Warehouse Optimisation Guide To Maximise Potential

Warehouse optimisation has always been a major challenge for businesses. Your ability to receive, store and ship products directly affects your brand’s operational costs and customer experience.

But warehousing can get complicated. Labour shortages, poor space utilisation, and supply chain issues create bottlenecks, making it difficult to meet management or customer expectations.

In this guide, we help you understand how you can optimise your warehouse to maximise space utilisation, streamline operations and make your organisation more productive.

What Is Warehouse Optimisation?

Warehouse optimisation is a strategic process of enhancing the efficiency, productivity, and functionality of a warehouse through improved warehouse design, technology integration, and process re-engineering. This approach builds resilient and responsive supply chains.

While every industry requires a unique approach, the rapid expansion of E-commerce, along with emerging multichannel and omnichannel distribution systems, have led to a different approach to warehouse management.

Here’s Why You Need To Perform A Warehouse Optimisation Study

The market is becoming increasingly competitive. Inefficient order fulfilment can break your business, leading to high operational costs and decreased customer satisfaction due to delays.

A warehouse optimisation study is a supply chain audit that helps you identify the gaps that should be improved. Business-to-customer channels require faster turnaround and accuracy as parcel delivery times are reducing their cutoff. Business-to-business channels face the same pressures.

But if you are willing to spend the time and resources, your warehouse will benefit from these three key advantages:

1. Increased Work Productivity And Reduced Turnover

Employee turnover in the UK is alarmingly high. According to warehouse logistics news, the average annual turnover for warehouse staff is 37%, which is extreme compared to the annual turnover in other industries, standing at 3.6%.

Thus, warehouse automation eliminates many mundane and repetitive manual tasks. This frees up your staff’s time to focus on more challenging tasks, helping you improve their job satisfaction and achieve higher retention.

2. Operational Efficiency And Cost Reduction

The core purpose of warehouse optimisation is operational efficiency. An optimised warehouse streamlines all other operations from inward inventory to order fulfilment. By introducing robotics and space-optimising features, warehouses can significantly reduce errors and speed up the processing time.

This not only enhances the cost efficiency of labour and machines but also speeds up the time to handle higher goods volume. Overall, this leads to an increase in output and profitability.

3. Customer Satisfaction

We live in an era where speed and accuracy drive customer satisfaction. When customers receive their orders on time, they will come back for repeat orders. The ability to process orders with speed and accuracy stands as a differentiator in today’s market.

An optimised warehouse helps you consistently meet your customers’ expectations, delivering the right product at the right time and in the most efficient manner.

How To Know If You Need Warehouse Optimisation?

Here are 5 common signs that you need warehouse optimisation:

Current Processes Take Up Too Much Manpower

Your warehouse workers can only complete so much work. If your warehouse processes are taking up too much time and man-hours, it’s probably time to switch towards warehouse automation.

Inaccurate Inventory Levels and Order Fulfilment

If you struggle to maintain accurate inventory levels, leading to incomplete or delayed orders, it’s time to optimise and automate using warehouse management systems. Automated systems ensure orders are not delayed and reduce product damage.

Customers Are Not Satisfied

If your customers are repeatedly unhappy about order fulfilment, it’s a clear sign your business needs to streamline processes. Requiring orders to be picked, fulfilled and shipped more accurately than manual processes. This is done through warehouse optimisation.

Legacy Systems Require High-Cost Maintenance

If you use outdated technologies to manage warehouse processes, there is a strong chance that your current systems are not providing optimal efficiency. Legacy solutions typically require more maintenance and support to keep it running.

Acquiring A New Business

Acquiring a new business generally leads to more inbound shipments, higher picking volumes, and additional SKUs. This calls for warehouse optimisation and designing offices accordingly.

Within The Final Year Of Lease

This is the best time to analyse your store operations and decide if your existing facility will continue to support your business in an optimised manner.

Addition Of New Product Lines

Adding new product lines requires potential SKUs, thus calling for new warehouse layouts and system needs.

Choosing The Right Type Of Optimisation

Warehouse optimisation is beneficial when you want to cut costs, streamline operations, and improve customer satisfaction. The question usually isn’t whether an organisation should use warehouse optimisation but what type of optimisation.

Here are the different ways firms save their costs through optimisation:

A) Warehouse Space Optimisation

Warehouse Assessments are done to find opportunities to improve the current space utilisation and capacity. By finding these optimisation gaps, you can prevent yourself from moving to another space, and minimise or reduce offsite goods storage. Thus, improving overall flow, saving time and new fixed costs.

B) Warehouse Labour Optimisation

A warehouse assessment highlights areas where the labour force can be increased, reduced, or neutral in line with improved logistic processes. This includes:

• Inbound vendor compliance where warehouse labour can be streamlined by finding ways to improve receiving and put away.
• More efficient picking leads to higher through-put costs while reducing labour costs
• Improving the customer return process for more efficient processing of orders

C) Warehouse Automation Optimisation

Warehouse automation is the most common output of warehouse assessment. This covers a range of functions, aimed at reducing labour costs and less space including:

• Using AMRs to move goods reduces manual human work and travel time. This can support receiving and putaway, returning and putaway, and cross-functional good movements.
• Go-to-person (GTP) picking technologies where items are automatically bought to workers, instead of workers going to items. Thus providing the highest pick rates
• High-density storage using Automated Storage and Retrieval systems(AS/RS) and Vertical Life Modules (VLMs) that retrieve items to picking stations.

D) Inventory Warehouse Automation

Warehouse assessments identify gaps in inventory movements and management, thus tracking inventory better. Accurate inventory tracking leads to

• Reduces the capital invested in inventory due to optimal tracking of demand and supply in the warehouse
• Reduce lost work time while packaging and fewer write-offs and pickers detailing with wrong bin locations
• Improved SOPs, controls and organisational changes to reduce inventory write-offs.

Process Automation And Physical Automation

Another way of classifying warehouse optimisation is categorising is through process optimisation and physical optimisation. Both are designed to improve warehouse operations.
However, your warehouse doesn’t necessarily need both types of optimisation. You may choose one depending on your needs.

A) Process Automation

Process automation automates the different manual processes. This may include inventory data collection, which integrates into ERP software. Barcoding and wireless barcode scanners track inventory data.

Process Automation is beneficial for all business sizes. It streamlines operations, enhances efficiency, and enables accuracy in warehouse operations, improving your customer experience.

B) Physical Automation

Physical Automation includes robotics systems and other mechanical hardware installations. When it comes to automation, businesses likely think of this type of automation. This is suitable for large warehouses and distribution centres handling high inventory volumes.

Physical Automation is more costly to implement than process automation but offers high ROI. This includes Automated Mobile Robots (AMRs), goods-to-person (GTP) technologies, along with Automated Guided Vehicles (AGVs). Automated Storage and Retrieval systems (AS/RS) are one of the most expensive and powerful examples of Physical Automation.

How To Implement A Warehouse Optimisation Plan?

Warehouse optimisation is generally conducted during non-peak season, preferably after the peak season. This requires careful planning and execution

Here are key aspects of developing and implementing warehouse automation

1. Current Operations Assessment

“You can only fix something you know is broken”

The first step involves analysing the current warehouse operations to identify bottlenecks and inefficiencies in the warehouse setup, staffing, technology, floor design and areas where improvements can be made. This is like a diagnostic test to identify where the actual problem lies.

2. Defining Clear Objectives

Once you have assessed your current setup, define what you aim to achieve by optimising your warehouse. They can be:

• Reducing order processing time or
• Reducing shipping time for customer satisfaction or
• Improving space optimisation to streamline the logistical process

Setting specific and measurable goals is important to track the growth of your optimisation efforts.

3. Designing And Planning

Based on the assessment and objectives, design a detailed plan for optimising your warehouse. This may involve revisiting the warehouse layout, storage and picking strategies, inventory placements and deciding the automation manual tasks. Analyse how the changes will affect current operations and plan for minimal disruption.

4. Integrating Technology

Here you identify which technology can support your goals. This may include warehouse management systems (WMS), Automated Storage and Retrieval systems (AS/RS), and robotics. Evaluate how these technologies can enhance the existing systems.

5. Implementation

Here you bring your optimisation plan to reality. Make sure you implement in phases to manage risks and ensure a smooth transition. At this step, you train your employees to use the new technology needed for successful implementation.

6. Monitor, Review And Improvement

Warehouse optimisation is a continuous process. Once your new systems are in place, it’s important to monitor and track if your KPIs are performing well. Use data and feedback to make necessary improvements to your systems and adapt to the changing needs of your business.

Emerging Trends And Future of Warehousing Optimisation

As technology changes, businesses must find a way to leverage technological advancements helping them further optimise their warehouse operations. Here are some emerging trends in warehouse optimisation and what the future holds in this industry.

1. Artificial Intelligence (AI) And Machine Learning(ML)

AI and ML are changing the way warehouse optimisation is conducted by bringing predictive analytics, and demand forecasting to decision-making processes. Thus enabling intelligent inventory management and personal customer experiences.

2. Automation And Robotics

Automation is a dominating trend in warehouse optimisation and robotics are playing a central role in revolutionising warehouse automation. This includes Automated Storage and Retrieval Systems (AS/RS) to pick up robots. Automation is increasing efficiency, reducing manual labour and enhancing worker safety.

3. Sustainability

In the last two decades, environmental concerns have been pushing warehouses to adopt greener practices. This includes energy-efficient technologies, waste reduction initiatives, and sustainable packaging solutions. In the coming years, sustainability won’t just be ethical, but a differentiator in the market.

4. Digital Twins Integration

As warehouse automation becomes more complex, the use of digital twins will grow in the next 5 years. These are virtual replicas of physical warehouses enabling managers to simulate changes, predict potential issues, and optimise layouts without disrupting current warehouse operations.

SEC Group’s Scalable Warehouse Solutions

As a part of warehouse automation and design, SEC helps you identify ways to increase efficiency while keeping their customers and team happy.

If your business is currently looking for an optimisation assessment and you’d like expert assistance in warehouse assessment, planning and implementing optimising strategies, we are available to assist you.