This article, written by Mal Walker, formerly a manager at Logistics Bureau, was first published in the January / February 2018 issue of MHD Supply Chain Solutions. It has since been expanded with some additional details about warehouse and inventory management services from Logistics Bureau.
The 7 Key Warehouse Processes
Are all warehouses the same? Short answer: no, but yes! This contradiction in terms is probably best explained by the Thai phrase; ‘Same, same, but different’. This phrase is used widely in Thailand to explain to naive tourists (such as myself) the similarities between one product and another.
Let me explain.
Yes, warehouses are the same in 7 key aspects. They share 7 key processes. Two relate to inwards flow (yellow), three to outwards flow (green), plus returns and value adding. Same, same!
Now Here is the ‘Different’ Part.
There is a plethora of nuances in how each process is physically conducted and electronically controlled. For example, two competitors with the same products will often have different ways of doing things. Idiosyncrasies across industries adds further diversity. Even third-party logistics companies do things differently.
The SCOR model and companies such as GS1 have blueprints of key processes using barcoding and radio frequency controls, which offer standard ways of reading and recording data, but the physical materials handling logistics and ways of doing things in each warehouse are somewhat unique to each business.
This is driven by factors including magnitude of the warehouse operation, storage capacity, temperature, order profiles, legislative requirements, company culture, and volume of goods moving through the facility.
So, what are they key processes and how are they handled?
1. Receiving
The act of handling products into a warehouse and onto a system.
Receipts may be for single products, objects, litres, cartons, packets, crates, kilograms or full pallets. Items maybe large such as pallets, or as small as a split pin. The best way to receive products is via an Advance Shipping Notice (ASN) from a supplier.
With this information on system, operators can scan consignment barcodes to bring up the ASN. If the delivery matches the ASN, then goods can be system-received. But at this point they are still at staging, albeit ready for put-away.
Some systems allow for goods to be received into inventory at this point, whereas others require the goods to be delivered to a specific stock location before inventory is updated. This depends entirely on the customer requirements and how the system is set up.
Lesson: Organise ASN on your system for automatic receiving and put-away. Ideally, use RF equipment for scanning and updating your management systems.
At Logistics Bureau, we have inventory management consultants with years of operational experience, who can help you to select, procure, and implement suitable solutions to streamline your receiving processes.
2. Put-Away
A good system will prompt put-away staff with a note indicating that stock is in staging waiting to be transported to a storage location. The process commences when operators accept the put-away task from the Enterprise Resource Program (ERP) or Warehouse Management System (WMS), and then scan the relevant barcode of goods to be put away.
If there is no barcode, then a manual entry can confirm that the goods have been identified.
At this point the system will be directing the put-away staff to deliver goods to the relevant storage location. Once at the location, the operator will either scan the relevant stock location barcode, or manually confirm that the correct location has been found, then place the goods into the slot before confirming that the put-away process is complete.
Lesson: Use a system that can direct put-away to vacant slots according to demand of the goods.
3. Picking
There are two main types of picking.
Primary: This is the first picking of goods. In some cases, the first picking is delivered directly to a staging area or packing bench for finalisation, consigning and dispatching, thus the first picking becomes the last picking.
Secondary: This is a second picking process. Some primary picks are subject to a second picking process, particularly where picked goods must be allocated to clustered orders (bunch of orders), or discrete orders (single orders) via a sortation process or system.
With the boom in online sales across many industries, far more companies are conducting secondary picking processes than ever before.
Once orders are received, it is common for orders to be released ‘real-time’ or in ‘waves’. Real-time orders are downloaded as they are received. Orders accumulated for specific picking times and transport routes are called ‘waves’.
Waves can be released at the discretion of the DC manager according to criteria that they determine. As alluded to above, picking may be discrete, i.e. one order at a time, clustered, i.e. multiple orders at a time, or batched, i.e. picking all the goods at once to sort to specific customer orders.
Often, companies may use all three types of picking. With increasing online orders, companies are increasingly installing picking apparatus such as put walls, put-to-light systems, goods-to-person systems and cross-belt sortation systems, to cope with the larger volume of small orders.
What about accuracy of picking? This is one of the most common questions asked by warehouse managers. Should you scan the product or location, or both during picking?
The unrelenting technology improvement and complexity of modern-day business dictates that companies invest in appropriate ERP and WMS systems to remain competitive.
This depends largely on the degree of accuracy required. If both are scanned accuracy increases, but picking velocity will be lower compared to simply scanning the location. Where voice systems are used, no scanning will be used, but check digits at the location serve to ensure the operator is at the correct location.
Voice picking obviates the need to scan at all, but with a touch of risk. The risk lies in the operator achieving the right count, upon picking, without making a mistake.
While companies worry about the accuracy issue, evidence suggests that voice picking and/or scanning the location only, gives a surprisingly high level of accuracy, without impeding picking velocity. For ‘accuracy intensive’ warehouses, accuracy can be enhanced by a statistical example of QA checks, normally around 10 to 20% of orders.
Lesson: Picking uses a large amount of resources, and can reflect around 60% or more of warehouse staff. Smart picking systems and WMS are a must for increasingly complex businesses.
4. Packing
There are scores of ways that goods are packed within distribution centres. Rather than delve into the specific details of packing processes, it’s sufficient to outline five rules, which, if adhered to, will aid your team in successful packing:
- Goods picked must be traceable in terms of location from which they are picked, plus relevant ‘use-by’ dates and/or ‘batch’ dates and codes.
- Accuracy and QA checks must be built into the process.
- Goods picking from different zones within the warehouse must be easily ‘combined’ and system-managed to ensure order completeness.
- Goods must be packed according to their size, quantity, temperature, toxicity, value, fragility, hygiene and legislative requirements.
- Consignments must always be system-traceable to documents and/or invoice numbers for future traceability.
Lesson: Packing is an extension of the picking process and must be system-managed and treated with care to ensure that orders are complete, and accurate.
5. Dispatching
The successful art of dispatch lies in the operation’s ability to have goods ready for departure, just in time for carriers to load their trucks. The DC manager must, therefore, balance and forecast packing and dispatching according to carrier pick-up times.
Goods that are ready too early, for example, will clutter staging areas, while dispatches that are late, will delay loading and potentially cause late deliveries. As indicated earlier, many firms resort to using their systems to release orders, for picking and packing in waves, aligned to specific delivery routes or carrier types.
Lesson: Avoid jambs and late deliveries by scheduling picking waves to align with carrier picking up times.
6. Returns
This is something most companies wish will just disappear! However, returns are an intricate part of most businesses, and alas, the volume of returns is growing for many organisations – mainly due to the e-commerce revolution. Alarmingly, most return orders for many firms is for just one item at a time.
The complexity around handling returns mandates the following rules:
- When customers return goods, they should seek, and be given Return Management Authorisation, which outlines what is being returned and why.
- All returns must be traceable, to their order, document and invoice.
- Companies must have a pre-determined returns process that delineates what is to be done with the goods once received back into the warehouse, e.g. return to stock, repair, destroy, discard, recycle, return to manufacturer, etc.
- All credits must be system-recorded together with reasons why the goods are returned.
- Inventory must be updated where goods are returned to stock, or held for further action.
Lesson: Returns is a complex part of any business. A defined process must be in place that accurately and reliably records the whole transaction and credit process.
What often happens with returns processes, especially within businesses seeing rapid growth in online sales, is that the ramp-up in returns outpaces the management team’s ability to scale resources and systems accordingly. As a result, the return process becomes excessively costly and inefficient.
Our inventory management consultants at Logistics Bureau are well-versed in reverse logistics, and can help you to evaluate capacity needs, identify appropriate systems and processes to improve returns handling and reduce costs, and execute the necessary changes with minimal disruption to the logistics operation.
Review your value-adding processes and make sure that your system can handle the requisite activities and transactions.
7. Value-Adding
This is the part of the business where products are produced, kitted, assembled, relabelled, modified, ‘burnt in’, or subjected to some other value-adding process. The value adding part is about performing work on the product to make it ‘ready for sale’.
This process of value-adding can be complex, particularly when many different items are combined to form a new product.
Complexity around handling value-adding processes and the changing nature of component products in and out of shelf locations can be daunting.
Over the years, systems have evolved to assist, yet there are many companies that find recording of value-adding components may be incompatible with how the logistics system or conventional ERP or WMS have been set up.
Lesson: Review your value-adding processes and make sure that your system can handle the requisite activities and transactions.
To Conclude
So, there you have it, 7 key processes that are ‘same same’, yet ‘different’ for each organisation.
From the above, you will realise that modern distribution centre supply chains are a complex mass of processes, activities and transactions—all of which must be individually crafted by humans to make your warehouse operate effectively.
The days of using a pad and pencil or even a spreadsheet to manage warehouse functions don’t seem very long ago, yet the unrelenting technology improvement and complexity of modern-day business dictates that companies invest in appropriate ERP and WMS systems to remain competitive. Equally important is that they are correctly configured to the ‘different’ aspects of your business.
Need Help With Warehouse Process Improvement or Inventory Optimisation?
Our IM services are tailored to the needs of each individual client, but they typically include:
- Diagnostic audits of warehouse processes such as receiving, picking and dispatch
- Warehouse design and internal layout reviews
- Process optimisation projects
- WMS selection, procurement, and implementation
- Systems design and integration
- Inventory optimisation
These are but a few examples, and if you’re experiencing any issue, in any of your warehouse processes, or just want to subject them to some objective scrutiny, our team of IM consultants is ready and waiting to help you.
To learn more about the ways in which we can help you get more from your warehouses, and the inventory you hold in them, please visit our inventory management services page.
Alternatively, if you’d like to speak to us about a project you’re planning or considering, it’s easy to get in touch with us to schedule a FREE discovery call.
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated May 10, 2022, under the title “Spotlight on: 7 Key Warehouse Processes“.
