What is Warehouse Operations? How Does It Work?

When it comes to warehouse operations, we are officially living in the golden age of speedy fulfillment. This means that the world’s warehouses have their work cut out for them.

According to data gathered by Statista, the number of warehouses operating in the United States has been on a steady incline in the past decade, peaking at nearly 18,000 facilities in 2017.

As competition increases and consumer expectations run into uncharted territories, it’s becoming more and more important for retailers, suppliers, and distribution managers to learn the ins and outs of the ever-evolving field of high-tech modern warehousing.

But, just because recent automated technologies have changed the landscape of the overarching customer experience doesn’t mean that those new to the field can skip out on learning the fundamentals. Developing a keen awareness of warehouse operations should be the first step for any enterprise entering today’s fulfillment race.

Let’s take a quick dive into the meaning, challenges, and best practices associated with warehouse operations.

What is Warehouse Operations?

Rick Stinchcomb of the University of Oklahoma Press defines warehouse operations as such: “The goal of warehouse operations is to satisfy customers’ needs and requirements while utilizing space, equipment, and labor effectively. The goods must be accessible and protected. Meeting this goal requires constant planning and ongoing change.”

Breaking it down, warehouse operations covers a number of important areas, from the receiving, organization, fulfillment, and distribution processes. These areas include:

• Receiving of goods
• Cross-docking of goods
• Organizing and storing inventory
• Attaching asset tracking solutions (like barcodes) to assets and inventory
• Integrating and maintaining a tracking software, like a WMS to streamline warehouse management
• Overseeing the integration of new technology
• Selecting picking routes
• Establishing sorting and packing practices
• Maintaining the warehouse facility
• Developing racking designs and warehouse infrastructure

Of course, the aforementioned points represent just a fraction of what many modern warehouse operations managers face. That said, they constitute the fundamentals of warehousing, elements that serve as the building blocks for all warehouses, big and small.

How Does Warehouse Operations Work?

While many factors come into play when considering warehouse operations, ostensibly, today’s key factor concerns customer experience. Since the rise of Amazon and its nearly autonomous fulfillment centers, consumers have grown accustomed to two-day, one-day, or sometimes even hourly shipping times.

These expectations force warehouse operations to keep customers’ needs at the forefront. Operations can achieve this by investing in a software system, like a WMS, WES, or CRM that give all members of the supply chain, including customers, a picture of the retailer’s inventory levels.

The operations manager, along with planners and other management, can use the purchase data to organize the warehouse floor in such a way that the most popular or quick-moving SKUs are strategically placed. Once the inventory and infrastructure plans have been inked, management must also consider factors like new technology integration, picking routes, safety, personnel management, and more.

Attention must also be paid to the organization’s fleet, whether it be internal or otherwise. It is the job of the warehouse operations personnel to ensure that all inventory is picked, packed, and ready to be loaded for shipment in the most efficient way possible.

Warehouse Operations Best Practices

Maintaining a reliable, safe, and modern warehouse can be possible for operations of all sizes and budgets, provided that the basic best practices are followed. These include:

• Safety – According to OSHA, the fatal injury rate for warehousing is “higher than the national average for all industries.” Because of this fact, agencies, like OSHA, pay extra close attention to common warehouse operations pitfalls, including improper licensing/training procedures, faulty infrastructure, poor recordkeeping, facility maintenance issues, and more. Following the established safety rules ensures that the health of the associates and the business remain secured.
• Organization – Supply Chain 247 preaches the importance of storing all materials in standardized bins, and in locations that are strategic and well-labeled. The publication also recommends that all operations who can, should implement cross-docking procedures in order to reduce “cycle time and material handling costs.”
• Communication with the planning team – Too often, organizations experience communication breakdowns between the personnel working on the floor and those working in the corporate office. While a planning team might be aware that factors like globalization could affect inventory cycle times, the warehouse might not learn of this until the 11th hour, when it can only survive, not strategize. This common scenario can be remedied by more frequent meetings and daily communication within a cloud-based software system.

Integration and Connectivity Considerations

In today’s fast-paced and interconnected business environment, seamless integration and connectivity between warehouse operations and other systems are crucial for achieving end-to-end visibility and optimizing the entire supply chain.

Warehouse operations must be tightly integrated with systems such as:

Enterprise Resource Planning (ERP)

ERP systems serve as the central hub for managing business processes, including inventory management, order processing, and financial operations. Integrating warehouse operations with ERP systems ensures real-time data exchange, enabling accurate inventory tracking, efficient order fulfillment, and streamlined financial reporting.

Transportation Management Systems (TMS)

TMS solutions optimize transportation planning, execution, and freight management. By integrating warehouse operations with TMS, businesses can coordinate inbound and outbound logistics, optimize transportation routes, and reduce transportation costs while improving delivery times.

eCommerce Platforms

For businesses with an online presence, integrating warehouse operations with eCommerce platforms is essential for efficient order processing, inventory management, and timely order fulfillment. This integration enables real-time updates on product availability, order status, and shipping information, enhancing the overall customer experience.

The benefits of seamless integration and connectivity in warehouse operations include:

• Real-time data exchange and visibility across the supply chain
• Improved inventory accuracy and order fulfillment rates
• Streamlined order processing and reduced lead times
• Enhanced customer satisfaction and experience
• Optimized transportation and logistics management costs
• Better decision-making through centralized data and analytics

Benefits of Integration and Connectivity in Warehouse Operations

As businesses strive for agility and responsiveness in today’s dynamic market, the integration of warehouse operations with other systems becomes a critical enabler for achieving operational excellence and maintaining a competitive edge.

Important Warehouse Operations KPIs

Effective warehouse operations rely on continuous monitoring, measurement, and optimization of key performance metrics. By leveraging data-driven insights and analytics, businesses can identify areas for improvement, make informed decisions, and drive operational excellence.

Some of the critical performance metrics in warehouse operations include:

Order Accuracy and Fulfillment Rates: Measure the percentage of orders that are picked, packed, and shipped correctly and on time. These metrics directly impact customer satisfaction and loyalty, making them crucial for businesses focused on delivering exceptional service.

Inventory Accuracy and Cycle Counting: Inventory accuracy is essential for maintaining optimal stock levels, reducing stockouts or overstocking, and ensuring efficient order fulfillment. Cycle counting, a process of regularly counting and verifying a subset of inventory, helps maintain inventory accuracy and identify discrepancies.

Labor Productivity and Utilization: Labor is a significant cost factor in warehouse operations. Monitoring labor productivity and utilization metrics, such as orders processed per hour or lines picked per hour, helps optimize workforce allocation, identify training needs, and implement process improvements.

Space Utilization and Slotting Optimization: Efficient space utilization and slotting optimization ensure optimal use of available warehouse space, reducing wasted space and improving picking and putaway efficiency. Metrics like cubic space utilization and travel distance can guide layout optimization and slotting strategies.

Transportation and Logistics Costs: Monitoring transportation and logistics costs, including inbound and outbound freight costs, helps identify opportunities for cost savings and optimizes the overall supply chain network.

To effectively leverage these metrics, businesses should implement robust data collection and analytics tools, such as warehouse management systems (WMS), business intelligence (BI) dashboards, and data visualization platforms. These tools provide real-time visibility into warehouse operations, enabling data-driven decision-making, continuous improvement, and proactive problem-solving.

Final Thoughts on Warehouse Operations

As you can see, modern warehouse operations have evolved into a rather involved field, but that doesn’t mean that the basics have changed. Always put the customer first, focus on fulfillment times, and keep a regimented study on facility safety and organization. By following these steps, you, too, will have the tools you need to run an efficient enterprise.

Frequently Asked Questions