Comprehensive planning is a prerequisite for all business disciplines, but running a successful warehouse demands even more: a skilful blend of specialised technology, analytical prowess, and space optimisation. This multi-dimensional responsibility makes warehouse management a complex process.
The efficiency of warehouse operations is critical for quick, accurate order shipments and subsequent customer satisfaction. One way of ensuring efficiency is through process optimisation – a key strategy involving a systematic approach to efficiently utilising warehouse’s time, space, and resources. Prioritising efficiency can result in timely order fulfilment for the end customer and cost reductions through an effective supply chain.
How to optimise a warehouse
Building a smart warehouse to improve operations can be challenging due to the numerous components involved. Companies often have precise requirements, meaning no two warehouses are the same.
However, most companies will benefit from prioritising the following four key areas when optimising their warehouse operations.
- Invest in an Automated Storage and Retrieval System (ASRS)
There are several types of ASRS available for order picking, and the choice you make depends on the specific needs of your company. Ultimately, your decision will be influenced by factors such as the nature of your operation and its products, your throughput goals, and your budget.
These technologies typically fall into three primary categories:
- Shelf-based picking (where an operator receives an entire shelf or tray of product)
- Bin-based picking (where an operator receives individual bins with a certain quantity of product)
- Robotic picking (where robots pick products and deliver them to an operator)
AutoStore, for example, is one of the world’s leading ASRS. This modular and flexible system is engineered to handle material picking and placement swiftly and precisely at predetermined storage locations. It can be customised to fit any building, and expanding the system is simple when a warehouse reaches its capacity.
- Analyse and optimise your layout
The next rule for optimising a warehouse is to get organised. This involves mapping out the warehouse’s layout and identifying opportunities to improve the flow of goods, such as facilitating the easy retrieval of high-velocity items. An effective approach is to strategically arrange inventory to ensure that frequently ordered items are easily accessible.
For example, AutoStore takes advantage of the well-known 80/20 rule (the Pareto principle) where 80% of order lines are associated with 20% of stock-keeping units (SKUs). The elementary rule is that whenever a bin is presented to a port and returns to the grid, it always returns to a random top location. Consequently, bins containing fast-moving SKUs will already be situated at the top of the grid, ready for the next order dispatch.
The system will, rather ingeniously, reconfigure itself naturally when there is a shift in the SKU profile, such as for fashion items. For example, warm clothing will be at the top of the grid during winter, but customers will start ordering items like hats and sunglasses as summer approaches.
However, after experiencing a period of inactivity, the items will have sunk to the bottom of a grid stack, as the Pareto principle dictates. However, straight after the first order retrieval, these SKUs return to the top of the grid to cater for the warmer season.
- Harness data-driven software
Big data and analytics are revolutionising the way businesses operate. For warehouses, harnessing data-driven software offers supreme visibility into inventory, leading to streamlined processes and better decision-making. Tools like predictive analytics and real-time tracking provide information that can drive warehouse efficiency and productivity like never before.
Furthermore, advanced technologies like machine learning and automation are transforming the very fabric of warehouse management, unlocking valuable insights into supply chain optimisation and customer behaviour.
Some actionable insights that warehouse data offer include:
- Capacity simulations: advanced software tools create digital twins that simulate various scenarios to help develop tailor-made system designs.
- Money-saving predictive maintenance: a proactive approach to maintenance that identifies potential problems before they cause downtime or equipment failures.
- Resilient transportation planning: data-driven software also creates intelligent operations that contribute to the broader supply chain to enable smart logistics decision-making.
- Employee engagement: data-driven software can incorporate gamification elements to make mundane work-related tasks enjoyable and engaging experiences.
Warehouse leaders can integrate these insights into the business intelligence framework to radically enhance overall operations.
- Employee training and development
Implementing new technologies is an integral part of today’s business landscape, and employee training on maximising technology to reduce reliance on manual labour is critical. Ongoing and effective training will engage the workforce and make them willing to embrace innovation, enabling a seamless digital transition.
An equally important success factor is to analyse and monitor warehouse performance, such as order processing times, and inventory and shipping accuracy. Leveraging this data will aid warehouse operators in making informed decisions to boost business performance and identify improvement areas.
Warehouse optimisation is continuous process
Ultimately, the primary objective of warehouse optimisation is to continuously enhance efficiency. Every year businesses incur significant financial losses due to mis-shipments, stockouts, returns, overspending on manual labour, and human error, all of which can be pinned on inefficient practices. Optimal warehouse workflow can prevent these issues by allowing executives to identify and eliminate errors and bottlenecks before they impede business growth.
However, modifying or retrofitting a warehouse can be costly. Therefore, a prudent approach is to enlist an experienced optimisation partner who can provide the most efficient and cost-effective solution.