a complete guide to warehouse logistics

• the importance of warehouse logistics;
• the role of warehouses in a logistics system;
• the functions of warehouses;
• different types of warehouses;
• the difference between warehousing and logistics;
• the difference between warehouse logistics and the supply chain;
• warehouse logistics inflow and outflow models;
• things to do before setting up a warehouse;
• things to do after setting up a warehouse;
• common challenges warehouses face and how to overcome them.

We then finish off by discussing one of our own warehouse systems, the modular rollerbed for warehouses, which can help make warehouse operations safer and more efficient.

Let’s get going by exploring the importance of warehouse logistics...

They pave the way for greater revenue

The inventory is accounted for and is in the right place at the right time when everything in the warehouse is running smoothly. Employees replenish stock when necessary. People make fewer mistakes when picking items. Systems fall into place as they should. The warehouse is more efficient overall, and fewer problems and fewer mistakes mean more revenue.

They make the stock more visible

Professional warehouse logistics and transportation services harness the power of advanced applications and strategies to account for stock and provide accurate insights of inventory. These systems allow the operator to track shipments and analyse historical performance data. Data collection and having the ability to analyse the data in real-time enables the operator to follow what’s happening when items are being shipped.

They help to secure customer satisfaction

The length of time between procuring goods and shipping them to the final recipient can be long. Good logistics, however, can shorten this cycle time and get orders to the recipient in a more reasonable time. Managing inventory and transportation well will generate consistently high levels of performance and customer satisfaction.

They play a major part in reverse logistics

Unfortunately, sometimes items have to go back. They may be faulty or damaged. The order may be wrong. The customer just might not be happy with them. Whatever the case may be, the warehouse helps the operator to manage returns more efficiently and to still keep track of its inventory.

They serve as an assembly point

Some warehouses serve not just as storage locations for goods, but also as a central assembly point. When all the different materials for a product arrive, the warehouse puts everything together and distributes it to the final recipient.

they allow more efficient packing

A warehouse often possesses the equipment and products to store, move and process customers’ orders. Loading docks, pallets and pallet racks are three examples of equipment necessary for the job. Best of all, these are all in one central location, saving you time and money. Businesses can also pack and grade goods both in line with their needs and with legal requirements.

they make it possible to manage risk easier

Warehouses can help businesses protect perishable products, reducing their losses. Depending on the items and the type of business, it’s possible to lease a warehouse that contains fridges and freezers and enables the business to control the temperature to preserve their goods. Food, medications and candles are examples of these types of goods. Storing them in the right warehouse can stop them from spoiling and extend their shelf life.

they facilitate price stabilisation

Government policies, climate conditions, employment rates and a plethora of other factors can cause demand for certain goods or services to fluctuate. A warehouse allows a business to store goods for when they’re not in demand, rather than sell them at a lower price, and sell them at their regular price when they’re back in demand. Skis are one example. Companies tend to sell them for less towards the end of the season, whereas they could maximise their profits by holding onto them and then selling them at the start of the following one, thanks to the storage space in their warehouse.

serves as an emergency buffer for supply and demand

If disasters such as faulty goods or a delay in transportation strike, the warehouse gives the business a cushion to fall back on until it can solve the problem. They’ll have spare goods that can save the day until then.

keeping items safe and secure

It goes without saying that a warehouse is there to protect a business’s goods. The operators are likely to have security systems in place as well as security personnel on-site to ensure all is well and that no one is accessing the site for malicious purposes.

add value to the business

Warehousing is just one part of the overall logistics system, and the facility stores the goods in the right place until it’s time for them to move on to their next destination or for other important activities in the process, such as order consolidation, to take place. They’re also crucial in the packaging and shipping parts of the process. Ultimately, warehouses add much value to a business.

receiving stock

If the warehouse has too little space, the stock will pile up easily and hinder outbound operational tasks. A warehouse needs a solid organisation plan for receiving and storing new stock.

preserving temperature-controlled products

If the business sells perishable goods or foods that it must maintain at a specific temperature, the warehouse is extremely important. The operator should fit it with equipment and systems that either meet regulations or exceed them.

picking, packing and shipping products

This is one of the most essential stages, especially in the case of e-commerce businesses. The more efficient and well-executed the process is, the better. Packing desks should be organised and as clearly labelled as possible. High volumes of orders will help the operator cope with and meet the demand as speedily as possible.

addressing errors in a timely manner

No warehouse operation is absolutely flawless. Some products can experience a lot of volatility in orders. Packaging materials can run out. Stock can run out, too. A paper or electronic inventory tracking system can help the operator timestamp the receipt of stock, storage of it and other activities in the warehouse logistics process. This gives them the opportunity to calculate the average time spent on each stage in the process and make adjustments.

pick, pack and ship warehouses

When a customer places an order with either a brick-and-mortar store or an online retail business, the order follows a process of pick; pack; and ship. The warehouse will receive a pick list of products, and people or automated systems will locate these products in the building. The operator then packs them for shipping, labels them and sends them to the customer.

smart warehouse

This is very straightforward. The warehouse will use automated systems and interconnected technology to receive products, put them away, pick them for orders and then ship them to the customer. The technology will also keep track of the inventory. These warehouses minimise the number of humans required to keep operations in the warehouse going, and they also increase productivity, the volume of production and reduce the number of errors to a minimum.

cold storage warehouses

As discussed above, cold storage warehouses store temperature-sensitive items such as perishable goods, food, candles and medicines at low temperatures. They also use refrigerated shipping both for inbound and outbound shipping.

on-demand storage warehouses

This type of warehousing has become something of a trend in warehouse logistics. On-demand warehouses have plenty of space and support businesses that need warehouse space either temporarily, seasonally or because of a spike in sales.

customs warehouses

These warehouses receive imported goods for export and store them for several years without paying duty or VAT on them. Effectively, a customs warehouse, also referred to as a ‘bonded warehouse’, is a duty-free zone while the products are in the warehouse.

Storing goods in customs warehouses offers advantages such as

• improved cash flow because the business only pays the import duty when the goods enter the UK market;
• non-payment of duty on goods the business is importing only to export to non-EU countries;
• and port-centric logistics, since the warehouse is likely to be near a port, allowing it to distribute the goods more easily and cut costs in the supply chain.

People often couple the terms ‘warehousing’ and ‘logistics’ together but mix them up. Both perform functions within the supply chain, with the warehousing focusing on the safe storage of items and the logistics concerning itself more with the functional side of the delivery of goods to the warehouse and the storage of them. To ensure the two work together effectively, it’s important for them to work in tandem. You can’t have one without the other.

Logistics… warehousing… supply chain… all closely connected, but easy to confuse at the same time. The best way to understand the supply chain is to know that it encompasses the whole process, from the transformation of the raw materials into the finished product through to the delivery of the product to the customer.

Logistics is the organisation and implementation of an operation and helps move goods, tangible and intangible, through the supply chain. Storing items in bins or on racks in the warehouse so that you save floor space and so the warehouse staff can find a product, based on the rack or bin location, is one example of logistics.

first in, first out (FIFO)

This is relatively self-explanatory: the first items to enter the warehouse are also the first ones to leave it. The FIFO method allows optimal stock rotation and works well for perishable items.

The FIFO method is compatible with:

• live pallet racking, into which the operator inserts pallets into the higher end of the storage channel and then, for extraction, slides the pallet over rollers at a controlled speed;
• the drive-through system, which has an entrance and an exit and is good for storing a high density of the same products;
• and the pallet shuttle system, which removes the need for forklift trucks by using a shuttle that, powered by a motor, runs on rails in the storage channels.

last in, first out (LIFO)

Again, straightforward: the last item(s) to enter the warehouse leaves it first. This system works well for non-perishable products that last a long time and don’t lose value over time.

The LIFO works well with:

• a push-back racking system, in which the operator stores and retrieves the goods from just one side;
• and drive-on one, in which the operator stores the pallets on rails and, just like the push-back system, retrieves them through the same entry point at which they racked the items.

The shuttle system is also compatible and, when combined with the LIFO approach, provides lots of versatility.

the ABC system

This system is slightly different in that it groups stock into three categories: A, B and C. These categories work as follows:

• Category A covers the items of the highest stock inventory value. They need close observation. Monitoring this stock is essential to avoid stock depletion and the problems this can cause. These products tend to occupy the lowest position on industrial racking.
• Category B encompasses items that don’t require as much control by the company because they rotate it less. Normally, the company will update this stock in batches, rather than units, and you’ll find it at an intermediate height on industrial racks or in a less central part of the warehouse.
• Category C applies to the items that are easy to control and the business rotates the least (which is why they’re simple to control). A company will generally replenish category C items as soon as they leave the warehouse. These occupy higher spots on the racks or sit in less central areas of the warehouse.

wilson’s model

Also known as the ‘optimal order’ model, Wilson’s model involves determining the quantity of the volume of the order necessary to place. That means how much to order and when to order it. The purpose of this model is to optimise stock inventory management. Calculating this will consider the yearly demand for the raw material, the order cost and the storage cost.

the ‘Just-in-Time’ (JIT) model

This model of inventory management calls for impeccable organisation and is one you’ll find in the automotive sector. A badly managed JIT model can trigger delays or stock depletion, which, of course, are bad news for the business. Basically, the method calls for minimal storage because the organisation has just the right amount of raw materials it needs to complete each stage of production.

the right location

The operator will have to select the right location for their warehouse. To do this, they should consider the areas where there is the highest demand and the transportation costs.

They should also bear in mind the type of goods they’ll be storing, as this will determine whether they pick a warehouse close to the source of the goods, which would be useful if they’re perishable or fragile and the operator wishes to avoid spoilage, spillage or other damage; or opt for a more isolated location, which could be more appropriate if they’re dealing with hazardous chemicals, to avoid unsafe contact with them.

the layout

This goes without saying, but it’s essential to have a floor plan that optimises space, prevents accidents from happening and, at the same time, enables the warehouse to operate effectively. Parking and loading bays should be close to the road, for instance, and trucks should have enough room to reverse into loading docks.

storage space

Organising an entire warehouse, including routes and zones, is time-consuming and challenging, but necessary for the facility to operate as efficiently as possible. A good inventory storage system will make quick, accurate picking, packing and shipping possible.

When optimising storage space, the business must determine what the best way to store items is, bearing in mind the carrying costs; the best way to move large amounts of inventory to different locations; and the best way to do it correctly so that issues don’t arise during picking.

workflow

When strategically planning a warehouse layout, it’s vital to outline the different warehouse workflows and see how the different elements of the warehouse will connect to each other. This includes planning them around the dock doors where the warehouse will receive items or where carriers will collect them.

The business should map out workflows for maximum efficiency and keep workspaces organised for optimal productivity. From the receipt and storage of goods to the picking and packing of them, to the shipping of them… this should all be mapped out as much as possible.

workstations

The business will need to think about the different workstations it needs. How many? Will the workers be able to operate comfortably? A straightforward one-way workflow is a good way to avoid congestion and increase safety in the warehouse. After deciding how to set up workstations, the operator can start creating paths for employees by marking them with tape or signs so that they have clear directions.

testing the setup

Testing the layout is important. When doing this, the operator should:

• tape off the flow in any areas where they’re planning to set up equipment;
• check the workflows by walking around the space as if they were working on the job — is there plenty of space or does it feel congested in any areas?
• double-check safety requirements and make sure their warehouse will comply.

If you’re setting up a warehouse and are unsure of the requirements, you can consult the Health and Safety Executive (HSE) website for more resources and advice on observing health and safety in warehouses.

hire a warehouse manager

An experienced warehouse manager will have the knowledge of equipment and systems necessary to help the warehouse run smoothly. This person will understand the tools, the spaces, the strengths of each employee and, when something goes wrong, how to solve the problem and incur as little damage as possible.

Beyond this, they’ll also look to the future. They’ll have the instincts to realise what will generate a greater return on investment (ROI) and what technologies could help to make the warehouse run even more efficiently. This will give the operator the opportunity to begin effective capacity planning or, where necessary, save for equipment.

place the customer at the heart of the business

This is crucial in the world of logistics and for successful warehouse optimisation. Customers today have so many options available to them that it’s indispensable for warehouses to have the systems and technology to meet customer demands, which, in a nutshell, consist of two main desires: fast and free.

Customer service must be excellent the whole year, every year. To achieve this, an operator must adapt their technologies and adopt new ones as quickly as they can. The use of artificial intelligence can help them to predict fluctuating sales trends. Investing in tech may incur a cost, but it will be much less than the cost of not investing in it.

choose the right management software

Good warehouse management system software will enable the operator to understand the situation of their inventory, help warehouse employees to locate items in the building more easily and can even allow them to ship items out of the warehouse faster. A lot of warehouse management software comes equipped with mobile features, which makes picking for orders and checking inventory more straightforward because the employees can use scanners.

keep your warehouse organised

This should be obvious, but we’re going to say it anyway, just to be clear. In this busy field, warehouse workers can put equipment in the wrong place very easily. This will cause problems when others need to use those items later and can’t find them. A warehouse should stay organised, something which managers or supervisors should check regularly.

stay in touch with your workers

It’s good to break down the barriers between management and the employees on the ground. The leaders should check in with their employees, whether this is by organising structured meetings or just casually checking in with them. It’s good for morale and important for ensuring they’re meeting employees’ needs. It’s also a helpful way to glean information about the inventory and insight about what’s happening in the warehouse in a manner they might not be able to each day.

devise a damaged goods and returns strategy

Unfortunately, not all the goods will go out in satisfactory condition, despite the warehouse’s best intentions. Once the warehouse is up and running, the operator must work out how it’s going to deal with damaged goods and take care of returns.

• How will they process the return?
• How will they sort and categorise returns?
• How will they keep returns moving to reduce daily waste?
• How will they determine whether it’s possible to repair an item? What will they do with the items you can’t repair?
• What can they recycle and what do they simply have to get rid of?

devise a 'safety police' to prevent accidents and to address any that do occur

Slips and trips, manual handling accidents, falls and injuries from falling objects are all hazards that can occur in a warehouse. Employees must also watch out for forklift trucks and other vehicles moving around the warehouse.

Operators must put in place a suitable policy and implement measures to avoid accidents and the safety hazards warehouse equipment poses whenever possible. Possible measures include:

• ‘Wet floor’-type signs and encouragement of workers to clean up spills.
• Safe training of staff in manual handling and confirmation they know their manual handling limits (which are around 20-25 kilos). The use of lift trucks, pallet trucks, trolleys and other alternative solutions is also necessary to consider so that workers don’t have to lift loads manually.
• Mobile elevating work platforms for any workers that have to work at height, plus training workers who have to use them in how to use them. Staff shouldn’t have to climb shelves or racks to access items. Operators also shouldn’t build their own platforms.
• Adherence to the safe stacking weight and height recommended by the rack or pallet manufacturer. The heaviest items should go at the bottom of racks. Operators should inspect racks regularly to ensure they’re being well maintained and are still safe to use. A specialist should also check the racks at specific intervals.
• Implementation of a one-way system so that vehicles don’t have to reverse. Speed limits should also be in place, plus a zero-tolerance policy for any kind of dangerous driving inside the warehouse.

implement pest control measures to protect goods

The very last thing a warehouse operator wants is to see rats or other pests scurrying away when they enter it. Failing to deal with the problem adequately could result in prosecution or even closure.

Rats and mice are renowned for carrying diseases and could easily contaminate products. Not only that, but the operator could end up transporting these pests to their customers.

Then there’s the damage they can do to warehouse property, not to mention the fact that they can gnaw their way through almost any material, whether it’s wood, metal and masonry. That also includes electrical wire as well, which creates a fire hazard.

As a result of pest problems, productivity can suffer, either because the equipment needs replacing or because the operator has to put their operations on hold while they deal with the issue. It’s not just stock or stock levels, property and productivity that will suffer, however; the business’s reputation will take a blow. As a matter of health and safety, the operator must inform customers of their pest problem.

To help control pests, operators should check their warehouse for any gaps under doors through which pests might be able to squeeze. The main entry door to the warehouse should have an anteroom before it. This room can be a buffer between the warehouse and control area for any pests that manage to surmount the initial barrier. The operator should also train their employees in pest identification and in the importance of pest prevention so that they’re aware of their role in the warehouse. 

redundant processes

In warehouse logistics, it’s common for employees to handle a product several times, due to the nature of warehousing processes. One example of this was the passing of tickets through multiple hands. Besides being inefficient, creating more labour and being time-consuming, this process would be a health risk, something which, in the COVID-19 world, businesses need to avoid more than ever.

Barcoding is one solution. This streamlines the technology, removing unnecessary processes and allowing operators to make better use of their resources. The evolution of automated systems is growing swifter and swifter, and due to global trends, operators are updating their technology constantly to thrive instead of just to survive.

full supply chain visibility

Warehouses have to contend with a lot of external factors over which they have no control. How do they predict the weather? How do they predict customer sales? How do they predict spikes in demand? All of these factors, for instance, can affect inbound or outbound networks, and if warehouses had a greater view of the supply chain, they could react to the circumstances better. AI technology could help them achieve greater visibility of operations, and to plan for them or respond to them accordingly.

labour costs

A strong warehouse manager will be able to cut costs but increase productivity. To do so is still a major challenge, however, because warehouses use expensive equipment and employ a large labour force, from cleaners and administrative personnel through to packers and managers. On top of all this, warehouses now have to overcome the challenge of social distancing and account for fluctuations in logistics.

When trying to cut costs, the operator must consider the impact of the cuts on other costs. Their main options are maximising the available labour and implementing automated systems. Good workforce planning, which can include excellent working conditions, flexible hours and training, will create the right blend of skills and motivation; in turn, this will generate more productivity from employees and improve the performance from the warehouse.

bad warehouse layout

Poor warehouse layout is a real challenge and can really eat into efficiency and productivity, and, as a consequence, harm profitability. Achieving efficiency through layout has become even more of a problem for warehouses now in the age of COVID-19, as managers have had to figure out a way to do more with even less. Lack of storage space and inadequate use of storage space are common problems.

Maximising layouts means making the utmost use of horizontal and vertical spaces. Not only that though, but the warehouse should optimise its use of equipment and labour, accessibility, security and staff safety.

quality control

Often, the workers responsible for quality control will also be taking care of the picking, packing and shipping of the inventory items. Unfortunately, errors go unnoticed until the very last person the business would want to spot them identifies them: the customer. This has been even more the case during the pandemic, as operators have found themselves forced to get by on reduced staffing levels.

If possible, an operator should arrange a separate layer of quality control to facilitate better inventory management. This extra layer will generate the motivation to manage everyday inventory issues in a more structured manner and introduce some accountability.