Warehouse management — Processes and benefits

Warehouse management plays a central role in the manufacturing industry. The optimization of processes and the implementation of integrated logistics solutions are the basis for an increase in turnover. Especially inbound and outbound logistics are considered to be highly complex fields that cannot be mastered without the right warehouse management tools.

What is warehouse management?

Efficient and transparent warehouse management is a decisive factor for the success of any company. It is not only the manufacturing industry that benefits from modern logistics facilities and low operating costs. Warehouse management is just as important for buyers and sellers. After all, efficient warehouse operations go hand in hand with cost savings, customer satisfaction and increased sales.

Warehouse management: A definition

Warehouse management involves the monitoring of all operations and processes within a warehouse. To ensure a high degree of transparency, warehousing begins with the receipt of the order and ends when the goods leave the warehouse. The following aspects fall under the targeted management of the warehouse:

  • The receipt of goods
  • The tracking of goods within the warehouse
  • The storage of stock
  • The management of product shipment
  • The training of personnel
  • The general monitoring of the movement of goods
  • The planning of workload and labor utilization
  • The organization of warehouse space

Thus, warehouse management encompasses various processes and principles that enable smooth operations in the warehouse. This also includes the organizational procedures and processes within the warehouse. Professional warehouse management solutions should therefore consider different aspects and processes.

What is a warehouse management system (WMS)?

A warehouse management system ideally simplifies warehouse management. Due to its close connection to other company processes, it is usually a component of an ERP solution. This allows certain processes (such as tracking) to be used for order entry and scheduling in shipping, for example.

The main functions and benefits of a warehouse management system

  • Modern warehouse management systems offer various interfaces to related business applications to simplify the warehouse process.
  • The warehouse management software supports the definition of rules. These sets of rules help employees with daily recurring tasks such as picking and shipping.
  • Demand analyses can be calculated continuously thanks to central data management and automation. This enables companies to forecast sales in order to respond more quickly to fluctuations.
  • A warehouse management system (wms) provides additional transparency within the company. This is because the data is available in other ERP modules. This means that the relevant real-time data can always be consulted.
  • Thanks to the ability to access real-time data, this management strategy enables a targeted inventory determination. Knowing this inventory is critical when it comes to scheduling upcoming tasks.
  • A warehouse management system is the most efficient tool for understanding warehouse effectiveness and productivity. Only when such an understanding is in place can companies optimize processes or operations.

The main goal of warehouse management is to optimize warehouse processes. Finally, the appropriate warehouse strategy contributes to higher efficiency and transparency. Nevertheless, it is the specifics of the particular warehouse operation that need to be taken into account when selecting the appropriate software. This means that the warehouse management system should support the existing company processes and optimize them in the long term. It should not be necessary to first adapt the company-specific processes to the software.

Inventory management and warehouse management: What is the difference?

Although many companies use the terms “inventory management” and “warehouse management” synonymously, the two approaches differ from each other in key points.

  1. Warehouse inventory: The warehouse inventory management system focuses on ordering, storing and moving materials. These are required for manufacturing products or picking. So, the inventory managed by the warehouse inventory management software helps to implement customer orders more effectively and efficiently.
  2. Warehouse management: Unlike warehouse inventory management software, warehouse management software focuses on the entire warehouse operation. Warehouse management does not only include stored products, but also the related organizational processes. Thus, inventory management is a sub-area of warehouse management.

Advantages of warehouse management

Warehouse management usually takes place in the background and is invisible to customers. Even a large number of employees in the company rarely have contact with warehouse operations. Although warehouse management operates in the shadows, it offers numerous advantages:

  • Effective warehouse management contributes to on-time delivery of ordered products.
  • Reduction of warehouse costs can only be achieved if companies establish an efficient warehouse management process.
  • Professional warehouse management solutions such as SAP Extended Warehouse management can be integrated into existing ERP solutions. This makes it possible to make all relevant data available in real time.
  • A sound warehouse strategy focuses on organizational tasks and the most important warehouse management services at the same time. This makes warehouse management efficient and transparent.
  • A professional warehouse management software can help smaller businesses to save costs. This reduces expenses along the supply chain while maintaining the quality of services.

TeamViewer Frontline Success Story

At DHL Supply Chain, the vision picking solution xPick runs on smart glasses as a worldwide standard for their warehouses.

DHL Supply Chain successfully completed its global augmented reality pilots and is expanding its “vision picking” solution to more warehouses around the globe, establishing a new standard in order picking for the industry. The smart glasses provide visual displays of order picking instructions along with information on where items are located and where they need to be placed on a cart, freeing pickers’ hands of paper instructions and allowing them to work more efficiently and comfortably.

The international trials have shown an average improvement in productivity by 15 percent and higher accuracy rates. The user-friendly and intuitive solution has also halved onboarding and training times.

Practical implementation: Warehouse management for large and small businesses

An effective warehouse management process requires professional software that fits the needs of the business. While some companies focus on lean warehouse management, others require more comprehensive approaches. For the best possible results, warehouse stock management software should fit individual needs and provide transparency.

Warehouse management processes

The warehouse process varies depending on whether the warehouse is a traditional or a smart warehouse. Nevertheless, warehouse management always follows the following core processes:

  1. Receipt of goods: Warehouse management records and logs all products or goods that arrive at the warehouse.
  2. Preparation: Then the warehouse stock management software registers all goods moving towards the destination.
  3. Putaway: To facilitate picking, it is necessary to define where stock should be placed. The goal here is to reduce the following steps and minimize the burden on warehouse workers.
  4. Material withdrawal: As soon as customer orders are received, the respective software passes the orders on to the warehouse inventory management system. Then the employees or the machines pick the corresponding goods from the warehouse.
  5. Preparation for shipping: Once the picked items have been collected, the next step is to pack them. This is where warehouse management provides support by bringing together the individual products. An accurate delivery bill is used to help employees check that all the items are ready.
  6. Shipping: The final step of the warehouse process is shipping. At this point, the sales order is complete. Now the packed items are prepared for subsequent shipment. This step includes, for example, making sure they are at the right place at the right time to be loaded into the vehicle.

Important: To optimize warehouse operations, companies must view all steps as a unit and continuously improve them.

The principles of running a warehouse effectively

A sound strategy is essential for effective warehouse management. In addition, companies should strive to understand the general principles of warehouse management. They are the basis for integrating warehouse management services into the company in a sustainable way.

  • Regular control

    Regularly controlling processes is always relevant. It is of secondary importance whether companies opt for comprehensive or lean warehouse management. Regular checking should ensure that complex processes remain traceable, efficient and transparent. At the same time, continuous auditing enables errors or deficiencies to be quickly identified and rectified. As a result, it succeeds in ensuring smooth warehouse management operations.

  • Defining goals

    For effective warehouse operations, it is necessary to define the purpose and objectives in advance. This includes, for example, whether a specific form of warehousing is required. In addition, there might be specific delivery requirements that need to be addressed as part of warehouse operations. These objectives can be used to define a warehouse strategy that takes into account storage space, equipment and manpower.

  • Customer focus

    Excellent customer service thrives on efficient warehouse management. After all, the right products should be delivered as quickly as possible to increase satisfaction. Waiting several days or even weeks for an order is only justifiable under rare and exceptional circumstances. Instead, companies rely on speed and reliability in their normal day-to-day operations. Warehouse management supports this as well, as it provides accurate and detailed key figures around the product.

  • Focus on data

    Large parts of warehouse operations today are based on the analysis of relevant real-time data. This data contributes to the decision-making process. At the same time, they ensure that all processes run as smoothly as possible. This includes, for example, ensuring that products are localized. Alternatively, the warehouse management software can analyze all key data. This would allow goods that are ordered particularly frequently to be repositioned, for example, in order to keep the lines short.

  • Flexibility

    Flexibility and resilience play a central role in warehouse operations. Due to external influences, products or materials can arrive damaged or late, for example. In such situations, the responsible warehouse managers must react immediately. Since it may be necessary to adapt workflows, an e-commerce warehouse management software requires a certain degree of flexibility. This usually consists of redesigning warehouse areas or temporarily adapting the picking process.

Proven warehouse management strategies

A company-specific warehouse strategy is designed to help companies optimize warehouse management. This optimization is necessary to avoid waste and to increase quality and customer satisfaction. For this reason, it can be useful to define different strategies. The main strategies that have proven to be effective in warehouse management are the following:

  • FEFO picking: The goal of “first expired, first out picking” is to minimize waste. This strategy is often seen with food or other perishable products. Here, items nearing their minimum or expiration dates move forward. Products with a longer shelf life go to the back of the shelf. In contrast, when shipping directly from the warehouse, products with a shorter shelf life are shipped first.
  • FIFO picking: The goal of “first in, first out picking” is to ship older products first. There is a good reason for this, as keeping older items for a long time could make them appear outdated. This is especially critical when the design of certain products changes. If that’s the case, these visual discrepancies could confuse or annoy customers.
  • Batch picking: If it happens regularly that the same products appear in orders, batch picking is an excellent technique to male processes more efficient. For that purpose, regularly ordered items are placed in the same storage location.

Warehouse management: statistics, reporting and monitoring

In order to optimize( E-commerce) warehouse management the collection of various KPIs is essential. These key performance indicators help companies identify and correct problems. This means they are the basis for improving their own efficiency and increasing the quality of processes. The following values are of interest:

  • Order lead time: The time between order receipt and handover to the customer provides insights into the efficiency of the entire process.
  • The pick accuracy refers to the precision of the recorded picks.
  • Inventory turnover: How well a warehouse manages inventory can be determined by inventory turnover. The higher it is, the better. This is because only a few stock items remain in the warehouse for a longer period of time. This in turn keeps storage costs to a minimum.
  • Package returns: Package returns reveal where warehousing can be improved. However, it is important to note that a return is not always related to the company or warehouse management.
  • Goods receipt efficiency: The goods receipt efficiency describes how high the goods receipt volume per hour is. This KPI also focuses on the volume per employee. The value thus makes it possible to assess receiving efficiency and to identify and rectify potential problems in the warehouse strategy at an early stage.

These KPIs help companies to regularly review warehouse management. However, continuous monitoring is not enough in many cases. Regularly recurring statistics and reports help to create understanding for the area of warehouse management. At the same time, these reports help to illustrate improvements and optimizations.

Successful warehouse management with Frontline

TeamViewer Frontline helps companies to optimize manual work processes. To make this happen, the technology is based on a fully integrated augmented reality solution (“AR-Warehouse”). This makes it easy to empower human workers in their digitized work environment.

Digital tools such as smart glasses and other wearables can support employees working in the AR warehouse. This form of digitization helps workers increase productivity and minimize errors. While this technology simplifies warehouse management and makes employees’ workday easier, the company itself also benefits. After all, AR solutions can be implemented for many use cases along the value chain. The basis for this enormous potential is always the right software and the matching wearables.

However, TeamViewer’s focus is not only on corporate groups or large companies. Smaller businesses can also benefit from a good warehouse management software. Combined with the right data glasses and wearables, processes can be simplified and quality increased.