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The Definitive Guide to Warehouse Management

Employee walking through warehouse

As a business that manufactures or distributes products, you need warehousing to store all your products and materials. After all, you can’t scale without a place to efficiently organize your goods until they’re needed for production or shipped out to customers.

While it’s important to focus on inventory, labor, marketing, accounting, and all the other components that keep your business running, warehouse management is just as important. If you use warehouses, they require constant management to stay fast, efficient, and cost-effective. 

Warehouse management is a critical behind-the-scenes function for customer service. Even though your customers may not know the ins and outs of your warehouse operations, they definitely notice when your warehouse isn’t operating efficiently. Incorrect orders, delayed shipments, damaged items—the list of potential problems goes on and on. 

In this way, warehouse management has a real impact not only on your brand reputation but also on your bottom line. That’s why any business that stores products in a warehouse needs to manage its warehousing practices.

Learn what warehouse management is, why it’s so beneficial, and tips for automating warehouse management to speed up your business. 

What is Warehouse Management? 

Warehouse management is the end-to-end process that encompasses everything in your warehouse. It includes incoming raw materials, outgoing goods, storage practices, and so much more. 

In practice, warehouse management usually includes: 

  • Receiving: This is when products come to the warehouse from your supplier. Workers inspect goods as they arrive at the warehouse. Products arrive on pallets, in totes, or in other containers, and it’s the workers’ responsibility to verify that the quantities are correct and that the products are in good condition. 
  • Storing: After receiving, you’ll move products into storage. To do that, warehouses usually follow predetermined rules for organizing products so workers can find them more quickly. Every warehouse uses a different organizational system, so this will differ by company, warehouse, and product.
  • Picking: When it’s time to send goods to either a retailer or a customer, you’ll need to choose the correct products to fulfill the order. Pickers will go into the storage area, retrieve the products needed to fill the order, and transport them to the packaging and shipping area.  
  • Packing: Warehouse packers take products from the pickers and double-check the order for accuracy. If everything is correct, packers will box up the products and create a shipping label. 
  • Shipping: Products leave the warehouse on trucks and trailers, vans, and in some cases, through third-party delivery vendors like USPS, UPS, or FedEx, depending on the destination. This usually additional logistics management processes like fleet management and coordinating with retailers.

With warehouse management, it’s not just about where you store your products but how you use warehouse resources to get the job done. 

The Benefits of Warehouse Management

For companies that utilize warehouses, proper management is crucial for knowing how much inventory is in stock and where the products are located. But by creating a warehouse management plan, you’ll be able to: 

  • Save time: You made promises to your customers. If you guarantee two-day shipping, warehouse management helps you make the most of your time. With proper management, your products come in and go out on time, every time. 
  • Simplify: It might feel overwhelming to create procedures for such a bulky process, but warehouse management actually simplifies your business. It makes it much easier for your pickers to find the right products, fast. Warehouse management also gives warehouse workers more of their time back, which means they can focus on fulfilling more orders.
  • Improve safety: Warehouse management keeps the many warehouse operations processes and systems that occur simultaneously in a warehouse running smoothly. Effective warehouse management results in less aisle clutter, reduced travel time, and easier access to in-demand products, all of which help to boost warehouse safety.
  • Scale faster: No warehouse management system is going to be perfect in the beginning. But over time, you’ll create the proper setup for your business that will make it possible to scale without the growing pains. Iron out the kinks while you’re still small and create your own formula for success—from here on, it’s plug-and-play, no matter how large your organization becomes. 
  • Optimize eCommerce: eCommerce sales in the U.S. increased by 7% year-over-year between Q2 2021 and Q2 2022, following an 18% year-over-year increase from Q2 2020 to Q2 2021. Since more people are shopping online, it’s a good idea for brands to sell to both consumers and retailers. Even though it’s more complex shipping to individual customers instead of a handful of retailers, warehouse management makes it possible at scale. 
  • Increase capacity: If you can optimize your space utilization through warehouse management, you can store more products in the same footprint. Since warehouse space is getting more expensive, this can be a real boon to your bottom line. 

Inventory Management Versus Warehouse Management

You might hear people refer to warehouse management as “inventory management.” While the two processes are related, they aren’t the same thing. Warehouse management can be considered a part of the overall inventory management process. At the same time, inventory controls and inventory tracking are essential for effective warehouse management and reducing inventory costs.

With inventory management, you track your stock from the moment you receive it from a supplier until the moment it’s sold. That includes supplier relationships, retailer relationships, and the other aspects of selling products that happen outside of the warehouse. Since you have to store your products in a warehouse before you sell them, warehousing is technically part of inventory management. 

However, warehouse management is a complicated system on its own. It covers how you store, order, and move inventory throughout the warehouse. This also includes managing your employees and organizing a workflow.

In reality, you need both inventory management and warehouse management if you’re going to sell products or if you store a large number of parts and supplies. But if you need to get more ROI out of your warehouse, you need warehouse management to zoom in on the issues unique to warehousing. 

7 Essential Warehouse Management Best Practices

Brands face so many challenges with warehousing their products, including: 

  • Limited storage space
  • Damaged goods
  • Shipping delays
  • Customer complaints
  • Limited storage space

No brand’s warehouse process is perfect, but there are so many ways you can get your warehouse a little closer to perfection. Follow these seven warehouse management best practices to come out ahead. 

1. Hire great people

It’s clearly an employees’ job market right now, making it challenging to hire for warehouse jobs. In fact, 73% of warehouses can’t find enough labor. But even though finding workers is difficult, it isn’t impossible. 

Companies must invest in appealing benefits and retention programs to keep their all-star warehouse workers. In fact, 54% of businesses are offering more technical training as a way to retain their warehouse employees. It’s more expensive up front, but it’s still cheaper than running short-staffed or rehiring for the same roles multiple times in a year. According to Instawork’s State of Warehouse Labor 2022 report, less than 50% of warehouse operators offer the primary perk workers desire: flexible scheduling. Offering desirable perks and benefits is a strong competitive differentiator for warehouses.

It’s also important to have competent leadership in charge of the warehouse. Don’t assume that your workers will operate without oversight or structure. Hire an experienced warehouse manager to help workers, spot inefficiencies, and tackle problems as soon as they appear.

2. Work with a 3PL

Businesses outsource 80% of their warehouse activities to save time and money. If you’re having a hard time with internal warehouse management, consider outsourcing to a third-party logistics company (3PL). 

3PLs manage warehousing for you, handling everything from logistics to storage. It’s tempting to allow the 3PL to take total control, but you should still be involved in the warehouse management process. This allows you to check the vendor’s work and ensure your operation stays on track.

3. Conduct regular audits

Did you know that warehouse inventory is accurate only 63% of the time? That’s an alarming statistic for brands that live and die by their product margins. This is why conducting regular audits at your warehouse is so important. 

Through quality assurance, you can make sure everything is operating smoothly. Ask your team to:

• Check inventory numbers
• Look for damaged or expired goods
• Note which products need restocking

An audit is also your chance to evaluate whether certain processes or systems are working. Don’t be afraid to iterate if you think something needs to improve. 

How often you conduct an audit will depend entirely on your business. Larger, more complex enterprises will need to audit more frequently to keep their numbers as accurate as possible. 

4. Intelligently organize

Warehouse pickers spend a whopping 50% of their time just traveling between zones to pick orders. That’s a normal part of their job, but brands should optimize their warehouses to cut down on pickers’ time walking between different zones. 

Your warehouse layout matters. To make picking, packing, and shipping as efficient as possible, consider: 

To see if your layout works, walk through the process yourself. Are there any inefficiencies? It’s much easier to spot problems with your processes if you’re the one executing them. If you’re considering implementing a warehouse labeling system, here’s how to choose the right labeling solutions for your warehouse.

5. Collaborate with vendors

Any additional optimization to your warehouse has tremendous ripple effects down the line. That’s why it’s invaluable to collaborate with your suppliers and vendors. If you can convince your vendors to standardize or streamline how they work with you, it can make warehouse management much easier. 

For example, ask vendors to follow certain protocols for: 

• Delivery times
• Packaging
• Receiving

Educate vendors on how they can help you succeed. That’s going to cut down on inefficiencies and help you build stronger vendor relationships. 

6. Create and monitor KPIs

Key performance indicators (KPIs) are critical data points you can use to measure your warehouse management’s efficiency. Every warehouse chooses its own KPIs, but it’s a good idea to start with metrics like:

• Lead time
• Customer return rate
Inventory turnover
• Employee productivity

You’ll also want to keep track of other inventory metrics like inventory accuracy and carrying costs to guide your warehouse optimization efforts.

KPIs will highlight what you’re doing well and help you to identify where you could improve. The key is to monitor them regularly so you know what’s normal for your business. 

7. Get a WMS

Did you know that 83% of providers use a warehouse management system (WMS)? WMS is a type of software that simplifies warehouse management. It integrates with other tools in your organization, runs reports, and gives you real-time information about your inventory. 

As your business grows, it’s likely that you’ll need a WMS. It covers every aspect of the warehousing process, keeping your team productive and on-task at every step. If you don’t want your team to drop the ball or lose track of products, a WMS is a must. Choose a WMS that integrates seamlessly with your warehouse labels to make processes like inventory management, picking, and putaway more efficient.


How to Automate Warehouse Management

There are so many moving parts to warehouse management. If a single step of the process is delayed or inefficient, it can greatly impact everything downstream. After COVID-19, both the supply chain and the warehouse industry are shaky at best. This makes it more difficult to effectively manage your warehouse. 

The best way to combat uncertainty in your business is to build an agile, flexible warehouse. If you aren’t already automating your warehouse management, now’s the time to change. 

Manual processes kill warehouse productivity and accuracy. The human element is essential in some areas of your warehouse, but many tasks are better left to the robots.

With warehouse automation, you add intelligent technologies to your warehouse management practices. There are no more manual spreadsheets or manual scans: human labor is removed from the equation as much as possible. 

Through automation, you’ll be able to: 

• Reduce your reliance on human labor
• Route employees to more interesting, high-value tasks
• Significantly reduce errors
• Scale more quickly

Warehouse automation is taking the industry by storm. There are so many ways to automate your warehouse, but these are some of the most popular: 

  • Handheld devices: 38% of businesses plan to boost inventory accuracy by adding barcode scanners to their warehouse. With these handheld devices, workers can pick up goods in the most efficient way possible. Some software will even choose the worker’s route across the storage floor to maximize their travel time. These systems integrate into your WMS and AI analytics tools to create real-time reports.
  • Mobile robots: Automated guided vehicles (AGVs) are used in just 6% of all warehouses, but 14% of warehousing brands are considering them. Mobile robots automate the movement of goods around your warehouse, which is much more efficient (and safer) than asking employees to do the work. 
  • RFID: Roughly 50% of manufacturers use radio frequency identification (RFID) tags. While automatic scanning may sound like the perfect solution, there are some downsides to RFID technology, such as a lack of global standards and frequency jamming that hinders productivity. For these reasons, barcode inventory tags remain the gold standard for warehouse and inventory management.  
  • Automatic sorting: Automatic sorters identify products and route them to the correct bins on a conveyor belt. This makes picking and packing faster and more accurate. 

Even if you have a small business, managing all the complexities of operating a warehouse can quickly become overwhelming. While best practices will get you far, automation is the way forward. Camcode’s warehouse label and signage solutions create the foundation for efficient warehouse navigation, reliable location identification, and streamlined operations.

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