Best Practices for Optimizing Your Warehouse Layout

As your e-commerce business scales, so do your needs for warehouse locations to store inventory and fulfill orders. Beyond the physical space, you need a warehousing plan that can expand and adapt, as well. When facing this challenge, it can be tempting to outsource your inventory and fulfillment responsibilities to a third party.

Not so fast.

The reality is, with the right planning, tools, and warehouse management system (WMS), creating and maintaining your own warehouse space isn’t as overwhelming as you might assume. Not only that, but running your own safe, efficient, and optimized warehouse will both maximize your profits and put you in the driver’s seat toward further growth.

To start, you need to figure out e-commerce-business-need. The next step is to map out the best use of that space. In doing so, there are several best practices worth considering.

E-commerce Warehouses Need Dedicated Spaces for Dedicated Purposes

Instead of looking at your new warehouse as a daunting blank canvas, start breaking down the space into regions and critical locations – compartmentalizing all of the inventory management and fulfillment responsibilities into designated areas.

Reception

You need a dedicated space where you can receive incoming supply and transition it into your inventory. This means space to sort, catalog, and scan this merchandise so it can get moved into the appropriate storage area. Depending on what you are selling, this could require anything from rows of sorting bins to pallet landing spots.

Whatever your storage and organizational needs are in this space, your receiving area needs to function accurately to make sure that your newest inventory is properly accounted for. Reception must also work quickly to avoid logjams at your receiving dock. 

Skustack, Sellercloud’s patented warehouse management platform, has been designed from the ground up to create and maintain accurate inventory records for every piece of merchandise that enters your possession. Whether you are receiving purchase orders (POs) or returns, Skustack makes the process simple and intuitive. This workflow is made even more effective when you commit to a dedicated reception area in your warehouse design.

Inventory Storage

The largest footprint of any region of your warehouse will likely be your storage area. This combination of bins, racks, and stacks needs to be organized and optimized so that products can be quickly sorted and stored, while at the same time, be picked for outgoing orders.

Laying out the storage section of your warehouse can be a puzzle in and of itself. Typically, your highest volume SKUs should be most easily accessible to the other areas of your warehouse. Conversely, your seasonal and overstock merchandise can be tucked farther back off of the main pick path. Other considerations like product variations, inventory sizes, and forklift accessibility may also come into play when determining what goes where.

All things considered, an optimized storage plan allows your sorting and picking teams to get to what they need as quickly as possible. Similarly, as customer patterns shift, you should be able to adjust your stock locations accordingly. Flexibility is a key component of effective warehouse planning. If properly managed with an effective WMS in place, a dynamic warehouse will always outperform a static one.

Working together, Sellercloud’s robust inventory management tools can provide you with the metrics to recognize these changing patterns, while Skustack can provide the means to adjust stock locations without disorienting your warehouse staff. In the end, an optimized storage area means a worker can scan a code and know exactly where the item they are looking for is located. From there, the product can be picked and moved through the warehouse workflow toward packing and shipping.

Returns

Returned merchandise needs to be processed and handled separately from new inventory. What’s more, RMA stock must be dealt with before it becomes a pile of dead stock wreaking havoc on your customer service metrics.

This is an area where Skustack is especially valuable as a WMS tool. Workers can quickly scan, assess, and process returned shipments quickly and move them along to either be re-sorted, refurbished, or destroyed. Making space for this workflow in your warehouse design helps maintain prompt and accurate RMA processing as a priority.

Picking and Packing

You will certainly want to have a specific location for your picking team to procure and organize the goods ready for outbound orders. Doing this on the fly in either the storage or shipping areas of your warehouse can quickly lead to issues like gridlock or hazardous clutter. Instead, having a dedicated space for orders to be picked and assembled can keep things running smoothly. 

Skublox, our modular put-to-light pick-to-light system, is a useful tool for driving this type of workflow. Goods can be picked in batches, scanned, and placed into dynamically color-coded slots that show workers what goes where. Once an order is fully sorted, the lights on the picking side go out, and the shipping side can take over pulling and packing for shipment.

Shipping

This department of your warehouse is the end of the road for your outgoing packages. This also means it is your last chance to ensure that everything is labeled correctly and loaded onto the appropriate outbound vehicle. Even if everything has gone perfectly up to this point in the package’s lifecycle, an error here can really cost you.

Such an important part of the fulfillment workflow definitely requires its own dedicated space. In some cases, packing may be included as part of this area. In others, it makes more sense to give the packing process its own separate space. Factors to consider include the quantity of packages you ship, the number of different shipping options you offer, and the variety of products that can be packed into a single order. The simpler your average order, the more reasonable it may be to include this as part of your shipping department’s charge.

Regardless of your shipping circumstances or the size of your e-commerce business, Shipbridge, Sellercloud’s included shipping platform, can help keep this aspect of your warehouse running efficiently. Shipbridge makes it easy to create custom rules based on package characteristics such as shipping provider, destination, package weight, order value, marketplace, and more. No matter how many different channels and shipping carriers you partner with, you can be sure that the packages all get properly labeled and shipped the right way.

When In Doubt, Follow the Physical Flow of Your Inventory

Having dedicated spaces for every stage of the inventory management process is essential, but so is properly configuring where these dedicated spaces fit into your overall layout. 

When arranging your warehouse, putting the puzzle together starts with tracing the lifecycle of your SKUs. Do it well, and your inventory should be entering and exiting like a well-oiled machine. 

Start with your shipping docks – where inventory comes in and where it ultimately goes out. If your warehouse has the option of separate dock spaces for loading and unloading, that is the ideal. You can lay out a path from receiving, to storage, to picking and sorting, and to shipping that flows like a river. It doesn’t matter if your warehouse is shaped like a U, an L, or an I – If you can create a direct path from reception to shipping, do it!

If you are forced to use the same docks for both shipping and receiving, recognize that this shared space is a prime location for bottlenecks. You will need to design warehouse workflows that can account for this circumstance. The key is to have systems in place that prioritize keeping that shared dock space clear as much as possible.

Regardless of your warehouse shape or dock configuration, the tightest loop from receiving to shipping should be reserved for processing the orders for your best-selling merchandise. Prioritize physical efficiency when settling on your final layout.

In all of this, don’t forget about returns. Oftentimes, returns get unloaded and relegated to piles off in the corner, quick to be overlooked. In the highly-competitive world of e-commerce marketplaces, processing returns as quickly and efficiently as you do your new orders matters. It is a key part of maintaining your marketplace standing and customer satisfaction ratings.

Have a strong RMA workflow and designated physical space where it can be regularly carried out. In most cases, returned merchandise will wind up getting processed and stored separately from your new stock. As such, opt for a location close to both your receiving area and where this storage will be situated, so as not to interfere with your other logistical workflows.

Whole-Warehouse Considerations

Zooming out to look at your warehouse layout as a whole, there are several general items that you should always keep in mind when optimizing the warehouse’s physical efficiency:

  • Open space is critical. In the big picture, extra space provides room to grow – giving you the potential to carry additional inventory levels and add additional SKUs to your catalog. At the granular level, however, space means every person, item, and piece of equipment has the ability to easily move and maneuver through stacks, around bins, and between areas. 

Ultimately, space is something that must be planned for in advance to help maintain a smooth physical workflow and promote a safe working environment. Even the most optimized pick path becomes irrelevant if inventory and warehouse workers can’t move through it freely. When aisles and movement areas begin to get cluttered, it may be a sign that you need to reconsider your warehouse layout (or even consider expanding to a larger one).

  • Lighting matters. Every shelf, bin, packing surface, loading dock, and corner of your warehouse should be brightly lit. Not only does this make it easy for your warehouse team to find items and correctly process orders, it reduces the likelihood of on-the-job accidents. Properly positioned LED lighting can illuminate every corner of your warehouse and help keep operating costs down compared to traditional fluorescents or halogens.
  • Plan ahead for technology integration; it becomes infinitely more challenging if left to the last minute. When designing your warehouse spaces, be sure to account for the power, networking, and charging needs of the tech tools you will be using. Identify convenient and secure locations for your critical tech so that it is always within reach and ready to go when your workers need it.
  • Training your staff on warehouse protocols and procedures is a necessity. Having a perfectly designed warehouse system is pointless if it lacks the team to execute it. Moreover, there are safety and security concerns that you must be proactive about. This can be a time-consuming process, but it is unavoidable.

That is why we have designed the Sellercloud platform and technologies to be as intuitive and user-friendly as possible. With Skustack’s android-based scanning interfaces, onboarding new employees is made easier by design. Similarly, Skublox’s put- and pick-to-light system keeps accurate order processing simple and streamlined while Shipbridge takes the guesswork out of matching the right shipping labels to the right packages.

In each of these cases, our technological tools allow both your warehouse and staffing to scale with ease, while keeping training hours to a minimum.Want to see for yourself how Sellercloud, Skustack, Skublox, and Shipbridge, can help you optimize your own e-commerce warehouse? Contact us directly for a free demo and consultation.

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The Sellercloud team is dedicated to providing you with insights and content that can help guide your business strategy in a meaningful way. With 10+ years in the e-commerce space, our goal is to share our knowledge and ideas with you to help you achieve your business goals.