By: Aaron Rubin, Founder & CEO of ShipHero
Warehousing has been around for a long time, but in recent years, technology has advanced warehouse processes tremendously. As a result, businesses can optimize fulfillment operations and cut down logistics costs significantly.
Largely because of the COVID-19 pandemic, the eCommerce market grown rapidly over the past 2 years, increasing the need for optimized warehouse fulfillment.
eCommerce fulfillment can be more complicated than it is for its brick and mortar counterpart, and thus the need for more optimized, tech-enabled warehouse processes has increased.
The 6 key warehouse processes explained
Warehouse processes are categorized into the following 6 key components:
In the receiving process, warehouse teams accept the inventory from suppliers. The team also verifies that the correct items are delivered and that they comply with the agreed quality standards. If any discrepancies are found, a report is generated, detailing the missing products.
After the warehouse receives the products, your putaway staff transports the goods from the loading space to the warehouse storage location.
Products are putaway in areas that are easy to access, making it convenient for your picking team to locate them later. During the putaway stage, it’s important to transport products carefully and store them strategically to prevent damages.
In the picking stage, your fulfillment team locates and collects items to fulfill customer orders. Order picking can be costly and time-consuming, making up for an estimated 55% of your total operating expenses.
Some ways to reduce your picking costs and optimize the process are:
- Employing an experienced fulfillment team that’s skilled at locating packages and transporting them with care.
- Using barcode scanners or RFID to improve picking accuracy.
- Optimizing your warehouse layout and organizing your inventory, so your picking team can move around easily and conveniently locate items.
- Using machinery (like forklifts or cranes) or robots to transport items quickly and more securely.
After picking the products, they are brought to the packing station, where your fulfillment team prepares them for shipping. In the packing stage, it’s important to handle items carefully and to choose the right packaging, padding and dunnage.
Shipping damages are responsible for a whopping $1 billion annually in the U.S., as they invite costly returns, shipping costs and refunds. To mitigate these costs, packaging orders properly is essential.
The package’s size depends on the items’ dimensions, whereas the packaging material, padding and dunnage depend on the type of items. Fragile items, like glass or ceramics, are typically stored in cushioned packages, after being covered in bubble wrap.
After the items are carefully packed, they’re labeled with a packing invoice or sales order, ready for dispatch.
After the warehouse has successfully picked and packed the correct order, it’s time to dispatch the package to the right address. In the dispatch stage, fulfillment teams should make sure orders are shipped to the correct address to prevent costly wrong order complaints. Moreover, if packages are scheduled to arrive/be picked up in a given timeframe, your team should arrange the dispatch accordingly.
Retailers work hard to prevent the dreaded returns stage, but eCommerce returns are currently at a rate of 30%, making them an inevitability. The returns process involves costly reverse logistics; depending on your policy, you may have to pick up old items and ship the replacement order.
Businesses are bound by their return policy, which means you have to eat the costs if customers initiate the returns process. However, brands can implement the best pick and pack practices to optimize fulfillment and reduce return requests.
How to improve warehouse processes
Hire experienced warehouse managers
Warehousing costs make up a large percentage of your brand’s expenses, and fulfillment operations directly contribute to customer experiences. Slow pick and pack times (and thus slower shipping), wrong orders and damaged shipments make it difficult to maintain customer loyalty.
Thus, when hiring warehouse managers, look for experienced professionals that can optimize internal operations and streamline your team’s workflow. Good managers should:
- Have keen organizational skills, to optimize your warehouse layout and storage system.
- Be comfortable with numbers and skilled at interpreting data to track inventory and scale fulfillment operations.
- Be tech-savvy, so they can leverage the right technologies and automation to optimize warehousing processes.
- Keep up with the latest industry trends – warehousing technology is continually advancing, and keeping up with developments is critical to scaling your fulfillment operations.
Above all, good managers should be committed to continually monitoring your warehousing operations and identifying areas of improvement. They should actively work to remove both short-term and long-term friction from the supply chain, to cut fulfillment times and costs down.
Check-in with your workers
Your workers are on-the-ground and actively engaged with fulfillment operations, which means they might pick up on problem points that executives overlook. Check-in with your workers regularly, find out how they’re finding the workload and whether they have any suggestions to improve warehouse efficiency.
Implement software that supports the growth of your business
Logistics software has advanced significantly over the years, allowing businesses to minimize human error and optimize productivity. Warehouse management systems (WMS) are powerful software that streamlines supply chain operations by providing real-time inventory insights, meaningful data and analytics, automation rules and more.
WMS optimizes productivity and saves businesses from stock shortages (or surplus) by forecasting demand and tracking inventory. Additionally, mobile WMS tools help workers verify items and orders, minimizing pick and pack errors.
Audit warehouse processes every 6 months
Auditing your warehouse processes bi-annually doesn’t just help with identifying problem areas, but also monitoring the success of efficient practices. For example, if one of your warehouses has a lower ‘wrong order’ rate than others, you can identify the cause of their efficiency and implement it across the board.
Additionally, half-yearly audits help businesses avoid stagnation. For example, is your warehouse layout still optimal, or does it need improving because of new stock? Or, do you have deadweight stock that’s eating up space and increasing overhead costs? Don’t neglect to audit your warehouse processes regularly – they’re vital to optimizing supply chain efficiency and should be regularly vetted.
Review the entire supply chain
Supply chain problems and bottlenecks don’t necessarily occur after warehousing operations commence – some issues may arise earlier. For example, fulfillment operations might be delayed because your supplier is delaying the warehouse delivery. Reviewing the entire supply chain is important because, for this example, you might need to negotiate with the supplier (or change suppliers entirely) to optimize order fulfillment.
Work with a 3PL
Emerging brands might lack the resources to hire experienced fulfillment experts and optimize warehouse processes. This is why many growing DTC brands partner with third-party logistics providers to affordably scale their fulfillment operations.
Leading 3PLs provide businesses with complete transparency into their operations, and optimize your warehousing, inventory management, shipping and reverse logistics. The right 3PL partner can help you reduce errors and damages, cut down fulfillment costs and offer expedited shipping offers to customers.
How eCommerce stores benefit from optimized warehouses
Optimized warehouses have minimal errors and damages, fast pick and pack times, and optimal inventory management. Here’s how eCommerce stores benefit from them.
Grow their logistics network
Growing your logistics network is only sustainable if your warehouse operations are optimized. Otherwise, businesses that scale with inefficient fulfillment processes may suffer from late deliveries, increased wrong order complaints, and more damaged goods.
With optimized warehouses, fast-growing brands can scale their fulfillment operations without hurting their bottom line.
More efficient use of storage space
Warehouses with organized, strategic layouts make it convenient to locate required items. Additionally, optimized warehouses are designed to minimize picking times by leveraging shipping zones and implementing a clear route structure.
Orders are shipped faster
Optimized warehouses enhance the efficiency and speed of your warehouse operations, including packing and picking processes. As a result, your fulfillment teams can pick, pack and dispatch items quicker, leading to faster shipping times.
The advantages of working with a 3PL for warehouse management
Working with a third-party logistics provider helps brands scale their fulfillment operations sustainably while focusing on growth.
Optimized logistics network
3PLs optimize each stage of your fulfillment process, including warehousing, inventory management, pick and pack processes and shipping.
Access to distributed warehouses
Leading 3PLs have multiple warehouses nationwide, allowing partners to distribute inventory across various, strategically-located warehouses. By distributing your inventory, your 3PL can ship orders from locations closest to each customer, cutting down delivery times and costs.
More time savings & lower labor costs
Third-party logistics providers have skilled fulfillment teams and advanced software to optimize your fulfillment operations, saving time and cutting down costs.
In addition to the cost-saving benefits of a distributed inventory, 3PLs also use software to automate tedious processes and determine optimal picking routes and equip their pick and pack teams with mobile tools to minimize errors. The result is improved fulfillment efficiency and reduced expenses.
More efficient use of warehouse space
Thanks to their teams of fulfillment experts, 3PLs use optimized warehouse layouts and strategic organizational systems to make the most of the warehouse space. For example, items that are regularly bought together might be stored closely. As a result, items are easier to locate, and they can be picked conveniently with minimal risk of damages. In larger warehouses, fulfillment teams typically divide the storage areas into dedicated zones, to reduce complexity and make it easier to identify items.
Better data & analytics
Access to real-time data and analytics is vital to optimizing fulfillment operations. Otherwise, businesses are at risk of shortages, overselling, errors and delays. Advanced 3PL software provides real-time inventory analytics, implements automation rules, syncs your eCommerce store and inventory data, and provides more accurate demand forecasting.
3 things to look for in your next warehouse management system
Since warehouse management systems play such a vital role in optimizing your warehouse processes, here are three important features to look for:
Software that connects to your store(s)
eCommerce inventory management can be complicated because although your store is digital, the goods are still physical. Look for warehouse management systems that directly integrate with your store, syncing real-time inventory data to protect merchants from overselling.
Additionally, after connecting to your store, the WMS should provide your fulfillment team with important data like customers’ shipping addresses or picking lists. More advanced 3PL software even provides displayed vs actual shipping costs, so businesses can accurately monitor delivery expenses.
Software that’s compatible with your warehouse equipment
Look for WMS that’s compatible with your warehouse equipment; leading 3PLs make their API accessible to facilitate custom integrations. WMS that’s compatible with your equipment can set automation rules, sync important data (like humidity or temperature settings from sensors) through IoT, and streamline analytics.
Pick a WMS that has a demonstrated track record of increasing ROI for fast-growing businesses. A record of ROI improvements gives you the confidence that you’re choosing software that can help you achieve your growth goals.
Optimize your warehouse with ShipHero
ShipHero’s industry-leading warehouse management software (WMS) helps the fastest-growing DTC brands optimize their warehouses. Our WMS integrates directly with your eCommerce store, syncing inventory and store data and allowing you to set automation rules.
ShipHero’s WMS is compatible with modern warehouse equipment and provides vital data and analytics, including team reports and accurate demand forecasting. Additionally, we have a proven record of decreasing brands’ warehousing costs and increasing ROI.
Optimizing your warehouse operations is a comprehensive process; brands need to improve the efficiency of their warehouse operations to keep up with demand as their business grows.
For brands looking to run the best warehouses possible, check out ShipHero to learn how we can help improve warehouse operations so you can focus on growing your business.
Schedule a meeting today with our experts to learn more about our WMS built for eCommerce brands & 3PLs looking to run their best warehouse and how ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.
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Aaron Rubin, Founder & CEO
About the author: Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.