What is Warehouse Management?
Stefan von Gagern11/3/2022
We show you why the success of shops and entire companies can grow or end with warehouse management.
Table of contents
- What exactly is Warehouse Management?
- What are the benefits of good warehouse management?
- It isn't just about fast service at low cost. In fact, as with Amazon,
- If you want to optimize your warehouse management, the answer once again lies in digitization. For this, you need the
- Every warehouse management system comes with its own range of functions, but there are some commonalities. These basics should be noted so that the system can grow your business:
- As in other digital disciplines, such as social media, it is worth taking a regular look at the numbers in warehouse management, creating reports from them and deriving measures for optimizing.
- E-commerce has grown rapidly in recent years and is expected to reach an
- . Even though the enormous boost from Corona has subsided after the pandemic: steady growth in this area is a given. At the same time, customer expectations for fast and reliable delivery, service, and customer experience are increasing.
"Available in 12-14 weeks." A few years ago, this inconceivable time frame could be found in many online stores during the pandemic. Highly demanded goods such as bicycles, video game consoles, or guitars were only available after a long wait and sometimes hardly at all.
For customers, this was a painful and unfamiliar experience, demonstrating the importance of warehouse management: every company, that stores goods, needs good warehouse management.When it works, the company can deliver quickly and reliably while keeping costs low.
Customers directly feel the impact of mismanagement, such as delays or inaccurate deliveries. The result? They respond with complaints, negative reviews, or in the worst case, switching to the competition. However, during the pandemic, it wasn't just the warehouses themselves - global supply chains collapsed in the middle of the e-commerce boom.
A large part of Amazon's success is not that it operates the best or most beautiful store, it's the excellent logistics behind it. Orders from Amazon are almost always reliable and smooth. With one click, delivery often arrives the same day. A large part of fast logistics is due to excellent warehouse management.
What exactly is Warehouse Management?
Warehouse Management regulates the processes in everyday warehouse operations, these include:
- Organizing space in the warehouse
- Assigning tasks
- Managing inventory
- Executing orders
Upon closer inspection, each of these processes involves executing them as efficiently as possible. This requires optimization and coordination of each process. A good warehouse thus maintains high productivity and reliability while keeping costs as low as possible.
Recommended warehouse management software
On our comparison platform OMR Reviews you will find more recommended warehouse management software. We present over 80 solutions that are specifically tailored to the needs of warehouse management companies, logistics service providers and businesses. This warehouse management software offers comprehensive support in all aspects of warehouse management. Take this opportunity to compare the different software solutions using authentic and verified user reviews:
What are the benefits of good warehouse management?
Good warehouse management is virtually invisible to customers, while poor management is painfully noticeable. The goal is always to deliver quickly, punctually, and reliably. To achieve this goal, which is often expected today thanks to Amazon, all warehouse processes must run smoothly and efficiently.This means:
Warehouse workers (or robots in a fully automated high-rise warehouse) can find an inventory quickly and easily.
- Space is used efficiently, with empty spaces being quickly filled.
- Orders are fulfilled quickly.
- Goods are reordered quickly.
- Communication with suppliers goes smoothly.
- The suppliers work, produce, and deliver reliably.
- What is the actual value of good warehouse management?
It isn't just about fast service at low cost. In fact, as with Amazon,
good warehouse management impacts overall success as follows:Successful logistics means
- more conversions, i.e. more orders in the online shop.It strengthens the company's relationships with customers and suppliers.
- The
- customer experience is greatly improved and contributes to long-term success.How do you achieve good warehouse management?
If you want to optimize your warehouse management, the answer once again lies in digitization. For this, you need the
appropriate warehouse management software(WMS) or warehouse management system (WMS). It simplifies the complex processes that managing a warehouse requires.A WMS or WMS can do the following:
Analyze sales with data and automation, derive demands and a forecast for sales figures.
- Provide an overview in real-time of where which goods are in which quantity.
- Create a daily plan with recommendations for necessary reorders and other tasks.
- Monitor the warehouse to assess productivity.
- Suggestions for optimizing efficiency.
- Step-by-step instructions to help employees execute processes, such as orders.
- The WMS is often part of an ERP system (Enterprise Resource Planning) that manages the company's complete resources. Therefore, the WMS exchanges data with
ERP systems to organize logistics, for example. In combination, the ERP increases the efficiency of all business activities in the company. Such systems are for example , Billbee, weclappor Sage 100 . orgaMAX BuchhaltungWhat should a good warehouse management system be able to do?
Every warehouse management system comes with its own range of functions, but there are some commonalities. These basics should be noted so that the system can grow your business:
Track inventory:
- Inventory can be digitally monitored, for example with QR codes or serial numbers. With sensors in an IoT (Internet of Things) solution, inventory can be automatically tracked. This keeps track of incoming and outgoing goods, as well as the warehouse inventory.Make inventory visible:
- Warehouse operators and retailers face the same challenge: How well do they know their inventory? Minor discrepancies can cause major problems. Paper lists mean inaccuracy, human error, and delays. A WMS makes your inventory visible in real-time. This allows timely reorders without running into bottlenecks.Work efficiently:
- A WMS can set priorities and assign activities. This creates a structured plan that is assigned to the right employees at the right time. This prevents chaos and increases efficiency.Scale:
- When the business grows, the warehouse will also grow at some point - or the existing space will have to be used better. The same applies to the growing number of orders for the optimal scheduling of employee time. A good WMS can balance peak times and ensure timely deliveries.Implement extras like express delivery:
- Amazon sets the example with Prime and additional options like Same-Day delivery: Regular customers find additional options for faster deliveries attractive. Purchase decisions are often positively influenced by faster delivery, ideally on the same day. But clicking in the shop is only half the battle: The warehouse must also be able to implement extras and, for example, pack and deliver goods faster.What does warehouse monitoring and reporting achieve?
As in other digital disciplines, such as social media, it is worth taking a regular look at the numbers in warehouse management, creating reports from them and deriving measures for optimizing.
Key Performance Indicators (KPIs) are indicators that help you evaluate your warehouse. These should not be confused with OKRs. The
difference between OKR and KPI is explained on OMR Reviews. The metrics show problems and resulting opportunities. This can improve efficiency and better fulfill orders. The KPIs thus help to achieve the set goals.Efficiency or Productivity of incoming goods: This KPI describes the amount of goods received per warehouse worker per hour. Higher values, higher efficiency in incoming goods. Lower values indicate problems that you should investigate further.Picking accuracy:
- The number of correctly picked orders, divided by the total number of picked orders (including incorrect or missing orders). The closer the value comes to 100% accuracy, the better.Order lead time:
- The average time it takes for an order to reach customers after the order was placed. The shorter the lead time, the better for customer satisfaction.Goods return rate:
- The rate at which sold goods are returned by customers, calculated by dividing the number of returned items by the number of sold items. To get a complete picture of this KPI, it's important to consider the reasons for product returns. If a customer accidentally ordered the wrong product, this may not be a sign of problems in warehouse operations, but there's room for improvement if incorrect or damaged goods are frequently arriving.Inventory turnover:
- How much inventory is sold and replaced in a certain period. It is calculated by dividing the total cost of sold goods during the period by the average cost of warehouse stock during the same period. This KPI reflects how efficiently a warehouse manages its inventory to meet demand. Generally, a higher stock turnover is better. If a warehouse overestimates demand, stock turnover can be low. Excessive inventory that sells slowly can be costly, especially for companies dealing with goods that have a certain shelf life.What warehouse management tools are there?
- To support your own warehouse, there are numerous tools with different features. It pays to match the individual functions to your own needs. Some software also offers demos to test the systems. In the warehouse management systems category, suitable tools can be found with genuine user reviews. These include the following warehouse management systems:Conclusion: Warehouse Management is a success factor
E-commerce has grown rapidly in recent years and is expected to reach an
astronomical 55 trillion dollars by 2027
. Even though the enormous boost from Corona has subsided after the pandemic: steady growth in this area is a given. At the same time, customer expectations for fast and reliable delivery, service, and customer experience are increasing.
Amazon's success shows that fast and reliable logistics are a must for every online shop. At the same time, the bar is set high by the standards established by Amazon: customers basically expect delivery the next day. Bad experiences spread quickly through rating portals and the transparency of the internet, and can significantly reduce the success of a shop.Comparability on the internet also leads to high cost pressure. Warehouses must not only work fast but efficiently and cost-effectively to survive in the market. They must be able to quickly respond to new conditions, such as problems in the supply chain or increased energy prices. Therefore, optimal warehouse management is not a luxury, but a crucial success factor. Umsatz erreichen. Auch wenn der enorme Schub durch Corona nach der Pandemie wieder nachgelassen hat: Stetiges Wachstum in diesem Bereich ist eine Konstante. Gleichzeitig steigen die Ansprüche der Kund*innen an schneller und zuverlässiger Lieferung, Service und Kundenerlebnis.
Der Erfolg von Amazon zeigt, dass schnelle und zuverlässige Logistik Pflicht für jeden Onlineshop ist. Gleichzeitig liegt die Messlatte durch die von Amazon etablierten Standards hoch: Kund*innen erwarten im Prinzip die Lieferung am nächsten Tag. Schlechte Erfahrungen sprechen sich durch Bewertungsportale und die Transparenz im Internet schnell herum und können den Erfolg eines Shops deutlich mindern.
Die Vergleichbarkeit im Internet führt außerdem zu einem hohen Kostendruck. Warehouses müssen nicht nur schnell, sondern effizient und kostengünstig arbeiten, um am Markt bestehen zu können. Sie müssen in der Lage sein, schnell auf neue Gegebenheiten zu reagieren, etwa Probleme in der Lieferkette oder gestiegene Energiepreise. Somit ist bestmögliches Warehouse Management kein Luxus, sondern ein wesentlicher Erfolgsfaktor.
Author
Stefan von Gagern
Author
Stefan von Gagern
Stefan von Gagern arbeitet in Hamburg als Freelance-Content-Strategist. Er unterstützt B2B/B2C-Kund:innen wie Adobe, Amazon, Google oder Sage mit Content rund um Digitalisierung, Daten und Customer Experience. Das Credo des Tech-Journalisten: Content ist der wichtigste Motor für digitales Business.
