Are all warehouses the same? No, but also yes.
That contradiction is best explained by a Thai phrase: “Same, same, but different.” It gets used widely in Thailand to explain to naive tourists (myself included) the similarities between one product and another. It happens to describe warehousing rather well.
Here’s what I mean.
Warehouses are the same in seven key processes. Two relate to inwards flow, three to outwards flow, plus returns and value-adding. Every warehouse I’ve walked through in 29 years has run some version of all seven. Same, same.
Now Here’s the Different Part
There is a wide range of nuance in how each process is physically conducted and electronically controlled. Two competitors handling identical products will often do things in completely different ways. Idiosyncrasies across industries add further diversity. Even third-party logistics companies, who you might expect to converge on one best method, don’t.
The SCOR model and standards bodies such as GS1 publish blueprints for key processes using barcoding and radio frequency (RF) controls, and these offer standard ways of reading and recording data. But the physical materials handling and the ways of working in each warehouse remain close to unique to each business.
That’s driven by the scale of the operation, storage capacity, temperature requirements, order profiles, legislative requirements, company culture, and the volume of goods moving through the facility.
So what are the seven processes, and how are they handled?
1. Receiving: Unloading, Inspecting and Verifying Shipments
Receiving is the first step in warehouse operations, and it sets the tone for everything that follows. Get it wrong and you spend the rest of the week correcting it.
Receipts may be for single products, litres, cartons, packets, crates, kilograms or full pallets. Items may be as large as a pallet or as small as a split pin. The best way to receive products is via an Advance Shipping Notice (ASN) from the supplier.
During receiving, warehouse managers rely on a warehouse management system (WMS) to track and verify shipments. With the ASN on the system, operators scan consignment barcodes to bring it up. If the delivery matches, the goods can be system-received. Where it doesn’t match, the WMS flags the discrepancy so it can be resolved before it becomes someone else’s problem downstream.
The process typically runs as follows:
- Unloading. Goods are unloaded from the delivery vehicle and moved to the receiving area.
- Inspecting. Each item is checked for damage or defects, and any issues are documented.
- Verifying. Goods are verified against the shipment documentation for accuracy and completeness.
- Labelling. Items are labelled with the correct inventory information and directed to their storage location.
At this point goods are still at staging, albeit ready for put-away. Some systems allow goods to be received into inventory here. Others require the goods to reach a specific stock location before inventory is updated. Which one you want depends entirely on customer requirements and how the system is configured.
Lesson: Set up ASN on your system for automatic receiving and put-away, and use RF equipment for scanning and updating. It’s the single cheapest improvement available to most receiving docks.
At Logistics Bureau, we have consultants with years of operational experience who can help you select, procure and implement suitable solutions to streamline your receiving processes.
2. Put-Away: Getting Stock Into the Right Slot
A good system prompts put-away staff with a note indicating that stock is sitting in staging, waiting to be moved to a storage location. The process starts when an operator accepts the put-away task from the Enterprise Resource Planning (ERP) system or WMS, then scans the barcode of the goods to be put away.
If there is no barcode, a manual entry can confirm the goods have been identified.
The system then directs the operator to the relevant storage location. Once there, the operator either scans the location barcode or manually confirms the correct location has been found, places the goods into the slot, and confirms the task is complete.
Lesson: Use a system that directs put-away to vacant slots according to the demand profile of the goods. Static slotting wastes travel time every single day, and it compounds.
3. Picking: The Process That Consumes Your Labour
There are two main types of picking.
Primary picking is the first picking of goods. In some cases the first pick goes directly to a staging area or packing bench for finalisation, consigning and dispatch, so the first picking becomes the last picking.
Secondary picking is a second pass. Some primary picks are subject to it, particularly where picked goods must be allocated to clustered orders (a bunch of orders) or discrete orders (single orders) through a sortation process or system.
With the boom in online sales, far more companies are running secondary picking than ever before.
Once orders are received, it’s common to release them in real time or in waves. Real-time orders are downloaded as they arrive. Orders accumulated for specific picking times and transport routes are called waves, and they can be released at the discretion of the DC manager according to whatever criteria they set.
Picking itself may be discrete (one order at a time), clustered (multiple orders at a time), or batched (picking all the goods at once, then sorting to specific customer orders). Plenty of companies use all three. As online order volumes climb, more are installing put walls, put-to-light systems, goods-to-person systems and cross-belt sortation to cope with the growing volume of small orders.
Then there’s accuracy, which is the question warehouse managers raise more than any other. Should you scan the product, the location, or both?
Scanning both increases accuracy but slows picking velocity. Scanning the location only is faster. Where voice systems are used there is no scanning at all, and check digits at the location confirm the operator is in the right place.
Voice picking removes scanning entirely, with a touch of risk. The risk sits in the operator achieving the right count without making a mistake.
My view, and the evidence supports it, is that companies worry about this more than they need to. Voice picking and location-only scanning both deliver a surprisingly high level of accuracy without impeding velocity. For accuracy-intensive warehouses, add a statistical sample of QA (quality assurance) checks, normally around 10 to 20% of orders, rather than slowing every pick to protect against a small number of errors.
Lesson: Picking consumes a large share of your resources and typically accounts for 60% or more of warehouse labour. Smart picking systems and a capable WMS aren’t optional for a business of any complexity.
4. Packing: Five Rules Worth Enforcing
There are scores of ways goods get packed in distribution centres. Rather than work through the specifics, here are five rules that will carry your team through most of them:
- Goods picked must be traceable to the location they were picked from, along with relevant use-by dates, batch dates and codes.
- Accuracy and QA checks must be built into the process, not bolted on afterwards.
- Goods picked from different zones must be easily combined and system-managed to ensure order completeness.
- Goods must be packed according to size, quantity, temperature, toxicity, value, fragility, hygiene and legislative requirements.
- Consignments must always be system-linked to their documents and invoice numbers
Lesson: Packing is an extension of picking. Treat it as system-managed work, not as a finishing touch, and orders stay complete and accurate.
5. Dispatch: Timing Is the Whole Job
The art of dispatch lies in having goods ready for departure just in time for carriers to load. The DC manager has to balance and forecast packing and dispatch against carrier pick-up times.
Goods ready too early clutter staging areas. Dispatches that run late delay loading and cause late deliveries. This is why so many firms release orders for picking and packing in waves aligned to specific delivery routes or carrier types.
Lesson: Avoid jams and late deliveries by scheduling picking waves to align with carrier pick-up times. It costs nothing to change and it clears congestion faster than more staging space will.
6. Returns: The Process Nobody Plans For
This is the one most companies wish would just disappear. But returns are an integral part of most businesses, and the volume is growing, mainly because of e-commerce. Most return orders now consist of a single item.
That complexity means a few rules are non-negotiable:
- Customers returning goods should seek, and be given, a Return Merchandise Authorisation setting out what is being returned and why.
- All returns must be traceable to their order, document and invoice.
- There must be a pre-determined process setting out what happens to goods once they’re back in the warehouse: return to stock, repair, destroy, discard, recycle, return to manufacturer.
- All credits must be system-recorded together with the reason for return.
- Inventory must be updated where goods are returned to stock or held for further action.
Lesson: Returns are complex. A defined process must record the whole transaction and credit trail accurately and reliably.
What usually happens, particularly in 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 to match. The returns process then becomes expensive and inefficient, and it stays that way until someone measures it.
Our inventory management consultants are well versed in reverse logistics, and can help you evaluate capacity needs, identify appropriate systems and processes, and execute the changes with minimal disruption to the operation.
7. Value-Adding: Where Systems Usually Fall Short
This is the part of the operation where products are kitted, assembled, relabelled, modified, burnt in, or subjected to some other value-adding process. The work makes the product ready for sale.
It gets complex quickly, particularly when many different items are combined to form a new one.
Handling the changing nature of component products in and out of shelf locations is daunting, and systems have evolved to help. Even so, plenty of companies find that recording value-adding components sits awkwardly with how their logistics system or conventional ERP or WMS has been set up.
Lesson: Review your value-adding processes and confirm your system can actually handle the required activities and transactions. Many can’t, and people work around it with spreadsheets until something goes wrong.
What This Means for Your Warehouse
Seven key processes, same same, but different for every organisation.
Modern distribution centres run on a complex mass of processes, activities and transactions, all of which have to be designed to fit your business rather than someone else’s. The days of a pad and pencil, or even a spreadsheet, don’t feel that long ago. But the pace of technology and the complexity of modern business mean companies need appropriate ERP and WMS platforms to stay competitive, correctly configured to the different aspects of their own operation.
The physical layout matters just as much as the systems. Most of the seven processes above are constrained by the building they happen in, and no WMS will fix a picking face in the wrong place. If you suspect your layout is working against your processes, our warehouse design consultants can tell you.
Need Help With Warehouse Process Improvement?
Our services are tailored to each 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 a few examples. If you’re facing an issue in any of your warehouse processes, or you just want them subjected to some objective scrutiny, our team is ready to help.
Nice Read.
Is it possible I get your opinion on the best platforms out there which can help me in achieving the above objectives seamlessly and at reasonable costs
Sorry I cannot advise on specific platforms. As a consultant in this area I must remain vendor neutral.
I have custom procedure and warehousing how improving the facilitating and controlling the whole operational of the custom?
what kind about consultations and experience knowledge you rise.
Feel free to contact me directly, via the contact us page.
Nice Notes … I like it Because Am Studying Transport And Logistics And I Specialized In Warehouse Department
Glad to hear that, Cadlack!
describe two ways of warehouse location
Hi. I’m not sure I understand your question.
Do you mean how to locate products in a warehouse?
Or do you mean two techniques to determine an ideal warehouse location in a country / city?
This video is not due to be released for 2 days, but it may help you. See the links under the video also.
Hi I would like to know what is the key processes found in most warehouses
Hi, In basic terms, the key processes would include:
Receiving
Putaway
Stocktaking
Picking
Packing
Dispatch
Returns
They are described in this article…..
You should
are there good margins, say compared to residential properties
By owning warehouses? I think given the rapid changes in warehousing that are occurring, I’d stick to residential. But I’m sure it varies country to country. Here in Australia most of the larger warehouses are owned by large property companies.
Hi, can you describe the Process of stocking of the doubt and its release for market?
Sorry, but that is too big a question to answer here. Maybe we can do a video or blog post about it in the future.
Don’t you mean to determine warehouse location??
No, this article is about warehouses processes. There are others that discuss warehouse location factors.
Rob
Good article. Found myself flown into a implementation challenge in Vn this week and accessed this article to get my head straight at short notice. I would have added ‘staging’ as a sub set of one of the processes. Thanks again and good to acknowledge simple contributions like this.
Glad it Helped!
is it possible to track a person who put away stock but the lable still open..or what if they just dumped the stock in anywhere without scanning into a location.
Yes. Most good WMS (Warehouse Management Systems) will track each user and he tasks / activities they perform. It’s an aid to balancing work across the team as well of course, as tracking individual productivity and errors.
I adore this useful article. Excellent compilation sir.
Glad you found it useful…..
What are some of the financial SOP that can be implemented to improve the above processes?
Have a look at the page on KPIs. Check here
how can a supplier who is found to be supplying sub-standard product handled when the purchasing department is not ready to deal with the supplier?
It is really a procurement (supplier management) issue rather than purchasing.
The facts need to be presented to the head of procurement for action, if the team are unwilling to take action
Hi i am in Uganda and i want to open up na consulting firm.can you advise
Hi, as with any business….
(1) Assess the market. What services are required most? What is the size of the market?
(2) Develop a profile of your ideal client. Type of company, size, type of problems they have.
(3) Research the competition. Who are your major competitors? What services do they offer? How can you differentiate your business?
(4) Talk to some potential clients, get their feedback.
(5) If it all looks worthwhile………start!
Thanks so much i appreciate, will consult you as soon as i start
You might find this blog useful. It’s about starting a consulting business!
Click here
Thanks Rob
Thank you for the encouragement, kindly inbox me all information
. Value-Adding whats is this can you give me one example
It might be things like kitting, bundling, tagging…
great piece of article Rob…… but i am thinking shouldn’t the value adding process be inclusive with the Receiving process because from what i can see from the process stated by the logistics bureau value adding is the last process which i find inappropriate, although the process of warehousing/ receiving in various countries actually varies but your intellect clarity is highly welcomed
Yes, you are right. Value adding could be done at receiving for things like bundling, kitting and the like.
please sir, what is the different between dispatch and shipping as warehousing activities.
Alright..thank you Rob
Thanks and a nice reading. Interested in ways to facilitate warehouse operations.
what type of written assessment question ( scenario question) can ask for supply officer? Can you provide some sample question for supply officer {special related to centralized warehouse / supply chain operation }?
That would require more than a simple reply on a blog post, sorry.
Thanks Rob for sharing this concise piece on warehouse management.
good work and God bless you.
Great to hear. Thanks!
Thanks alot for this article, it really helped me get an overall understanding for Warehouse management.
You’re welcome. Best of luck!
What are the key policies should consider in warehouse management to meet organizational gials?
I think if you start on those 7 key processes, but then also focus on safety, security, org structure, job descriptions….
1. In 2022, KDG Ltd will commence the development phase of the Block 5 oil and gas fields. Accordingly, it has embarked on the mobilisation of critical materials and equipment (required to facilitate the development project) to its strategic materials yard located in Kizomba district. These materials and equipment will be both imported under duty exemption and some procured locally. Additionally, once received the materials and equipment will be distributed to the various well sites as required. To managing the handling, storage and distribution of the materials and equipment, Rub halls have constructed for tangibles while non-warehouse inventory will be appropriately stacked in selected containers, and the OCTG properly racked at a lay down area and pipe yard. In parallel, a comprehensive inventory and materials management procedure has been developed to ensure exhaustive management of inventory both Physically and in the Company’s material management enterprise system. 1) With specific examples describe the key activities you would undertake to provide efficient and accurate inventory control while adequately supporting the project operational requirements.
How can i approach above question?
You might want to reach out to us for some consulting support. Click here to Contact Us
Thank you for giving this Amazing information , I always love your blogs and blogs from LSC Freights & Logistics LLC
Glad that it helps!
Hi,
How do you ensure the necessary processes and procedures are followed?
Ultimately that comes down to good management and culture, and the right KPIs.