Optimising Warehouse Efficiency

Optimising warehouse efficiency can play a critical role in the success of ecommerce businesses. As online shopping continues to grow rapidly, businesses must be able to handle the increasing volume of orders efficiently and effectively. 

Danny Ellard, Business Development Manager at ILG outlines:

“Ecommerce is a competitive world where fast and accurate order fulfilment is crucial to creating customer delight. Retention is critical, especially where the cost to acquire a new customer is so high. Efficient warehousing enables accurate inventory management and allows businesses to optimise their stock levels and prevent excess storage. This can lead to cost savings in multiple areas. Streamlined processes and improved layouts minimise the time and effort required for order fulfilment and reduce labour costs.”

Analysing Current Processes

When looking to optimise warehouse efficiency, one of the first things retailers should do is analyse their current processes. Danny Ellard suggests that “retailers should focus on the following areas:

• Warehouse Efficiency – Think about layout and organisation. Efficient warehouse layouts and pick paths can accommodate higher order volumes without compromising speed or accuracy.
• Continuous Improvement – By regularly reviewing performance and benchmarking against industry standards, brands can identify areas for improvement.
• Stock Management and Inventory – An efficient warehousing partner should be able to manage stock and inventory in order to optimise stock levels and prevent excess inventory in storage.
• Technology and Systems – Ensure the systems the 3PL is operating on / integrating with are suitable, leveraging automation and robotics where appropriate to improve efficiency.
• Returns Management – Assess the returns management process to ensure it is efficient, timely and minimises the time and effort required to process returns.
• Scalability – How prepared is your current warehouse partner to scale as your business grows? The warehouse should be able to keep up with increased order volumes and growth.”

Implementing Automation

Once you’ve taken stock of your current warehouse setup, it’s time to look at the ways in which you can improve operational efficiency. One of those ways is through automation.

By automating systems, businesses can streamline processes, reduce manual labour and improve overall operational effectiveness. And there are many ways in which automation can be brought into the warehouse:

• Automated inventory management ensures real-time visibility, optimised stock levels and efficient replenishment. 
• Automated order processing minimises errors, enhances order accuracy and speeds up fulfilment. 
• Robotic systems and material handling solutions improve movement and transportation within the warehouse. 
• Data analytics and machine learning enable predictive insights and continuous optimisation. 

Johannes Panzer, Head of Product Strategy, Ecommerce at Descartes summarises, “In brief, using automation means you need fewer resources to process the same number of shipments, which means in reverse that retailers can in fact scale and grow their business with the existing HR resources.”

Improving Inventory Management

Proper inventory management is of critical importance in a warehouse. It ensures that retailers have accurate and real-time visibility into their stock levels, enabling them to meet customer demand effectively while avoiding the risks of stockouts or overstocking. Efficient inventory management allows businesses to optimise their storage space, reduce carrying costs, and minimise the chances of obsolete or expired inventory. 

It also enables businesses to forecast demand accurately, plan for seasonal fluctuations, and make informed purchasing decisions. By maintaining optimal inventory levels, ecommerce warehouses can fulfil orders promptly, improve order accuracy and enhance customer satisfaction.

Edward Hutchinson, Managing Director of BITO Storage Systems, outlines that, “the seamless connection of order processes in the online shop to a Merchandise Management System (MMS) is crucial to shorten the processing of orders. To enable smart warehousing, all logistics areas – from goods receipt, storage and sorting to packaging and shipping – must be digitally networked via a Warehouse Management System (WMS).

“Investing in smarter warehouses is worthwhile even in times of recession, as it leads to more efficient processes, cost savings and greater customer satisfaction, and will likely result in larger order volumes. The use of AI and predictive analytics allows a forecast of the future ordering behaviour of customers. This allows orders to be picked and prepared for dispatch even before they are received.”

Optimising Order Picking

Optimising order picking is crucial for maximising efficiency and productivity. It saves time and labour costs, improves order fulfilment speed, enhances order accuracy, minimises operational costs, enables scalability and flexibility, and provides valuable data-driven insights. By streamlining the picking process, businesses can meet customer expectations, reduce errors, and maintain a competitive edge.

Johannes Panzer outlines a detailed overview of efficient order picking:

“Grouping together or clustering similar orders in one or in multiple batches and then picking them accordingly helps to drive efficiency. Here are a few examples of the various different types of picking techniques that have individual characteristics:

• Single-order picking: the typical process in place when starting a business – picking one order at a time, usually with the help of a printed delivery note
• Multi-order picking: a group of orders that all have something in common, e.g., size/weight, the source of the order (e.g. orders from an ecommerce marketplace whose dispatch times are subject to the SLAs of the platform), the amount of orders, a specific carrier, international destinations, requested delivery time etc.
• Multi-single item order picking: ideal type of orders to segment if a high percentage of such orders is expected
• Zone picking and sorting at put walls: recommended if warehouses are larger in size to keep picking routes of the team as short as possible and to decrease picking times
• Tote picking (pick and sort to trolley): an excellent choice for similar-sized orders, which are picked and directly put to bin (trolley), which increases the efficiency of the process tremendously

“If then a warehouse layout and WMS are in place, which allow the vendor to implement sorting of bin locations and racks/aisles, this setup will enable warehouse employees to make use of optimized picking paths/routes during order fulfilment.

“By implementing barcode-based processes in the warehouse, picking with mobile devices, as well as optimised picking routes in the warehouse, vendors will reduce the number of mis-mu to almost zero while boosting efficiency at the same time.”

Conclusion

Optimising warehouse efficiency is crucial to the success of ecommerce businesses. Proper inventory management ensures accurate stock levels, reduces carrying costs and improves customer satisfaction. 

Implementing automation through systems like automated inventory management and order processing, robotic systems and data analytics enhances operational effectiveness and reduces labour costs. 

Finally, optimising order picking further maximises efficiency by saving time, improving order accuracy and providing valuable insights. By focusing on these areas and leveraging technology, ecommerce warehouses can meet customer expectations, drive growth and maintain a competitive edge in the fast-moving ecommerce market.

Like this article? Read more fulfilment content in the Ecommerce Fulfilment Update August 2023.