Warehouse Management: 9 Vital Processes

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Improving the system begins with simplifying processes and procedures. Still, it should be done in the best way possible to get the most out of it. When done correctly, these processes can boost productivity and reduce operational costs.

Warehouses may vary in size, type, function, location, and ownership, but the basic processes remain the same. One way to make warehouse operations more efficient is by using the latest technology.

The chart below shows the costs associated with different warehouse activities. It highlights the importance of pick, pack, and dispatch operations in day-to-day activities. These numbers can vary depending on the type of operation.

Warehouse activities as a percentage of total cost

Source: Gwynne Richards; Warehouse Management; Warehouse processes: receiving and put-away

Apart from those three steps, pre-receipt and receiving are also important. If the wrong product is received or placed in the wrong spot, it can cause big problems.

This article will discuss the warehouse process from before receiving goods (pre-receipt) to the put-away stage. Put away means everything in the warehouse between getting goods from suppliers and storing them on the shelves.

9 vital processes in warehouse management

In warehouse management, 9 vital processes ensure the smooth functioning of operations. These processes are like gears that work together to keep the warehouse running efficiently. Let’s take a closer look at each of these processes and understand how they contribute to the overall success of warehouse management.

1. Pre-receipt

To ensure the buyer gets the correct quality goods, the supplier must deliver them correctly to the warehouse. The buyer doesn’t know how the goods are received, so they should receive goods that match the description.

The warehouse manager plays a crucial role in this process. They have to choose and give the okay for the packaging, decide how many items go in each box, how many packages go on each pallet, any unique labels needed, and the transportation method.

In the end, containers with many products still need to be sorted in the receiving area. It includes products on pallets and those without pallets, just loose in the container.

When the loose products arrive in the container, someone must place them on a pallet before storing them on the shelf. These boxes should be stacked neatly on the pallet without sticking out or being at risk of getting damaged.

Using ready-made software can make improving how we load the products more accessible. Pallets not only look nice, but they also help reduce the chances of the products getting damaged.

The International Organization for Standardization (ISO) has rules about the size of pallets. These rules are in ISO 6780: Flat pallets for moving things worldwide – main sizes and limits. The table below shows the six dimensions that ISO specifies.

Dimensions in mm (Width x Length)	Dimensions in inches (Width x Length)	Countries that use
1219 x 1016	48.00 x 40.00	North America
1000 x 1200	39.37 x 47.24	UK and Asia, commonly referred to as industrial pallet
1165 x 1165	44.88 x 44.88	Australia
1067 x 1067	42.00 x 42.00	Most countries
1100 x 1100	43.30 x 43.30	Asia
800 x 1200	31.50 x 47.24	Europe, commonly known as euro pallet

To figure out how to arrange the racks, you need a solution that can handle different sizes of pallets. One option is to use plastic pallets called iGPS. These pallets are unique — you can recycle them, and weigh 30% less than wooden ones.

The good thing about iGPS pallets is that they don’t need any maintenance, which makes them great for moving groceries in warehouses.

Labeling products in boxes is essential to ensure easy identification. One way to do this is by using barcodes. These barcodes are like special codes that machines can read. They store information such as the product code, description, and how many packages there are.

In the supply chain, it’s essential to have consistency. You must ensure that the number of packages provided, stored, and sold matches the demand. This way, there won’t be too much or too little product available.

Many products often arrive at the warehouse in poor condition, with improper packaging, incorrect labels, or the wrong number of items. Therefore, it’s important to discuss certain things before placing an order. These include:

Determine the size and type of cardboard required.
Choose the appropriate packaging: cardboard, plastic, tote bags, metal stillages, roll cages, or pallets.
Decide whether to ship the products with or without pallets.
Specify the size (length, width, and height) and type of pallet needed, such as a euro pallet or a pallet with a four-way entry.
Determine special labeling needs, such as product description, barcode, and quantity.
Estimate the number of cartons needed, including both inner and outer cartons.
Plan the transportation method, including the number of shipments and the delivery frequency.

Selecting shipping methods that align with the warehouse’s available equipment is crucial to ensure smooth operations. For instance, if there is no loading bay, it is necessary to use vehicles equipped with tail-lift or side-unloading capabilities.

Shipping many goods overseas increases container traffic. You must choose between loose loading or palletizing your cargo as a business owner. Using pallets protects your stock from loss and damage during handling. It reduces the number of people needed to load and unload containers.

However, there’s a downside. Pallets take up space in the container, using up to 10% depending on the type used. Some pallets can’t be stacked, which further reduces space.

Due to the reduced space, pallets can increase shipping costs by 15-33%, depending on the load. However, it also lowers costs for delivery. It decreases the chances of damage to your products and injuries to your staff.

To reduce this drawback, you can use slip sheets instead of pallets. Slip sheets are made of thick cardboard or thin plastic and have a width of about 2 centimeters.

In this method, you place the load on a slip sheet inside the container. When the goods arrive, a special forklift attachment removes the slip sheet and the pack and then puts them on a pallet for storage.

The number of packages will depend on the product’s value, weight, and size. It’s important to note that boxes cannot weigh more than 20 kg, as legal restrictions exist. We must maintain a consistent product flow to ensure we count our stock accurately and reduce mistakes when picking items.

We need to have discussions with warehouses, procurement, customer service, and suppliers. For instance, we should talk to suppliers about our specific requirements and ask them to change their usual processes.

Another vital thing to remember is the 80/20 rule. This principle means roughly 20 percent of our suppliers provide about 80 percent of our stock. Likewise, around 20 percent of suppliers are responsible for 80 percent of the problems we encounter with our goods. It’s something we should keep in mind.

Problems often arise because suppliers may not realize how their actions affect our operations. So, it’s better to address the issue directly and work with the supplier to fix it.

2. In-handling

Warehouse managers face the challenging responsibility of aligning work hours with the workload. They can reduce the hours needed and achieve cost savings by minimizing the time required to handle products.

Labor costs are the most considerable expense for warehouses, making up around 48% to 60% of the total cost, depending on automation levels. Handling activities alone account for roughly 20% of the overall expenses in retail warehouses.

3. Preparation

To prepare correctly, make sure the supplier sends the product to the warehouse when you decide, not when it’s convenient for them, except when the shipping company is struggling to deliver on time.

To provide delivery times, match the time slot with how long you estimate it will take to complete the task.

For example, unloading a 45-foot pallet trailer might take 30 minutes, and moving the pallets to a storage area could take another 15 minutes. Depending on the number of items and available staff, unloading a loosely packed 20-foot container could take up to three hours.

Keep track of the time required for each type of delivery and share this information with the ordering team. The ordering team can plan more efficiently by understanding the necessary labor and equipment.

The warehouse staff needs to know the products being sent, the type of vehicle used, and the equipment required for unloading. Once everything is confirmed and the time is calculated, assign appropriate order slots and provide order references to the supplier.

Also, make sure you understand the details of the pallet exchange agreement. If you’re using a pallet rental system, both parties need to record the movement of pallets in the system accurately.

Providing advance notice of the shipped products is also a good idea. It allows the Warehouse Management Software (WMS) to enter the details and prepare for the arrival of the products.

4. Offloading

When the goods arrive, you must check the vehicle’s condition and compare the seal with the order reference. Then, assign the vehicle to the loading bay or a spot in the yard.

Before you change the vehicle’s temperature for unloading, check how hot or cold it has been during the trip and how hot or cold the goods are right now. Once the vehicle is in the room or yard for unloading, ensure the team has enough people and the tools to do the job quickly and satisfactorily.

The most common way to lower pallets into the loading bay is using a powered pallet truck, hand pallet truck, or pallet jack. Some companies use counter-balanced forklift trucks, but be careful because accidents can happen if the truck, driver, or floor weights are weak or damaged.

To speed up this process, we have installed an automatic unloading system that can unload 26 pallets in just 5 minutes. The picture below shows one of the unloading methods, which uses tracks.

Offloading tracks in warehouse management

Image source: Robotics and Automation News

Unloading loose-loaded containers consumes much time. It takes at least two people to unload and place the goods onto pallets. At the same time, another person waits to transport the stacked pallets to the inspection area.

This process lacks productivity. Staff inside the containers must wait to replace full pallets with empty ones. At the same time, forklift drivers await the construction of the pallets.

Containers often contain a mix of products, so sorting is necessary at the unloading dock. This sorting process is inefficient and poses risks to staff constantly bending and stretching in the confined space and near Material Handling Equipment (MHE). Moreover, the lighting is poor, making the conditions unfavorable.

Pallets or stillages can be placed on either side of the conveyor and stacked with the right items to improve this operation. The operator can reduce the amount of bending and stretching required by using platforms that adjust to the height of the pallet they are building.

Instructing suppliers to load the same product in each container is crucial for smooth operation. This change could increase productivity gains by up to 50%.

Using more automation will make the cartons more consistent. We now use robots to build pallets when we bring items in and send them out. We also have other equipment like forklift trucks with clamp attachments for unloading big appliances and larger boxes. And we have forklift trucks with slip sheet attachments for unloading containers.

5. Checking

Once you unload the goods, you must decide whether to check them before storing them. Ideally, move incoming goods directly from the loading bay to the storage or discharge areas if they are cross-docked.

The problem with this process is trust unless you’re sure the supplier can deliver the right product. There’s a solution to this problem: you can randomly inspect some of the products instead of checking everything.

Some retailers employ a method known as Good Faith Receiving (GFR). In GFR, they receive products at the distribution center without conducting immediate checks. They randomly inspect the products and report any issues to the supplier in proportion. This approach allows drivers to continue making deliveries and pressures suppliers to enhance accuracy.

Managers can establish rules and inspection requirements if they don’t use GFR. The manager measures supplier performance based on the accuracy of their recent shipments.

New suppliers may feel concerned when their first shipment undergoes a check. Still, you will continue checking until you have confidence in their accuracy. As for experienced suppliers, you can inspect 10% of each shipment. If an issue arises, you can check the next 10%.

There’s a trade-off between the time it takes to inspect shipments, the number of problems found, and the time it takes to deal with them.

Barcodes have accelerated inspections and increased accuracy. When we scan products, we can instantly compare their details in real-time if we have wireless capability.

After scanning, we can move the goods directly to the next step, such as checking quality, selecting items, storing them, or shipping them out. Using RFID technology will make inspections even faster in the reception area. When products with the proper tags come into the warehouse, we can quickly recognize and count them, sending the information immediately to the warehouse management system.

Aberdeen Group (2009b) found that 70% of the best companies prefer receiving goods without paper documents. They use barcodes, RFID, or voice technology instead.

Noting and reporting discrepancies in the received goods is crucial in the admissions process. It plays a vital role. Here’s an example of a report for goods that do not meet the requirements.

Receiving Date	Supplier	Product Code	Purchase Order Number	Order Reference	Non-Compliance
03/04/21	ABC	59193	26620	1128	Barcode cannot be scanned
03/04/21	ABC	105729	26620	1128	Outer carton exceeds 20 kg
06/04/21	DEF	541037	29901	2832	Barcode located outside, not inside
07/04/21	FHI	925739	29992	3314	Quantity does not match expectations
07/04/21	FHI	017592	29992	3314	Barcode cannot be scanned
08/04/21	JKL	752948	3210	2109	No price sticker present

6. Cross-docking

Most warehouses want to move products quickly and hold less stock. Cross docking is a way to move products straight from receiving to shipping without storing them in the warehouse or picking them up.

For cross-docking to work, suppliers must ensure clear labeling of products and provide timely notifications of their arrival and delivery. We also need systems to identify products and processes that encourage shipments.

After checking the products, we transport them directly to the delivery area. We actively track the temporary storage locations of these products in the system, enabling staff to be aware of their readiness for delivery. Additionally, we maintain comprehensive records for auditing purposes.

It’s essential to have enough space in the entry and exit areas. Having enough space helps us move products quickly and safely. If there are any bottlenecks in these areas, it slows down the process and can cause tension between teams.

Additionally, it’s crucial to establish a marked area for the placement of products before shipping them. Drive-in rack areas can assist in organizing loads for specific collections.

Companies widely employ cross-docking in the supply chain to transport perishable goods. Retailers actively utilize this system at their distribution centers to receive products from various suppliers, sort them, and dispatch them to different stores.

The just-in-time system also relies on cross-docking to send parts to a central location for assembly and delivery in a specific order. The image below shows an example of how cross-docking works.

7. Recording

Every product needs records beyond the usual information like product code, description, and quantity when it arrives. It can include extra details such as batch or slot numbers and serial numbers.

8. Quality control

Certain products require stricter acceptance checks. These include high-value items, food, dangerous goods, and products that need specific temperatures, like medicines.

Create a designated area close to the receiving point to check goods upon arrival. It’s crucial to carry out this process with speed and efficiency to avoid any hold-ups and ensure prompt integration of the products into the system.

If there’s a problem with a product, put it in a separate area for quarantine. If the issue is with the storage room, put the product there but label it as damaged or wait for test results.

Most WMS systems actively block access to blocked products and prohibit their selection. Adding physical markings on the site provides an additional measure to ensure proper handling of the products.

9. Put-away

Warehouse Management Systems (WMS) actively assign product locations beforehand and instruct workers where to place goods. Workers can perform this task directly at the dispatch area for cross-docking, at the pick face to restock, or in backup storage.

To ensure the effective functioning of this system, we must input a wealth of information. This information encompasses various aspects such as:

Size, weight, and height of palletized goods
ABC analysis or slotting results, which means putting fast-moving goods closest to the delivery area
Current order data
Grouping products together
A mix of actual sales data
The current status of each product’s pick face
The size of the space for pallets
How much weight can the shelves hold

Without a system, the warehouse manager has to figure out the best spots for goods and tell the operators where to put them. When you use fixed locations, you have to assign a specific area for each product. Random locations mean putting pallets where they fit best.

When placing products, it is crucial to consider certain factors. We must allocate dangerous goods to a specific area and provide special storage for valuable items that we can lock or place on a secure carousel.

It’s best to put the fastest-selling items in the middle row when putting boxes away. That way, the people picking orders don’t have to bend or stretch too much. Slower-selling goods can go on the top and bottom shelves.

The warehouse manager also needs to group similar items. Some warehouse systems combine putting things away with picking pallets, called insertion duty. The system tells the operator where to store pallets while they gather the full ones needed to restock.

Summary

All warehouses follow a similar process, although they may vary in size, function, ownership, and location. As discussed, the receiving and setup process is vital for an efficient warehouse operation.

Ensuring the smooth running of this process is crucial to achieving optimal results and cost reduction. To enhance productivity in the receiving and setup area, here are five steps you can take:

Reserve specific slots for most of your suppliers to make things easier.
Minimize the number of checks needed for incoming deliveries.
Prioritize incoming goods by using a system. For example, focus on low-stock items and promotional items.
Plan the setup process carefully to place products accurately and efficiently.
Whenever possible, prioritize cross-docking to speed things up.

In the following article, we’ll explore another important aspect of warehouse operations: the picking process.

References

Aberdeen Group. 2009b. Warehouse Operations: Increase Responsiveness through Automation. Boston: Aberdeen Group

Richard G. 2011. Warehouse Management. Great Britain: Kogan Page Limited.

Impact Insight Team

Impact Insights Team is a group of professionals comprising individuals with expertise and experience in various aspects of business. Together, we are committed to providing in-depth insights and valuable understanding on a variety of business-related topics & industry trends to help companies achieve their goals.

9 Vital Warehouse Processes You Need to Know