Warehouse Optimisation

A Guide To Improved Efficiency and Customer Satisfaction

Warehouse optimisation is not just a buzzword; it’s a game-changer for businesses looking to stay competitive in the 2020s.

Whatever industry you’re in, or how much experience you have, you can’t afford to let your warehouse operation stand still.

We’ve created this guide to give you actionable tips to maximise space utilisation, streamline operations, and boost productivity.

From layout optimisation to inventory management, order picking strategies to automation technologies, it’s all here.

This guide will help you better understand how to make a warehouse optimisation plan. It looks at the key strategies and techniques, along with giving tips to improve efficiency and, ultimately, enhance customer satisfaction.

Warehouse Layout Optimisation: Maximise Space Utilisation and Efficiency

A first step to optimising your warehouse operation is to assess how well you are using the available space and to identify areas for improvement. Start by creating a detailed floor plan layout of your warehouse, including all storage areas, picking and packing zones, and material handling equipment paths. This visual representation helps you better understand the flow of goods and identify potential bottlenecks.

An optimal design ensures that goods flow as smoothly as possible, in a system that gives you clear visibility of what’s going on at all times.

The route to this optimal warehouse design requires capture and assessments of operational data, such as:

• Demand patterns
• Seasonal fluctuations
• Shipping process times
• Customer behaviour
• Common warehouse issues

This operational data allows you to build a profile of your warehouse operation. From this you can make informed decisions about how the storage space can be used more effectively, and what equipment is required to ensure stock is received, stored and picked with maximum efficiency.

There are various tools and techniques available to help you achieve an optimised warehouse design. Here are some approaches to consider:

ABC Analysis

This ranks SKUs based on their importance to your business. The value of each item is based on sales volume, or demand. Classify items based on their demand frequency (A-items: high demand, B-items: moderate demand, C-items: low demand). Store frequently accessed items closer to the shipping area to reduce picking time.

Volumetric Analysis

This takes into account the physical attributes of your stock items. Each SKU is categorised by weight and dimensions to identify the most appropriate equipment for handling and storage, and to ensure the pick face is appropriate.

Slotting Optimisation

Analyse sales patterns and inventory turnover rates to determine the ideal slotting strategy. Place fast-moving products in easily accessible areas and prioritise popular items in pick zones.

Vertical Space Utilisation

Warehouse layout often fails to make good use of the vertical dimension. You can optimise use of this space by implementing tall pallet racks, mezzanines, or automated vertical storage systems to maximise storage capacity.

Inventory Management Systems: Gain Control and Visibility

A profitable and productive warehouse operation keeps stock moving cleanly and efficiently, with no redundant processes or bottlenecks. Items are tracked in real-time, helping to ensure they are available for picking when needed. Integration with other business systems helps ensure stockouts and overstocking are avoided.

Here are some of the best practices around inventory management:

Implement a Warehouse Management System (WMS)

A robust WMS allows you to automate and streamline order fulfilment operations, including order picking, packing, and shipping. This system optimises picking routes, reduces errors, and improves overall efficiency.

ABC/XYZ Analysis

Categorise items based on value (A-items: high-value, B-items: moderate value, C-items: low value) and demand variability (X-items: stable demand, Y-items: intermittent demand, Z-items: highly variable demand). This simple yet highly effective form of analysis helps you establish appropriate inventory control for each category.

Just-in-Time (JIT) Inventory

Adopt JIT principles to reduce inventory holding costs and improve order fulfilment speed. Collaborate closely with shipping providers and suppliers across your supply chain to receive products as they are needed, minimising warehouse storage requirements.

Real-Time Inventory Tracking

Utilise barcode or RFID systems to monitor inventory levels accurately, enabling real-time visibility into stock levels. This will help to optimise replenishment activities and prevent overstocking.

Order Picking Strategies: Streamline Operations for Faster Fulfilment

When you smooth your order fulfilment processes you’re not only improving efficiency, you’re also paving the way to increased customer satisfaction.

Here are some practices that can improve your picking and fulfilment operation:

Pick-to-Light and Put-to-Light (PTL) Systems:

PTL systems use lights and LED displays to guide pickers and packers to the correct location. The visuals help your team move around faster and more confidently, meaning less risk of human error and faster picking times.

Cross-Docking:

Utilise cross-docking to expedite the movement of goods by transferring them directly from incoming shipments to outbound vehicles, minimising storage time and increasing order fulfilment speed.

Warehouse Automation Technologies: Boost Productivity and Accuracy

Warehouse automation has become a game-changer for businesses looking to optimise their operations and stay competitive in today’s fast-paced market. By implementing advanced technologies, companies can significantly improve productivity, accuracy, and safety within their warehouses.

Some of the most impactful warehouse automation solutions available today include:

Automated Storage and Retrieval Systems (AS/RS):

Implement AS/RS to automate the storage and retrieval of products, reducing manual handling (as well as the manual checking process – removing redundant processes), human error and optimising space utilisation.

Robotics and Autonomous Mobile Robots (AMRs):

Utilise robots and AMRs for picking, packing, and sorting operations to improve efficiency and reduce labour costs.

Data Analytics and Predictive Analytics:

Utilise data analytics and predictive analytics to forecast demand, optimise inventory levels, and improve overall warehouse operations.

Key Performance Indicators (KPIs): Measure and Improve Warehouse Performance

Measuring and improving warehouse performance is crucial for optimising your operations and driving business success. Key Performance Indicators (KPIs) provide a quantitative way to assess the efficiency and effectiveness of your warehouse processes. By identifying critical KPIs, setting up a monitoring and reporting system, and engaging your warehouse staff in the improvement process, you can create a data-driven approach to warehouse optimisation.

Actions to help you achieve this include:

Identify Critical Warehouse KPIs

To measure and monitor the performance of your warehouse, you need to identify the KPIs that are most relevant to your operations. Some critical warehouse KPIs include:

• Inventory accuracy: Measures the difference between recorded inventory and actual physical inventory
• Order fulfilment rate: Percentage of orders shipped on time and in full
• Picking accuracy: Percentage of orders picked correctly without errors
• Dock-to-stock cycle time: Time taken from receiving goods to putting them away in storage
• Warehouse capacity utilisation: Percentage of available storage space being used

Establish a KPI Monitoring and Reporting System

Having established your key warehouse KPIs, you need a robust monitoring and reporting system. This allows you to track performance over time, identify areas for improvement, and make data-driven decisions.

You’ll want to set targets for your KPIs and ensure a reporting mechanism that quickly alerts you to variances that require attention. You should also conduct regular reviews to ensure your KPIs remain relevant, and to identify opportunities for improvement.

Engage Warehouse Staff in the KPI Process

Engaging your warehouse staff in the KPI process is crucial if you want to develop a culture of continuous improvement. When your team understands the importance of KPIs and how their individual roles make a difference to overall performance, they are more likely to take ownership of improvement initiatives.

The Sustainable Warehouse: Efficiency Through Reducing Environmental Impact

By adopting sustainable practices, you can minimise environmental impact while improving overall efficiency.

Here are some ways for warehouse optimisation to contribute to sustainability:

Energy Efficiency

Warehouse operations can consume a considerable amount of energy. When you implement energy-efficient technologies and practices, you can minimise your carbon footprint alongside reducing operational costs. Opportunities for these savings include:

LED Lighting: Switching to energy-efficient LED lighting reduces electricity consumption and maintenance costs while providing better illumination.

Motion Sensors: Installing motion sensors in the warehouse helps automate lighting systems, ensuring lights are only active when necessary, reducing unnecessary energy usage.

Insulation and ventilation: Proper insulation and ventilation techniques optimise temperature control, reducing the need for excessive heating or cooling and decreasing energy consumption.

Waste Reduction

Efficient warehouse management helps reduce the amount of waste generated by your warehouse, while encouraging recycling and responsible disposal practices. Many warehouse managers have found that by reducing waste, their business contributes to a more sustainable environment.

Packaging optimisation: Implementing appropriate packaging techniques, such as right-sizing packages and using recyclable materials, reduces material waste and transportation costs.

Reverse logistics: Establishing a well-structured reverse logistics process enables the efficient handling of returned products, reducing waste and facilitating recycling or refurbishment.

Waste segregation: Proper waste segregation practices within the warehouse promote recycling and facilitate the disposal of hazardous materials in an environmentally friendly manner.

Transportation Optimisation

Warehouse optimisation can help streamline transportation processes, leading to reduced fuel consumption and greenhouse gas emissions. Consider the following approaches:

Route optimisation: By optimising delivery routes and scheduling, you can reduce distance travelled, minimise fuel consumption, and decrease emissions.

Consolidation and collaboration: Implementing strategies like freight consolidation and collaborative transportation with other businesses helps maximise truckload capacity and reduce empty miles, thereby minimising fuel usage and emissions.

Inventory Management

Efficient inventory management practices positively impact sustainability efforts by reducing excess stock, minimising waste, and preventing obsolescence. Some techniques include:

Demand forecasting: Accurate demand forecasting helps optimise inventory levels, reducing the need for excess stock and minimising the risk of waste due to expired or obsolete products.

Just-in-Time (JIT) inventory: JIT principles ensure that inventory is replenished precisely when needed, minimising storage requirements and reducing the environmental impact associated with excess stock.

Green Technology Adoption

You can further promote environmentally-friendly practices by adopting more sustainable technologies and solutions. These can include:

Renewable energy sources: Installing solar panels, air source heat pumps or utilising other renewable energy sources to power warehouse operations will further reduce your dependence on fossil fuels and help to lower greenhouse gas emissions.

Electric vehicles (EVs): Adopting electric vehicles for intra-warehouse transportation and last-mile deliveries will reduce carbon emissions and air pollution.

Sustainable material handling equipment: Using electric or hybrid forklifts, pallet jacks, and other equipment helps reduce emissions and noise pollution compared to traditional fuel-powered alternatives.

By implementing these warehouse optimisation strategies, you can achieve significant sustainability benefits, reduce your ecological footprint, and contribute to a greener and more environmentally conscious supply chain.

Warehouse Optimisation: Your Next Steps

The work of warehouse optimisation is never done. There is always scope for improving efficiency, enhancing customer satisfaction and becoming even more sustainable.

Continuous improvement is also a feature of the tools, techniques and best practices for warehouse optimisation. Approaches to warehouse layout, inventory management, order fulfilment processes and warehouse automation are continually evolving in line with changing customer requirements and technological developments.

We help businesses identify and adopt opportunities for positive change in their warehouse operations. Our experts support firms seeking to maximise their efficiency and productivity through improved warehouse design and operation.

Optimise your warehouse with help from SEC Storage today.