How to set up a Warehouse for your E-Commerce business
For anyone starting up an E-Commerce business, it is crucial to set up an effective and efficient shipping and warehousing mechanism. How well you manage this affects customer satisfaction, delivery speeds, and the rate of returns since the accuracy of order and timeliness of delivery are key components by which a new customer rates your service. Additionally, efficient storage affects the amount of space you need to lease, insure, and maintain. However, none of this will matter if your warehouse for your e-commerce business is not properly set up and organized.
We spoke to a number of seasoned E-commerce merchants and have identified the following aspects that make an E-commerce warehouse effective and efficient.
1. Figure out the amount of space you need:
A good way to calculate this is to figure out how many pallets or packaging units you plan to store with yourself at any given time. Then you need to multiply the number with the footprint of the average package, pallet, or carton. The storage space should be calculated in terms of Volume and not area, as storage and shelving systems allow you to stack up your merchandise letting you get the most out of the total space. You should keep in mind though, that you also need to factor in some space in addition to the storage space you will need. Think of the space that you will need for any other warehouse operations and to accommodate the movement of the people performing these activities. Sometimes a warehouse for your e-commerce business needs operations that you should plan for include receiving and unloading goods, quality checks, labeling, storage, forward staging, shipping, packaging, mail handling, and some space for any inventory management equipment.
2. Equip your warehouse with all the essentials:
The basic goals of any warehouse are to maximize space, efficiency, visibility and safety. You will likely require different equipment depending on your products, volume, and business model. However, there are some essentials that you need to have for your E-Commerce warehouse or fulfillment center. Based on your warehouse functions, you will need to plan for storage equipment like warehouse shelves, racks, small bins, or whatever fits your specific product. You may also need specific material handling equipment that would cover your transport, loading, and storage. To maximize visibility and safety, you should also ensure that your warehouse space is well-lit. Using LED high bay lights can illuminate your space almost completely, making all your products visible, and lessening the threats of any accidents caused by poor visibility. You should also use LED lamps to brighten any workspaces like the counters where your product is assembled, packaged, or labeled for shipping. Other equipment includes inventory management software and other technical equipment like barcode readers, printers, and your choice of E-Commerce software.
3. Establish Guidelines for your Warehouse:
Establishing policies and guidelines for the workers in your warehouse is essential. In addition to picking paths and layout of goods, you must also set policies and procedures for safety, workflow, order accuracy, and quality control. Once you have established the policies, you have to enforce them and also make them visible by putting up reminder signs or posters in key locations to encourage workers to follow them. For instance, having reminders to use safety equipment is essential. You should also establish workflow guidelines by visualizing the process from your workers’ point of view and try to answer any question they might have surrounding any activity to clear any uncertainty. The policies you establish for quality control and order accuracy make the difference in how your warehouse function operates in the long run.
4. Staff Training:
It is essential that you train your staff by giving them the key skills required to get through the tasks they are expected to perform efficiently. If you have detailed policies set out in advance, it will be a fundamental aspect of your training. A well-trained employee can save you money in the long run, as any money spent training your staff will reflect in worker speed and efficiency.
5. Select suitable Warehouse Management Software:
The right warehouse management software can make your warehousing function a breeze. There are many good management software options available, all suitable for different prices and offering different services. Some basic operations that you need to consider when making your choice are:
- Managing inventory
- Handling Inbound receiving
- Workflow management of Pick, Pack, and Ship
- Customizable reporting that reflects your key KPIs
- Availability to set critical alerts and reminders
- Scalability functionality for growth
6. Define your Key Performance Indicators and set up a data collection process:
For on-going success in your operations, you need to be able to evaluate your performance to gauge whether your warehouse is set up to function in an optimal way. By establishing Key Performance Indicators (KPIs) you will be able to identify any weaknesses, process bottlenecks, strengths, etc to effectively plan your warehouse operations. Any good warehouse management solution will be able to track them easily. You can have as many KPIs as you need, but some essential ones that you should track for optimal warehouse management are:
- Inventory turnover (How quickly you sell out a given volume of inventory)
- Order lead time (The total time needed to fulfill an order, from end to end)
- Rate of return (How frequently items are returned, which ones, and reason for return)
Finally, remember that you will make mistakes and you should learn from them when first setting up a warehouse for your e-commerce business. It is unlikely that you can develop a warehouse setup that runs without a hitch perfectly from the start. Be adaptable to change and embrace new technologies, and business models to ensure that you keep running a smooth ship. Learn from any mistakes you make and incorporate the lesson learned into future practices. You should also learn from others and look up successful models and try to use their wisdom to improve your own processes.