Organising a well-functioning warehouse for ecommerce constitutes a key aspect in the management of an online shop. In many long-term aspects it may prove to be even more significant than the shop. Thanks to having a shop that has been designed in a good manner, we may easily acquire buyers. However, thanks to executing the orders effectively, we contribute to our customers being satisfied with the whole shopping experience.
What should we be considering while organising the work of the warehouse?
First and foremost, it is worth considering which of the warehouse operations will exert the greatest influence on the effectiveness of the warehouse. How should we measure the effectiveness of the warehouse? This can be done by measuring the daily quantity and quality of the goods released from the warehouse, by monitoring the number of orders that the warehouse is able to execute (pack and ship) on the day of their placement. Such a choice of key indicator for the efficiency and quality of the warehouse arises from the fact that it reflects not only how our customers evaluate the work of the warehouse but also the work of our whole shop.
Which other warehouse for ecommerce operations are also performed?
acceptance of deliveries, literally collecting the goods from our suppliers, distributors and wholesalers;
- storage of the goods, involving the decisions about where and how the goods should be placed in the warehouse,
- release of the goods, for the final step in executing the customers’ order,
- return of the goods service, accepting those goods returned by the customers.
If we have already determined that the process of releasing the goods constitutes the primary task of the warehouse for ecommerce, then why should we be pondering which of the above operations will exert the greatest influence on the effectiveness of the warehouse? The answer is that it depends on the style of the work we adopt for our shop (and the warehouse).
Different business – different warehouses
Some shops buy goods in large quantities (e.g. when importing goods from abroad), which means that they need a lot of space to store goods, as deliveries take place only occasionally (once a month or once every few months). In such a case, the operations related to releasing the goods, storage and reasonable usage of warehouse space become crucial. For large deliveries, not all the goods must be immediately available for release (sale), although each type of product should have at least a few examples in locations where they can be collected conveniently (i.e. those locations where orders may be executed easily and quickly, meaning the goods may be collected and released).
The just-in-time-mode is the complete opposite of such an approach. This is where only the most popular products are permanently stored in the warehouse, and then only in small quantities. The majority of the goods are bought on an ongoing basis and delivered to the warehouse when we already have a buyer. This may be our choice if our shop offers a very wide range of goods (e.g. consumer electronics, etc.), where it would be very costly (or even unprofitable) to always have each type of product in stock. Unfortunately, apart from the obvious advantages, such as having less funds “frozen” in the goods, or less warehouse space being required, this lower stock level may cause considerable difficulties. The main problem is, of course, the fact that contrary to the previous model, as here deliveries are received frequently (everyday). However, each delivery is relatively small, and may be quickly accepted (small numbers of products in each delivery).
Effective warehouse – key operations
This brings us to our discussion on the key operations that are decisive for the effective use of our warehouse for ecommerce. In the case of the just-in-time model, even though customers still evaluate us on the basis of what they can see, that is how fast and reliably we execute their orders, the key influence on the speed and quality of the order execution is exerted not by those operations relating to release of the goods but, first and foremost, by the speed and effectiveness of accepting the goods. Why? Because of the simple fact that we cannot release any goods until we first accept deliveries of the same!
In the upcoming articles, we will try to discuss in more detail the issue of how to optimise the particular processes related to the performance of basic warehouse operations. We begin with accepting deliveries and finish with the final operation, which is releasing of the goods / order execution.