “waves” so a number of relevant packages can be prepared for a single pickup.

7. Returns

One additional step that deserves careful attention is the returns process. While not a desirable part of warehouse management, returns are very much a business reality. All companies should utilize a Return Management Authorization (RMA) procedure to assign a unique number for each return and provide instructions to the customer. It’s also important to have a dedicated space within the warehouse to handle returns and inventory for restocking.

As you can see, these seven major processes connect to each other within the warehouse and cannot be managed in a vacuum. By looking at the whole system overall and identifying useful metrics for each major step it is possible to make improvements to even the most advanced warehouse design. We hope the tips presented in this post will help you identify a few areas of improvement within your own warehouse operation.