Important Techniques for Effective Warehouse Practices

Warehouse optimization refers to the process of exploring every corner of the infrastructure, analysing workflows, processes to identify and eliminate inefficiencies. The benefits extend beyond a healthier bottom line to improving warehouse metrics. Implementing the right techniques, such as The Warehouse Management System (WMS), can help to control and support routine operations. When WMS is implemented, tons of manual work and human errors can be reduced. Thus, the efficiency in warehouse practices will be greatly improved. This article discusses the important techniques for warehouse operators to improve their practices.

Warehouse Management System (WMS)

Due to the growing importance of warehousing in the supply chain function, many companies or businesses are implementing WMS to optimize and support effective warehouse practices. Engage with a suitable WMS, companies are able to lower the initial investment costs and avoid high maintenance costs. The focus of the warehouse practices is on the movement of products which includes activities but not limited to, such as pre-receipt planning, receiving, storage, order picking, packing and labelling, shipping, cross-docking, dropshipping and inventory management. Selecting the right WMS can help to control and support routine operations in a warehouse by reducing mistakes or errors, the amount of paperwork and improve the efficiency of the routine warehouse practices. Some other benefits of implementing a WMS are – stock visibility, the accuracy of stocks, automatic replenishment of inventory, accuracy in reporting, improvement in responsiveness, and last but not least, an increased level of customer service.WMS can be a stand-alone system or integrated within an Enterprise Resource Planning (ERP) system that may supports automation, radio-frequency identification (RFID) or voice recognition. A good and well-suited WMS is able to provide real-time records and provide reports as required. It will be able to control all methods and deal with massive data or transactions and high compatibly with the other companies’ systems.

Inventory Control Techniques   

Inventory control is the process of controlling and tracking an organization’s inventory levels. Inventory control is a key function of supply chain management which ensures adequate stock levels to meet customer demand. The purpose of stock optimization is to have the right product available at the right place and time in an efficient and cost-effective manner. It enables inventory availability while reducing inventory costs and minimizing the risk of excess items. Understanding what products to carry based on demand is key to controlling inventory levels. It is critical to invest time in setting up advanced inventory forecasting models that produce accurate demand forecasts.

ABC analysis is one of the inventory control techniques that can be used to organize warehouse inventory. It is based on the value of the item that it brings to the company. Each item in the warehouse is valued differently depending on how much money it makes for the business. Value can be defined in several different ways, including sales revenue, profitability, sales volume, and annual consumption value.

Inventory policies ensure that the company stock the right items in the right quantities. This technique is a must for good inventory control in the warehouse. It makes sure the warehouse team has a set of ‘rules’ for every stock-keeping unit (SKU) they carry. Making minor adjustments in the stock replenishment strategies is a must as stock levels can only be optimized with informed stock purchasing practices. Generally, businesses will reorder when they reach a specific date or when their stock drops to a certain level. The quantities are usually fixed or varied to meet the minimum or maximum inventory capacity. However, this method may lead to excessive stocks or stock-out situations. Thus businesses can input in some variables such as demand forecasts, economic order quantities or suppliers lead times into their stock replenishment strategies in order to optimized their stock holding. Safety stock prevents out-of-stocks and backorders in the event of exceeding forecasts or supply delays. It minimizes inventory disruption caused by disruptions to demand, supply chains or fulfillment while investing the least amount of capital in inventory.

References

Cathrine Pang Siu Wen, DLSM. (2019). “Key Considerations for Warehouse Storage”. Retrieved from SIPMM: https://publication.sipmm.edu.sg/key-considerations-warehouse-storage/, accessed 18/03/2021.

Carolina, Monroy. (2019). “50 expert warehouse optimization tips and techniques”. Retrieved from https://6river.com/expert-warehouse-optimization-tips-and-techniques/, accessed 24/03/2021.

Cheng Heng Yee, DLSM. (2021). “Key Considerations for Effective Warehouse Operations”. Retrieved from SIPMM: https://publication.sipmm.edu.sg/key-considerations-effective-warehouse-operations/, accessed 18/03/2021.

Gan Koon Tin, DLSM. (2020). “Key Performance Indicators for Warehousing Performance”. Retrieved from SIPMM: https://publication.sipmm.edu.sg/key-performance-indicators-warehousing-performance/, accessed 18/03/2021.

Julia, Montgomery. (2021). “6 Inventory Control Techniques for Stock Optimization”. Retrieved from https://www.eazystock.com/blog/6-inventory-control-techniques-for-stock-optimization/, accessed 21/03/2021.

Kelvin Lim Chok Boon, DLSM. (2021). “Essential Considerations for Selecting Warehousing Solution”. Retrieved from SIPMM: https://publication.sipmm.edu.sg/essential-considerations-selecting-warehousing-solution/, accessed 18/03/2021.

Lauren, Koppelman. (2020). “6 best practices to improve warehouse operations”. Retrieved from https://6river.com/best-practices-to-improve-warehouse-operations/, accessed 18/03/2021.

Syed Muhamad Faizal, DLSM. (2018). “The Five Essential Methods for an Efficient Warehouse Operation”. Retrieved from SIPMM: https://publication.sipmm.edu.sg/five-essential-methods-efficient-warehouse-operation/, accessed 18/03/2021.