The Process of Warehousing Explained

As retail sales in the United States continue to grow, the boom for e-commerce is great but can present a challenge for start-up to mid-size retailers. Supply chain logistics can be challenging. You need space to store, sell, and ship your goods to customers. To do that, you’ll need to understand what a warehouse is and how it works.

What is warehousing?

There are different types of warehouses being utilized today, and you’ll want to understand your needs to determine the one most appropriate for your business. For the sake of simplicity, warehousing is the process of storing goods before they are sold or sent to a dedicated warehouse to store for a longer period of time. A warehouse will help you manage inventory. You will have visibility to track where your items are located, when they have arrived, how long they have been stored, and the quantity available.

Three key parts of warehousing logistics

Warehouse management—Includes the day-to-day operations. Managing a warehouse entails overseeing staff, training, inventory, equipment, relationships with shipping carriers, and safety and security.
Warehouse operations—The process of moving and tracking inventory. Efficient operations enable your business to keep costs low, manage inventory during peak times as well as slower times, and, most importantly, keep customers satisfied.
Warehouse management systems—Technology provides the tools necessary to maximize your processes. It enables you to save time and money. A warehouse management system (WMS) optimizes inventory and tracking, workload distribution, and shipping.

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How can warehousing fit into your operations?

When your customer purchases an item from your e-commerce store, they expect it to magically show up on their doorstep in 48 hours. However, there are a few steps in between clicking the purchase button and delivery to the customer’s home.

Inventory storage—Each item has its designated area within the warehouse. When time matters, quickly pinpointing the exact location of any item is critical.
Shipping and receiving—Your warehouse should run efficiently in order to accept incoming inventory. A good warehouse will also know which products are arriving and how many units of each.
Returns—There will always be returns, especially when there is no local storefront to manage the process. The warehouse will manage the entire process. They will make sure the customer has prepaid return labels, track the returned item for inventory accuracy, and refund the customer.

What should be considered when selecting a warehousing solution?

When considering a warehouse, there are some key factors that should be in your decision-making process.

Storage costs and the number of SKUs—Warehousing fees can range from per-SKU or per-unit storage to a fixed fee for individual bins, shelves, or pallets used. Understand your inventory needs and the space you will use on a monthly basis.
Do you have seasonal inventory?—Fluctuations in the supply chain and demand can add a few complications to your process. If your sales fluctuate, leasing a dedicated space for your business can get expensive during the lower traffic months. A fulfillment center can maintain a balanced flow of inventory while keeping overall costs down.
The number of warehouses matters—When your business grows, logistics can become more complicated. Choosing warehouses with the right locations in terms of size and geography can help your business needs today and into the future.

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Final thoughts

Any business that sells products will have some type of warehousing needs. Choosing the right one to fit your strategies is key to helping you save money, meet your customers’ needs, and drive efficiencies. Outsourcing your warehousing needs to a third-party logistics company is a smart way to save time and allow you to focus on customer satisfaction and growing your business.

Want a personalized consultation to discover what 3PL solutions can do for your business? Contact PFS today!