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Warehouse Optimisation: Types, Benefits, & Examples

Organised, productive warehouses are essential to attaining better profit margins and delivering excellent customer service. Warehouse optimisation is the process of improving your facility’s workflows and layouts, making them safer and more efficient. 

Conducting periodic warehouse optimisations helps your organisation eliminate frustrating and costly inefficiencies. It’s an essential part of inventory management and enables you to provide better service for your customers. 

This article explores why warehouse optimisation is so important, the different types of warehouse optimisations, and the latest trends in the field.

Warehouse management Inventory optimisation Inventory management
10 minute
Oliver Munro blog profile picture

by Oliver Munro

Posted 10/12/2024

warehouse optimisation

What is warehouse optimisation?

Warehouse optimisation is the process of improving your warehouse for maximum efficiency. It starts with a complete analysis of your current warehouse operations to identify roadblocks and areas for improvement. 

After analysing your current operations, the next step is to address the roadblocks you identified and find ways to make your operations more efficient. This could include reorganising your warehouse layout, implementing new technologies, or developing new processes to get daily tasks done faster. 

warehouse optimisation

Optimisation also means finding ways to cut back on warehouse management costs. 

Warehouse optimisation is an ongoing process and should be revisited on a regular basis as your business grows. As you develop new products and expand your operations, optimisation will help you prevent excess costs, shipping delays, and disorganisation.

6 benefits of warehouse optimisation

Warehouse optimisation offers many benefits for your business and your customers. For example, one estimate found that optimising your inventory management processes and implementing automation could save $800 per month, per employee.

Here’s why warehouse optimisation is so essential for growing businesses.

benefits of warehouse optimisation

1. Accurate inventory data

One key component of warehouse optimisation is improving your inventory tracking system. Optimisation often involves implementing automated stocktaking technology, eliminating human error and resulting in more accurate inventory data. 

This will give you a complete picture of which items you have in stock at any given time.

When you have access to accurate inventory data, you can time your new product orders perfectly to ensure you’re not understocked or overstocked. With this inventory data, you can also create more accurate reports and conduct effective demand planning for the future.  

2. Increased customer satisfaction

Optimising your warehouse makes it easier to provide high-quality service for your customers. 

Streamlining your pick-and-pack processes can help you get each order to customers faster. Implementing strategies like demand planning and automated reordering also prevents items from ending up on backorder for an extended time, which can cause delays. 

On top of that, warehouse optimisation improves order accuracy, so customers get the exact items they order every time. Implementing quality checks in your shipping process helps prevent shipping errors. Not only will your customers be happy, but you’ll also have fewer costly returns to process.

3. Improved warehouse organisation

Optimising your warehouse results in a more organised space. This makes it easier for employees to find the items they need and can help prevent products from getting lost or stolen. 

Better organisation will also help you do more with the space you have. For example, you can find ways to store more products or create more effective workspaces for your employees.

4. Lower costs

Warehouse optimisation can help you cut back on unnecessary expenses. After optimisation is complete, you might be able to reduce labour costs, cut back on utilities, or switch to more affordable technology options. 

Because of the potential cost savings, warehouse optimisation is particularly important for companies with restricted budgets. You may also be able to pass these cost savings on to your customers, which can help you build brand loyalty.

5. Safer warehouses

An often-overlooked benefit of warehouse optimisation is the ability to keep your employees safer while working. Warehouse optimisation can help you remove obstacles from the warehouse floor, creating wider paths for your employees to move through. 

During the optimisation process, you might also identify the need for more employee protective equipment, such as helmets, visors, or harnesses. Employees might also benefit from more flexible scheduling options that allow for more rest.

6. Increased productivity

Warehouse optimisation gives your employees the tools they need to be more productive on a day-to-day basis. Benefits like automating repetitive tasks and using the space more efficiently can help your team get essential daily tasks done more quickly.

This improved productivity will help you keep up with demand during busy seasons.

Warehouse optimisation examples

So, what exactly does optimising a warehouse look like in practice? Here are some examples of businesses that have successfully optimised their warehouses in real life.

Zara

As one of the world’s largest fast fashion brands, Zara faces unique inventory management challenges.

Because Zara releases new clothing styles so frequently, the company needs extremely accurate demand planning to meet customer expectations while minimising dead stock. With a global presence, Zara also needs to allocate inventory in warehouses throughout the world. 

To optimise its warehouse network, Zara worked with AMPL and researchers from UCLA and MIT to develop a proprietary inventory management model and software program. This model included advanced forecasting capabilities and inventory data, which helped Zara warehouses around the world manage their inventory.

Toyota

Over the years, Toyota has regularly optimised its warehousing and logistics strategies. This has helped the car brand navigate ups and downs in its supply chain. 

Toyota was one of the first brands to use a just-in-time inventory strategy, implementing this approach in the 1970s. This meant that Toyota was only carrying the stock they needed to meet immediate demand, which reduced the need for warehouse space. Since then, Toyota has continuously adjusted its warehousing strategies to account for current demand. 

For example, Toyota is now using robotics and automation at several points throughout the supply chain to maximise productivity. They also use multiple suppliers and focus on maintaining strong supplier relationships.

Types of warehouse optimisation

types of warehouse optimisation

There are several different types of warehouse optimisation. All these optimisation types can be beneficial for your business, as many of them even support each other.

Warehouse layout optimisation

This is the process of optimising your warehouse space to create a more effective layout and improve productivity. 

Warehouse layout optimisation often focuses on moving items and stations to create a more streamlined workflow. For example, if two products are often packaged together, those items should be stored next to each other to eliminate trips back and forth across the warehouse. 

For large warehouses, adding traffic signs and “lanes” can also be very beneficial. This keeps your employees moving in the most efficient way through the space and can prevent collisions.

Warehouse space optimisation

Warehouse space optimisation focuses on getting more out of the space you have. By storing more products in the same space, you won’t need to spend more on additional storage as your company grows. 

This often focuses on finding safe ways to use vertical space more effectively. For example, you might invest in taller, denser shelving units or even build a mezzanine level. You can also find ways to fit more products in your horizontal space, such as creating narrower aisles or changing the width of your shelving units. 

Another key component of warehouse space optimisation is removing items that are not necessary to your operations. This could mean donating products that you no longer sell, or recycling old equipment to make way for a more space-efficient version.

Warehouse process optimisation

This type of optimisation focuses on standardising and streamlining each of your warehouse processes to help you get things done more quickly. This means optimising every step of your inventory lifecycle as items move from receiving to storage to pick-and-pack to their final shipment. 

Using technology can help make each step of this process faster. In some instances, you may even be able to use automation to handle repetitive tasks, reducing the need for manual labour. 

Once you’ve optimised your processes, it’s important to communicate them clearly with your employees using signage and employee handbooks. If you’re making significant changes to your warehouse processes, training sessions may also be required.

Inventory management optimisation

This is the process of improving your inventory management practices, with the goal of getting more accurate inventory counts. 

This type of optimisation relies heavily on technology to keep track of inventory as it moves in and out of your warehouse. This can help prevent inventory loss and help you operate more efficiently. 

Inventory management optimisation can also involve demand forecasting. This helps you predict how much product you’ll need at any given time so you can stock your warehouse appropriately.

Warehouse optimisation trends

warehouse optimisation trends

With technology improving at a rapid pace, warehouses are finding new and exciting ways to improve operations. Here are some of the trends we’ve seen in warehouse optimisation over the past several years.

AI in warehouse optimisation

Over the past few years, AI has been a huge buzzword – not just in logistics, but across all industries globally. It’s no surprise that warehouses are looking for unique ways to incorporate this technology into their operations. 

One of the most exciting applications of AI in warehouses is demand planning. AI tools can assess inventory data from past months or years to identify trends in consumer purchasing. Then, the AI can automate future purchases to ensure you have the right amount of inventory in stock. 

Some warehouses have also been using AI for predictive maintenance and safety. AI tools connect to the devices used in your warehouse and create a predictive maintenance schedule based on how often the devices are used and the data they provide.

Robotics

Many warehouses are also implementing robotics tools to handle tasks like order picking. This can help improve the accuracy of your orders by minimising opportunities for human error. Amazon and several other large-scale e-commerce brands have implemented their own robots to fulfil orders more efficiently. 

By using robots to handle these repetitive and physically intensive tasks, you free up time for your employees to focus on more complex problem-solving. Studies have found that using automated robotics in combination with human talent is most effective, rather than using automation alone.

IoT sensors and wearables

Another popular tool for warehouse optimisation is the use of IoT devices. These devices collect data directly from the warehouse, which decision-makers can use to increase efficiency and keep workers safe. 

For example, warehouses can implement sensors to measure the temperature and humidity levels at key points throughout the warehouse. This is very helpful if you have inventory or machinery that is sensitive to environmental conditions. 

Some warehouses have also been providing their employees with wearable devices to help keep them safe. For example, some warehouses provide their employees with wearable exoskeletons that provide extra support for heavy lifting. 

Some warehouse employees also wear watches or bracelets that help them find inventory locations faster. These wearable devices also help warehouses track employee movement patterns. This information can help you develop more efficient movement patterns throughout the warehouse.

Focus on sustainability

Another major trend in warehouse optimisation is an increased focus on environmental sustainability and social responsibility.

Warehouses play a very important role in the supply chain and in their local communities. A focus on sustainability helps reduce the negative impact on these communities. 

For example, many warehouses are focusing on reducing their energy and water consumption. This approach is both beneficial for the environment and helps reduce operational costs. 

Some brands are also focusing on social responsibility in their warehouse operations. This is often done by implementing ethical procurement practices, implementing advanced employee safety measures, and offering increased compensation and benefits for warehouse employees.

Optimise warehouse processes with Unleashed

Ready to optimise your warehouse? Unleashed warehouse inventory software can help you simplify the process, improve your bottom line, and minimise waste.

Unleashed helps you keep track of your inventory in real time across multiple warehouses, with complete product traceability. With access to detailed inventory data, you can make your warehouse more efficient, more organised, and more profitable. Try Unleashed for free today to get started.

Oliver Munro blog profile picture

By Oliver Munro

Article by Oliver Munro in collaboration with our team of specialists. Oliver's background is in inventory management and content marketing. He's visited over 50 countries, lived aboard a circus ship, and once completed a Sudoku in under 3 minutes (allegedly).