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What is Warehouse Optimization, Why is It Important?

Resources, Warehouse

A Definition of Warehouse Optimization

Warehouse optimization is key to the efficient operation of warehouses of all sizes. A disciplined process, warehouse optimization includes automation and a determination of how to save time, space, and resources while reducing errors and improving flexibility, communication, management, and customer satisfaction. Other warehouse optimization considerations include warehouse flow, product placement, storage, and retrieval systems. Warehouse optimization is vital to lean warehouses and agile supply chains. The most efficient warehouses are those that have been optimized to beat the competition on every level.

Warehouse Optimization Challenges

Most of the challenges that arise in warehouse optimization are related to errors, inefficiency, and lack of transparency. Many warehouse managers correct these challenges with warehouse management systems, automated material handling systems, barcoding, and automated data collection.
As Apptricity CEO Tim Garcia notes, there are five common warehouse problems that pose challenges to warehouse optimization: inventory accuracy, inventory warehouse optimization techniqueslocation, space utilization and warehouse layout, redundant processes, and picking optimization.

  • Inventory accuracy – Companies often do not know what they have in stock and have too little visibility into their warehouses when they lack an automated system
  • Inventory location – Without accurate insight into inventory location, pickers cannot work efficiently, which results in slower loading processes and backups in dock scheduling
  • Space utilization and warehouse layout – If storage systems and warehouse racking is not optimized, space required to house inventory and labor needed inside the warehouse increase
  • Redundant processes – Redundant processes and multiple touches hurt a company’s bottom line and are inefficient
  • Picking optimization – Too many warehouses lack common routes for picking items for shipment because their manual processes are inefficient

Warehouse Optimization Techniques and Best Practices

When optimizing warehouse operations, automation is key. The more you automate picking, packing, and shipping processes, the fewer human touches are required for products and orders. Automation via warehouse management systems and warehouse control systems makes it possible to manage materials handling equipment in real time and clues in warehouse managers to possible bottlenecks. It’s also important to automate warehouse operations because doing so allows for data collection to occur more quickly, efficiently, and accurately; improved data collection equates to real-time data and intelligence for warehouse managers.
Warehouse optimization also includes achieving the best warehouse layout design to optimize warehousing functions and to utilize space as efficiently as possible. In order to do this, warehouse managers should carefully analyze their data on reserve storage, forward pick, cross docking, shipping, receiving, assembly and special handling lines, and quality and inspection areas in addition to receiving, shipping, and inventory levels. Keep in mind that warehouse layout should take how to optimize your warehouseproduct storage, inbound and outbound operations, and value-added processes into consideration.
But, you should not get so caught up in automation and warehouse layout design for warehouse optimization that you fail to account for other things that significantly impact warehouse operations. Inventory management and warehouse operations consultant and practitioner Dave Piasecki reminds warehouse managers that there are little things that can dramatically affect their warehouses, too, and accounting for them improves warehouse optimization. Specifically, Piasecki points to training, tools, low-cost equipment, equipment maintenance, cooling, housekeeping, identification, forms and paperwork, and managing miscellaneous storage as the little things that can make or break warehouse optimization.
No matter which avenue of warehouse optimization you choose to pursue first, identification must play a role in your process. For example, clear product and location identification are critical to picking and putaway efficiency and accuracy. Identification of storage areas and staging lanes is another must. Warehouses that are winning at optimization opt for easily read labels on pallets, cartons, storage shelving, pallet racks, and aisles and floors. The best options for warehouse labels include durable floor label systems, barcode rack labels, long-range reflective barcode labels, and pallet barcode labels.

Recommended Reading on Warehouse Optimization

For more information on warehouse optimization and best practices for optimizing your warehouse, visit the following articles:

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