Not many businesses can deny the need for a couple or more warehouses somewhere along the supply chain. It’s not hard to understand why, typically having a warehouse per region ensures that stocks can be shipped to the customer faster.
That being said, having multiple warehouses is just the first step along the way to business scaling and growth.
One has to manage all warehouses carefully and properly – which can be a pain. If not, inefficiency, time delays, and costs will definitely skyrocket. Just imagine the inventory management nightmare that awaits you when you enter the office everyday.
But fret not, we are here to help. Read on to find out how you can manage inventory and stock efficiently across your multiple warehouses. It will take only 20 minutes of your time to read through and will save you from the hassle of handling multiple warehouse management by equipping you with the best techniques out there and adequate software.
Purposes of Having Multiple Warehouses
Before we dive into dishing out tips and tricks to increase warehouse management, it is paramount to understand the reasons for and goals of having multiple warehouses.
The necessity for an additional warehouse or two is not limited just to multinational businesses. Some organisations need multi-warehouses to cover wide geographies inside a country - think the fragmented Philippines or vast territory of the United States. Other organisations out there grasp the logic of not putting all your eggs in one basket – they have a second or even third backup warehouse backed with premium insurance plans to prepare for the just-in-case and worst case scenarios.
Most businesses go for multi-warehouse management because of the following reasons:
To bring Transportation & Labour Cost Down
Warehouses are usually situated at strategic locations so that unnecessary additional transportation of the product from the manufacturing plant to the final destination is kept to a minimum. One has to strike a balance between speed and cost when mapping out warehouse locations to determine the accessibility with regards to both target consumer market and transportation infrastructure and facilities. In addition, having multiple warehouses also lowers the transportation and labor cost, and so the prices can be lower for the consumer.
To have Bare Minimal Risk
In the unfortunate event that your warehouse burns down or when disaster strikes and shipping your products out to customers is tougher than sending man to outer space, there is at least a backup warehouse to cushion your business from tough(er) times ahead.
To improve Service Standard
The shorter the time it takes for products to reach your customers’ hands, the happier they will be. Simple.
To consolidate Products
The mix of stocks kept at different warehouses can be synchronized and aggregated to fulfill various inventory needs at particular warehouses. Each warehouse inventory depends on needs of customers nearest to the warehouse and accessibility of sources from said location. Multiple warehouses can also consolidate products for the purposes such as drop shipping and stock cross-docking.
Multiple Warehouse Management Challenges
It is easy to overlook issues arising at warehouses other than the primary one you are focusing on or the nearest one. When things get busy at a particular warehouse, it can be hard to give the rest of the warehouses the attention and effort they deserve. Having multiple warehouses in this situation just compounds the multitasking problem.
As it is impossible to pack every staff involved in multiple warehouse management into a singular office, remote collaboration just jacked up the level of difficulty in communication among employees by 2 notches.
Also, there are very few opportunities for these people to meet face to face and have natural and impromptu discussions on improving processes and symptoms. The loss of spontaneous communication and keeping every staff involved in warehouse management up to date on inventory is just...crazy. You’d probably be stuck shooting emails back and forth and clearing up miscommunications the whole day.
How To Manage Multiple Warehouses Efficiently
This activity must be dealt with extreme caution to ensure stocks don’t run out of supply, the wrong items don't get shipped out, and businesses don't suffer unnecessary costs among other issues. An efficient warehouse management software is critical to managing your supply chain and taking care of your customers.
Here are suggestions and practices you can consider using:
Optimally Locate Warehouses
Don’t overlook the importance of the geographic setup of your warehouses. Decisions on where to place your warehouse will have an impact on other aspects of the business such as logistics and operations, and usually requires some trade-offs. For example, the nearer your warehouses are to your consumers (the city areas), the higher the cost of renting the space and labor. The trick is to strike a balance between these factors and cost for transportation, labor, taxes, and utilities.
Improve Warehouse Layout
Warehouse layout can significantly affect business efficiency because it determines how quickly and accurately goods are selected and shipped out to customers. The picking and packing process takes up most time and when the warehouse isn't organized, say, when goods are not categorized properly or when there are no labels on the shelves, pickers might spend a great deal of time finding products to be shipped out. This is a waste of time, resulting in inefficiency, unhappy customers, and even lost sales.
Consider implementing a more organized stock system to improve your warehouses’ layout. Additionally, make sure that items that get sold more often should be near the packing and shipping area. That way, they are more accessible in terms of finding and retrieving before they get sent out. Simply studying and making inferences from sales reports regularly will give you an idea on where, and how, to place goods inside warehouses. Also, note that sales trends and patterns continuously change and are largely different in different areas, the organization of your warehouses have to reflect these location-specific demands for your products.
Divide Risk Among All Warehouses
We cannot emphasize how important it is to avoid having an aggregation of all or most of your business processes and activities, and product stock at one central warehouse despite having multiple warehouses. The plan is to have a more or less divide in terms of importance and activity across your warehouses so that the risk of being caught off guard if, and when disaster strikes is spread out as well – epitome of hoping for the best and preparing for the worst.
Update Reorder Points Regularly
A brilliant way of staying on top of stock levels and ensuring your multiple warehouses hold enough products to meet market demands, is to keep readjusting reorder points frequently. Product reorder points are determined by the delivery time stock (inventory needed during lead time) and the safety stock (minimum level of inventory that is held as protection against shortages due to changes in demand).
Reorder Point = Normal consumption during lead time + Safety Stock
However, reorder points dip and rise based on fluctuations in consumer trends and preferences, which change all the time and often in mysterious ways. Updating reorder points regularly will bring your attention to fast-selling products during the period and help you identify the quantity of goods you should order on a weekly or monthly basis. This is why you should pay attention to market movements and inclinations. A bit of media monitoring and keeping up with the news on a daily basis should get you there without much difficulty.
Other than that, you can also easily set and edit Reorder Points for inventory in the TradeGecko inventory management system. The Reorder Point option can be found in the Stock Options tab of the Variant Detail modal. Businesses can also view their Reorder Report to keep track of stock inflows and outflows by clicking on the Intelligence button on the Main Menu tab. More detailed articles on how to maneuver the TradeGecko system to get the most of your mileage on inventory management can be found on our support page.
Automate Warehouse Operations To Prevent Mispicks
Mispicks happen when the wrong items are shipped to a customer. This is a serious case of time and labor wastage, a costly mistake, and can taint your company’s reputation. To avoid blunders like these, steer clear from manually managing and tracking the inventory, and automate the process as much as you can instead.
The right inventory management system suitable for your organisation will aid employees in organizing stocks and selecting the exact products for shipment. Automating the processes you implement at multiple warehouses eliminate unnecessary costs and inefficient use of manpower and time. Manual processes are also time-consuming and increase the risk of human error. More importantly, it ensures that the right product gets sent to the right person, safeguarding your relationship with customers.
Double Efforts By Maximizing Warehouse Trips
Put into action a process that cuts down personnel costs and time used to pick, pack, ship out, and re-stock an item, and monitor and report such activities. Double the efforts your employees put in by using a smarter system to organize and make the most of your manpower. Take pickers for example, each time they go and take out goods to ship from the warehouses, make them bring in the same amount of goods they are going to retrieve so they can re-stock immediately. This improvement will save you lots of time and bring down operational costs.
Use An Effective Multiple Warehouse Management Software
Hiring a highly competent warehouse manager can only get you halfway there, he will need all the help he can get when he is in charge of operating multiple warehouses. Problems are bound to happen and issues will arise at an exponential rate unless you have a reliable multiple warehouse management software. The system will eliminate efficient processes, minimize hassles and errors, and ensure that your multiple warehouses have enough supply to meet demands.
Also, your current warehouse system might be due for a timely update, from spreadsheets or an old and clumsy software that doesn't meet your needs but does the exact opposite, to one that has everything you ask for, and more. Move over, medieval systems, it's time for a better and more modern solution to take your place!
To top everything off, use a warehouse management software that fits with your accounting or e-commerce software to have a trinity of a cloud to cloud to cloud solution. The power of three will set your warehouse worries free. See here for more TradeGecko apps and add-ons.
An inventory management software like TradeGecko with your multiple warehouse management. It enables you to easily manage stock across multiple warehouses with functions that help you transfer stocks between locations, send and receive goods from and into a specific location, create purchase orders, and many more. You can even gain real insight into stock and inventory movements and make decisions to improve your business based on our Intelligence and Reporting feature!
What’s better, TradeGecko's multi-user platform allows your whole team to collaborate and keeps everyone up to date on changes in the inventory. This feature, along our mobile sales app, puts an end to troublesome emails and ineffective communication among warehouse management staff.
Managing multiple warehouses definitely has its challenges but utilizing the right warehouse management software can streamline operations so you can get maximum results without spending more. Try out our 21-day free trial to get a feel of how our system is a one-stop solution for managing your multiple warehouses.
Applying the good strategies are also essential in your battle to combat challenges in warehouse management. All the best to juggling all your eggs between your multiple baskets!