As trade continues to grow, companies are increasingly demanding modern storage facilities for their products. At the same time, the demands on storage systems are rising, as the efficient processing of incoming orders has become a crucial competitive factor for suppliers.
This is also an area where enormous potential for increasing productivity still lies dormant. According to studies, the order picking process alone accounts for up to 55% of total warehousing costs. The main reason for this is the time employees spend locating stored items and bringing them to the picking station. These transport routes alone consume almost two-thirds of the total working time of warehouse workers.
It is therefore no wonder that companies are striving to minimize this effort.
This 6-step guide is designed to help companies examine their internal warehouse processes to identify untapped potential:
- Inventory classification
- Assign inventory to the appropriate racking solutions
- Automation of processes
- Identification of the optimal storage location for the goods
- Optimization of picking processes
- Implementation of a comprehensive software solution
1. Classification of inventory
How exactly inventory should be categorized depends on a number of factors. Key characteristics include the size and weight of the stored goods, as well as their retrieval frequency. It proves particularly efficient ALL stored goods and not just focus on optimizing fast-moving items . The 80/20 rule, often cited by companies as a criterion, according to which 20% of goods are responsible for 80% of sales, falls short here. This would mean that, conversely, the company is neglecting 80% of its goods – and thus a large portion of the total warehouse space – in the optimization process. Yet it is precisely the less frequently or infrequently retrieved goods that, due to their storage locations far from picking stations, result in particularly long distances for warehouse workers and therefore higher costs. For this reason, it is advisable for the company to find a comprehensive inventory management solution for all existing goods.
2. Assign inventory to the appropriate rack storage solutions
Manufacturers of material storage systems offer a wide variety of solutions, which differ considerably in terms of their capabilities and investment costs; they range from simple, manually operated pallet and shelf racks to technically sophisticated, fully automated horizontal carousels and vertical storage lifts.
The individual company now faces the task of identifying the appropriate shelving system for each product group.
Generally speaking, pallet racking has become standard practice for many companies (especially in the e-commerce sector) for their most frequently accessed goods. However, it's important to note that this type of storage requires a significant amount of space. When quick access to a large number of products is needed and storage space is limited, carousel or high-bay warehouses are a better option. Their high-density design allows them to store many goods in a small space and transport them directly to the picking point using a goods-to-person .
3. Automation of processes
- Reduced space requirements through the use of high-rise storage units that optimally utilize the available ceiling heights.
- Higher picking accuracy of up to 99.9%
- Improved control and management options through software control
- Improved inventory management – shortages and discrepancies are detected more quickly.
- Improved workplace ergonomics, as goods are transported directly to warehouse workers. Frequent lifting and bending movements are eliminated.
4. Identification of the optimal storage location for the goods
The better the various goods are stored, the more efficiently they can be retrieved. Furthermore, clever organization of the goods can minimize the required storage space and walking distances. Improvements are also made regarding..
- Call-up times
- Picking accuracy
- Work processes
- Search times
This has been achieved. However, in order to find the optimal position of each individual product in the warehouse, a number of additional data points are required besides the specific characteristics of the goods (size, weight, etc.):
- Retrieval frequency
- Number of units retrieved
- Number of units to be stored
- product-specific storage requirements
- Turnover rate
Based on the data obtained, warehouse management software then assigns the goods their optimal location.
5. Optimization of picking processes
Now that the goods have been classified and assigned to the appropriate storage systems, the focus is on optimizing the picking process. This is particularly important for e-commerce, where product picking is carried out thousands of times daily, meaning even small improvements can have a significant impact.
Batch picking is a good way to make processes more efficient. Especially with less frequently requested goods, collecting them together is an excellent way to save time, as the warehouse worker can process multiple orders in a single trip.
In addition , zone picking offers the possibility of dividing the warehouse area into different sections (zones) and assigning individual employees to each. These employees then process orders only for the products stored in their assigned zone. The order is then passed on to the next section, from which the appropriate goods are retrieved. This principle of order passing through various sections is particularly suitable for companies that handle goods with varying retrieval rates (high and low pick volumes) and whose design or size necessitates different storage system requirements. In this way, the various systems can be efficiently set up within individual zones.
The combination of the two strategies above is parallel picking. Here, individual orders are processed in parallel in all zones and forwarded to a central station where they are consolidated and prepared for shipment. Due to its complex structure, this approach is primarily suitable for companies that handle large volumes of orders daily and maintain a comprehensive inventory requiring diverse warehouse systems and zones.
6. Implementation of a comprehensive software solution
Only when all the systems are interconnected in such a way that they communicate smoothly with each other and can be accessed centrally, can the processes in the warehouse be transparently mapped and effectively controlled.
Nothing then stands in the way of successful and productive warehouse management.
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