Warehouse Organization | 4 mins read

8-Step Warehouse Organization Plan to Increase Efficiency

8 step warehouse organization plan to increase efficiency
Hanh Truong

By Hanh Truong

Warehouse organization helps businesses to productively utilize their stockroom space and maintain a smooth workflow. It also enhances employee morale, minimizes errors in the order fulfillment process, and prevents damages to inventory items.

These benefits will then help companies quickly meet their customers' demands and boost overall consumer satisfaction.

8-Step Plan to Increase Efficiency

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To increase efficiency in the warehouse, management should implement an organizational system. Managers can do this by following the 8-step framework-

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1. Strategize the Warehouse Layout

By reassessing the floor plan, management can pinpoint where inventory, equipment, and tables should be located. Creating a strategic layout will allow the warehouse staff to navigate around the space safely and easily.

An organized and well-defined warehouse design will ensure accessibility to goods and maximize space utilization.

To examine the efficiency of an existing floor plan, warehouse managers should consider the two best practices-

  • Review the Workspace
A warehouse will typically have areas for storing, receiving, packing, and shipping goods, as well as an office. These areas should be separated and have ample space between them so that employees can freely move around. Warehouse safety is a priority when designing the workspace, therefore, there should also be clear paths for forklifts to prevent any safety hazards.

  • Talk to Warehouse Staff
Collecting feedback about employees' daily workflow will provide insight into what improvements need to be made in the warehouse. It will also help managers understand how staff performs certain jobs, such as quality inspection and order preparation, and what needs to be done to optimize these processes.

2. Utilize Storage Organizers

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Depending on the type of business, warehouses can be made efficient with different types of organizers, such as shelves and racks. A proper storage system will maximize space and protect inventory from damage, which will further enhance the business's bottom line.

  • Manufacturing
A manufacturing business will typically need space and equipment to produce products. Therefore, heavy-duty shelves and bins can be placed near the work areas to hold equipment and supplies.

  • Simple Manufacturing
This type of business focuses on assembly stations to create products. By using bins and carts around the station, employees can easily reach the materials they need for assembling. Shelves can also be put up in the storage areas to stow away finished products.

  • Traditional Inventory
These are businesses that stock finished goods and ship them to customers. Stock items can be organized into shelves or bins so warehouse employees can quickly find the products they need to fulfill orders.

3. Organize Inventory

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Warehouse inventory should be organized based on how often it is used, moved, or purchased. For example, placing the best selling and popular stock next to the packing area will minimize the time staff would need to retrieve the item. Products that are less popular and are not frequently used can be placed on top of shelves or further back in the warehouse space.

To identify which stock to prioritize, managers can use the ABC analysis and categorize their inventory into 3 levels-

  • Level A - Items that have high demand and have high-profit margins.
  • Level B - Inventory that has moderate demand from consumers.
  • Level C - Goods that are less important and have less demand, compared to A and B items.

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4. Have a Labeling System

Products, workspaces, and aisles should be well organized and properly labeled so that employees can efficiently navigate throughout the warehouse and locate the items they need. Placing safety signs are especially important to alert staff of loading zones and incoming forklift trucks.

5. Optimize Picking Processes

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The picking process refers to identifying and selecting items in inventory to fulfill customer orders. Optimizing the process will ensure that orders are packaged accurately and customer satisfaction is maintained.

A method to streamlining the picking process is placing the packing area near inventory to minimize travel time. Order pickers can also utilize bar code scanners to speed the process of finding an item. These tools will scan stock-keeping units (SKU) to provide information on where the inventory item is in the warehouse.

6. Monitor the Receiving Process

To prevent delays in workflow, warehouse staff should be diligent when receiving purchase orders. This means ensuring that the right products were received and that the orders are in the right quantity.

Methods that managers can implement to optimize order reception are-

  • Allocate Space - The receiving area should have enough room for employees to sort and check new shipments.
  • Implement an Inventory Management System - Inventory management software with ordering features will allow users to monitor orders in transit, conduct inventory control, ensure their orders are correct, and send memos to suppliers when items are damaged or missing.
  • Conduct Quality Control - Inspecting items once they are received will enable staff to identify any damage quickly. These defective products can then be set aside, ensuring that it will not be sent to a customer.

7. Frequently Clean the Warehouse

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All work areas in the warehouse should be thoroughly cleaned and tidied by the end of the workday. To improve efficiency, supplies and equipment should also be placed back in the right places and any clutter should be removed from the floors and workspaces. This will allow staff to work productively and safely.

8. Review Warehouse Organization

Warehouse managers should reassess organization strategies to ensure that it is effective. It is recommended that management conduct reviews yearly and connect with employees to see if productivity was improved with the current organizational plan. This will give managers insight into whether or not any adjustments need to be made.

By implementing efficient warehouse organization strategies, management can make sure that their supply chain functions are operating smoothly and excellent customer service is being provided.

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