Understanding warehouse process basics is critical to understanding where to improve operations. Here is an overview of the basic processes that occur in a warehouse and how they relate.
First, let's define a process. A process is a finite sequence of steps that have a definite result. Now let's think about a warehouse or distribution center. A warehouse holds inventory and ships it to customers. So the warehouse must bring product in, hold it, and ship it.
Basic Warehouse Processes
This leads us to the 5 basic warehousing processes. We consider these basic because they exist in every warehouse and each step expresses a physical flow of product through the warehouse.
- Receiving is where the warehouse unloads the freight, inspects, takes possession of, and receives goods into its inventory.
- Putaway is how the warehouse team places the goods into their storage locations.
- Picking has the warehouse team locating and removing ordered goods from their storage location and transporting them to the packing step.
- Packing is the step of preparing the goods for shipment.
- Shipping is loading the goods into the mode-of-transportation for the order and sending it on its way. This is where inventory is removed from the warehouse.
A straight-line sequence of these processes looks like this:
Each process often gets its own department in a warehouse. This is because there is a lot of detail and possible variety behind each of these, which we'll get to in later posts.
Also, some excellent resources to learn about warehousing in more detail include the book "World Class Warehousing" and the Cisco-Eagle blog.
Supporting Processes
Supporting processes are sometimes performed at warehouses depending on the warehouse size and scope. They are important and valuable but they don't directly move product. These include:
- Yard management and logistics is the set of processes that coordinates trucks into the yard to the dock doors and out of the property. This includes gate processes like check-in and check-out, appointments, dock door scheduling, and yard space management (especially if using drop trailers).
- Quality control and Inventory management focuses on making sure that as few defects as possible happen. These functions typically audit other processes for errors. Inventory management in a warehouse is different than inventory management for the company. The warehouse will manage where the inventory is and how accurate its records are. The company-level inventory management is more concerned with ensuring that the right amount of inventory is available.
- Value-added services (VAS) is anything the warehouse does to the inventory that the customer is charged more for doing. Examples can range from adding labels to cases, to repairs, to light manufacturing and assembly before shipping.
- Reverse logistics deals with returns. At 8-15% of overall sales and more if doing e-commerce, reverse logistics is growing rapidly. It follows the same steps as basic warehousing but has extra inspection and disposition decision steps.
- Planning is a front-office process of matching warehouse processing capacity to demand.
- Replenishment is breaking large units like pallets down to smaller ones like cases or broken-case units so they can be picked in smaller quantities. This process means the warehouse moves product from high-density storage to more accessible picking locations and units of measure.
- Slotting and Capacity management, or Space management, or simply "Storage" is managing where the product goes in the available physical space. It is for making sure the cubic footage of the warehouse is used efficiently considering both density and processing perspectives.
- Honorable mention: Trash and corrugate removal and management. This is often overlooked but can be a big effort, depending on the operation!
Laying the supporting processes over the basic processes looks like this:
Conclusion
Warehouses range from very simple to very complex. There are 5 fundamental processes that occur in every warehouse: receiving, putaway, picking, packing, and shipping. These are supported by other processes that depend on the warehouse's purpose and complexity.