What is Warehouse Logistics?

"Warehouse logistics is the process of planning, operating and managing the flow of goods within a warehouse to meet business objectives." and "warehouse logistics is the process of managing the storage, tracking and movement of goods, products and materials within a company's warehouse." Goods, storage, and flow/movement are all critical parts of warehouse logistics.

Comparing Warehouse Logistics and Supply Chain Logistics

Warehouse logistics is a subset of supply chain logistics. Supply chain logistics looks at everything from extraction of raw materials through transportation manufacturer of finished goods and ultimate delivery to customers. There can be several warehouses embedded in a single supply chain process. Placement of a warehouse is certainly part of supply chain logistics, but it is outside the scope of warehouse logistics.

There are two parts to warehouse logistics. What exactly is a warehouse? Then, what processes take place inside a warehouse? 

In this blog, we will look at warehouse logistics from the standpoint of supporting your business needs. No logistics process exists for its own sake. We design and implement logistics systems including warehousing to achieve specific ends for our clients and customers. More on that below when we talk about the connection between warehousing and your business objectives.

What is a Warehouse and Why Is It Useful?

A warehouse is a location where you temporarily store inventory, and you deliberately track the contents of that storage.  

Warehousing has many purposes. It is used to smooth out discrepancies between demand, time, and space in the supply chain. You may be using warehousing to store material to ease seasonal fluctuations in production or demand. You could be using warehousing as a way of consolidating material to gain economy of scales for transportation. You could be using a warehouse to combine input and raw materials for production to make down-stream manufacturing more effective and run smoothly. You could be using warehousing as a way of adding worth to material goods.

How Does Warehouse Logistics Support the Broader Business Objectives?

The science of Operations Research is an integral skill at Maveneer, the one we use to map warehouse logistics to business objectives. Figure 1 (below) lists some example business measures/objectives and some typical warehouse measures. In the warehouse, you can influence the velocity of operations such as how quickly things are put away or pulled from stock for an order. You can increase your location accuracy and help preserve the condition of your product/material.  You can also improve order accuracy. These are worthy goals by themselves, but as the animation shows, these directly affect business measures. Order/issue accuracy increases customer satisfaction. Increasing inventory accuracy and decreasing material loss increases efficiency that has broad positive effects on all the business objectives. Increasing capacity and decreasing costs increases the potential for business expansion. 

The key is to understand the relationship between your warehouse operations and the overall business goal and prioritize your warehouse enhancements to best support the business objectives.

Now we know what we want to accomplish and why. The next question is how do you go about ensuring your warehouse is operating at peak efficiency?

What Are the Key Aspects of Warehouse Logistics?

Warehouse logistics has four main components: the physical layout of the warehouse; the material handling equipment that helps move, store, and pick the product; the warehouse personnel; and the information management system.

There are three processes involved in warehousing: receiving, storage, and issuing.  There have been hundreds of books written on each one of these topics. While they sound simple in theory, in practice there are many nuances and interactions between the process categories.  

The information management system determines where material will be stored, under what conditions, what should be withdrawn from storage, where it should be taken out of storage, and where it should be assembled for issue. There are two traditional names for this information system in warehouse logistics. A Warehouse Execution System (WES) was only concerned with tracking what was received, deciding where to place the incoming product, and then informing the staff where to pull any issues from. The Warehouse Management System (WMS) tended to be more comprehensive including everything that a WES did as well as deciding what stockage levels should be, when to reorder, when to dispose of lines, etc.  The differences between WMS and WPS have decreased over time, and at the time of publication the two terms can be used almost interchangeably.

Planning for Success

There is an adage in warehouse logistics worth remembering, "if you do not plan for success then you are planning for failure." Appropriate planning based on data and engineering math and science are critical for achieving your warehousing goals.

Physical Layout

The physical layout of the warehouse is a key factor in smooth operations. There are five operational areas in a warehouse. Please see figure 2 (below). Loading/unloading is the area where stock is offloaded for processing and storage in the warehouse. These areas should be large enough to allow your Material Handling Equipment (MHE) such as forklifts, pallet jacks, etc. to move safely and efficiently. Congestion is your enemy in warehouse logistics. Reception is the location where bulk packing is broken down, material coming into the warehouse is inspected for accountability and condition verification, and the inventory is added into the warehouse stock. This is often the first place in the process that material is internally tagged whether that is a barcode sticker or a radio-tag. If possible, reception should be close to the unloading point. Generally, the largest area in a warehouse is storage. This is where your material is held until issued. There can be multiple types of storage in a single facility. You might have refrigeration areas. There might be bins to hold small parts. You might have pallet stacks where large, but light items are stored. There are thousands of configurations and storage container types. The picking area is where items being taken out of storage for issue are assembled, inspected, and potentially pre-packed. The final area is shipping where orders are put into containers and labelled for transportation to down-stream users whether that is a customer or a manufacturing facility. It saves time and decreases inventory loss if you can locate the shipping area close to the loading location.

Critical Processes

Receiving

In computer programming, there is an old expression "garbage in, garbage out." It is the same with warehouse operations. Quality warehousing begins with the receiving portion of the process. There is a pre-receipt, upstream part of the receipt process.  Materials coming into the warehouse should be properly labeled, accounted for, packaged in a manner that is safe to the operators in the warehouse, and the condition of the material should be verified.

Storing

Material can be stored in a warehouse for varying periods of time. The location where your stock is stored has a substantial impact on the efficiency of your operations.  Time is money in business, and space is money in a warehouse. You want to maximize your storage density, but you want to leave enough room to allow for storing and picking without too much congestion. Fast movers, your inventory that spends the least amount of time in storage, should ideally be closer to your picking area to increase the velocity of fulfilling orders. 

Issuing

There are several subsets to the issuing process including picking, packing, and shipping. This is often the area where you can save the most time and money through effective design. 

Quality Control

This is an umbrella process that works in parallel with the other operations in warehouse logistics. The industrial engineer says, "what is not inspected is neglected." Even in well-run, well-designed facilities it is important to do periodic and random checks on the subsystems. Periodic inventories of locations help verify location accuracy and material condition. Random checks of packages help promote order accuracy and identifies systemic issues before they become business problems. Personnel should have refresher training, and, when new equipment and automation is introduced to the warehouse, take the time to ensure that your employees understand how to operate the equipment and what the changes to logistics operations are.

What's Next?

Future blogs will cover some of the topics raised here in more detail such as: the differences between WES and WMS and picking the right one for your business, when automation is useful and how to select the best MHE systems for your warehouse, the importance of safety and some tricks to bake safety into the "DNA of your warehouse." Please check back frequently to see new material published by Maveneer.