Warehouse Best Practices

• Warehouse Layout
• Ideal setup of a warehouse
• The Receiving Area
• Storage and Picking
• Packing and Shipping
• Free Area
• Warehouse Labeling
• What is warehouse labeling and what does it look like?
• Labeling principles
• How is it efficient to put the goods on the shelf?
• Picking Routes

Warehouse Layout

Let's say that you recently bought or rented a warehouse. You are certainly asking yourself a lot of questions about what needs to be done from now on. One of them is how do I organize the space in a warehouse. How do I optimize the pickup flow? Where do I put the shipping area?

Setting up a warehouse is not very complicated, but the details make everything. Every step a worker takes and every product sitting on the shelf costs time and money.

Fortunately, there are standards that with a little change can maximize the space in the warehouse and have an efficient processing flow. Next, we present the separation by zones.

Ideal setup of a warehouse

Let's take for example a warehouse of 14000 sq. ft. which is in the shape of a rectangle. It should be taken into account that a warehouse can have several shapes such as square, rectangular, L-shaped, oval, etc.

A good scheme of a warehouse must have uninterrupted areas divided as follows:

1. Receiving
2. Storage
3. Packing and Shipping
4. Free zone

The Receiving Area

In a small warehouse like the one in the example above, there is a very high chance that there will be a single receiving area that can function as both a receiving area and a shipping area. In this case, you have to keep an eye out because bad things can happen, such as confusing shipping products with storage products.

We can see that the situation in retail sales is becoming more and more difficult since with the Amazon or Walmart program in which they promise delivery to the door in 2 days. This fact is becoming a standard in the industry and the customer expects this. With this fact on the table, you cannot afford to have products in the warehouse that sit for nothing, so the whole process must be organized in such a way as to help the operations of sending orders. 

The main goal in this fact is to avoid as much as possible the congestion of the areas. The recommendation is to have a receiving area and a shipping area next to each other.

A very important observation is that in the receiving area and in the shipping area, the products should not stay for a long time because that is the purpose of the storage area.

Storage and Picking

Storage must be the largest area in the warehouse because that is what it was bought/rented for. But we always have to be smart with the arrangement of the products because, as I said above, every step taken by the worker costs time and money.

A good recommendation is that the first aisles with racks near the processing area should be with goods that sell very quickly because the processing times will be short. We should think that in a pharmacy, the drugs that are always requested must be in the front shelves and those that are rare or hard to find will always be put in the bottom drawers or in another room. In this way you optimize the storage space to the maximum. 

Packing and Shipping

If until now we discussed the storage area and the reception area, now we have to talk about the area where the products leave the warehouse, namely the packing and shipping area. If the first question that comes to your mind is whether this area is needed, the answer is simple and clear, yes. In this area, the last checks are made before the products leave the warehouse, checks such as the integrity of the products and the correct association with the order, after which the shipping label will be attached. This area must not be contaminated with the other flows but must have an intersection point in the pick, pack, and ship process. 

A remark to be made here: Once a product has been labeled for delivery, it should be put aside because the processing table must always be empty, so the workers will have fluency in the processing for shipping.

Free Area

Most of the time small warehouses are used by small companies, in rare cases medium and large companies use small warehouses only for storage and transfer space, and in even smaller cases companies have small warehouses scattered throughout the country.

In other words, a warehouse must have a free area reserved, preferably somewhere in the middle. This area can be used as a buffer zone in periods when there are many shipments or in periods when there are many receptions. As the business grows, this area can be changed to another processing area to avoid blockages, for example, a new receiving or packing and shipping area is added. Or it can conveniently be transformed into a storage area with shelves.

Example of a small warehouse setup for an online store

In the example above, we find the areas explained in the "Ideal setup of a warehouse" chapter, namely: the receiving area, the shipping area, the storage area, and the free area. Two more areas were added to them, namely the area for processing returns and the area where damaged products are stored. The latter was added as an extension of the standard setup because the flow of an online store requires it. Like the surface, they can be as small as possible in order not to complicate the traffic in the warehouse, being used less often than the rest. At the same time, the traffic routes were drawn to make the walking as clear as possible.

Warehouse Labeling

Labeling a warehouse may seem like a minor detail, but in reality, it is obviously important. Regardless of the size of a warehouse, choosing a labeling plan is vital for the smooth operation of a warehouse. Also, paying attention to proper labeling and addressing will save dead time in a worker's daily flow.

To set up a warehouse, we have to think of some streets. The labels are the traffic signs that help the worker to navigate inside it without knowing its location from the outside. Think about the following fact: Can you drive without looking at traffic signs?

The best way to create storage addresses is to find the optimal route for pickup.

What is warehouse labeling and what does it look like?

The ideal label includes precise information that describes the location of a product in the warehouse. Its numbering must start with the largest area and must continue to the smallest possible unit.

A good example in this direction is how the postal service of letters works. From the extremely many addresses, a postman manages to bring your letter directly to you. This is possible because, at the post office, the letters are first sorted by region, then by postal code, followed by the city, then by the street, and finally by the street number.

A warehouse must be organized and labeled in the same way, except that in the present case, we have other references such as aisle, rack or row, bay or unit, level or shelf, position or location, and bin. Let's take an example:

1. In the warehouse, we have 3 aisles that we number 1, 2 and 3
2. Following them, we have the racks that we number from 01 to 04.
3. Each rack has 3 levels. In the present case, we number them from bottom to top: A in the lower area, B in the middle area, and C in the upper area.
4. Each rack has 4 positions per level, numbered from 01 to 04.

If the pick-up list says 1-02-B-03, we will know that on aisle 1, rack 02, the middle level, the third position, we will find the product. At the same time, we can see that adding a letter to the deposit address makes reading easier.

The example given above related to shelf labeling is also known as standard labeling. The 2nd labeling method is serpentine labeling which is useful if the racks are grouped in pairs (one behind the other) in the specific case in the image shown above. Example:

1. In the warehouse, we have 2 aisles that we number 01 and 02
2. Following them, we have the racks that we number from A to Z.
3. We have 4 racks containing 3 bays each, which we number as follows: The letter from rack A followed by a letter or a number, for example, AA, AB, AC.
4. Each rack has 3 levels. In the present case, we number them from bottom to top: 1 in the lower area, 2 in the middle area, and 3 in the upper area.
5. Each rack has 4 positions per level, numbered from 01 to 04.

If the pick-up list says 01-AA-1-03, we will know that on aisle 1, bay AA, the first level, the third position, we will find the product.

Labeling principles

Regardless of the degree of automation in the warehouse, the uniqueness of a warehouse address will be able to guide the worker exactly where to pick up the product or products. In order to achieve this fact, some basic principles must be followed:

1. The system must be sequential. The labels must use a combination of numbers and letters in sequential order to be able to identify exactly the position on the rack. Colors can be used in this case to mark the levels on the rack. This helps workers identify the level on the rack more quickly by associating the color with a level.
2. Alternate the numbers with the letters. A variation like the one presented above (01-AA-1-03) makes long codes easier to read and reduces the predisposition to errors.
3. Labels must be legible. The labels with the warehouse addresses must be easy to see and understand at a fast pace. If there are racks with several levels, it is recommended that they be installed at eye level. In this case, arrows can be used inside the label to indicate the level. Example: level A down arrow, level B no arrow, level C one up arrow, and level D 2 up arrows.
4. You must be consistent. Choose a way of labeling the locations and it will not change during the installation of several shelves.
5. Use the appropriate materials for labeling. Labels can be with adhesive tape, magnetic or even metal. Here it depends a lot on the budget and flexibility.

How is it efficient to put the goods on the shelf?

The warehouse must be designed based on the picking routes. We can use the analogy of a highway to describe an active warehouse. The space between the shelves must allow workers to transit easily.

If you know the sales rate of some products, the storage space on the racks must be optimized so that the access to the products with a high sales rate is at the level of the worker, and the rest of the products are placed on the higher levels.

Picking Routes

What do the signs in the warehouse have to do with the pickup routes? It's simple, everything.

In order to have an intelligent picking system, it must take the worker directly to the positions from where he has to make the lifts without memorizing the routes. The worker does not have to memorize the pick-up locations because he may not be at work all the time or worse, leave the organization. Let's return to the pick-up routes... The goal of a pick-up routing system is to make a worker choose the shortest and most efficient way to pick up the packages that need to be shipped.

When drawing up a picking flow, the following must be taken into account:

1. Workers must go in one direction during the picking session. Going back and forth will waste time and make the shipping process more difficult, which will lead to lower company performance. A good solution is even and odd numbers like in the IKEA stores.
2. A picking session must group products that are located next to each other on the same road. It is not appropriate to pick up, for example, a piece from aisle 1, 2 pieces from aisle 3, then return to aisle 2 to pick up another piece.
3. The picking method must be taken into account. If in one session only orders from the online store that need to be shipped are picked and in the second session orders for wholesale sales are picked, these must not be in the same session.
4. Structure the warehouse layout properly. One of the considerations we have to take into account is if there is a need for 2 people to be inside an aisle at the same time. If so, then the spacing between the racks should be reconsidered.