Setting Up Your Warehouse and Bin Location System


Having an easy-to-navigate system for your warehouse is crucial to your fulfillment process. Not only will it give you more control over your inventory, but it will also help you save time. A well-planned warehouse and system also helps with new hires and seasoned employees.

Neeps has developed a system and warehouse layout that has streamlined its fulfillment process. Here's an article from the SolidCactus September 2005 newsletter written by Scott Sanfilippo, co-founder and chief operating officer, on how to set up your warehouse:

If you're selling products and stocking them in your warehouse, you probably have some type of location system in place to make picking easy for your employees. You don't? Well, then, read on!

If you're just starting out and have a few employees who know where products are located by memory, it may seem like a good system to have. Don't be fooled. For instance, what happens when those employees take jobs elsewhere or you need to quickly hire new people to take care of the influx of holiday orders that suddenly crept up on you? Chances, are you'll be wasting a lot of valuable pick/pack time having those employees walk around aimlessly searching for products. The solution to your warehousing evolution is bin locations.

Bin locations are simply the places where products are housed in your warehouse. This is a crucial system for every e-business to develop, and you should organize your warehouse right down to the exact location on every single shelf. Taking the time to set up bin locations now, before the holidays, will save you time and money, improve your order turn-around time, and eventually lead to greater customer satisfaction down the road. Here's how you start.

For the purposes of these examples, I will assume that your warehouse is set up with racks making up aisles, which we call pick lanes. The first thing you need to do is find a starting point for your pick route. A good origination point is the spot where you keep your pick tickets and baskets or carts for picking products. The second step is to label your pick lanes. Pick lanes should be labeled alphabetically. The aisle closest to the start of the pick route can be labeled A, the second-closest can be labeled B, and so forth.

When you have a map of your pick lanes, it's time to label the racks that are located in each of those aisles. To maintain a flow, racks are labeled in such a way that your picker will start at the beginning of the pick route, walk up the first aisles, down the second, up the third, and so on, eventually ending up back at the start of the route, ready to pick another order. For obvious reasons, we call this a serpentine layout.

Labeling your racks along the pick aisle is simple. Let's assume there are three racks in each aisle. Starting at the beginning, assign the first rack on the right the number 01 (put a zero in front of single-digit numbers to maintain consistency and allow for future growth), the second 03, and the third 05. On the left side of the aisle, assign the first rack 02, the second 04, and the third 06 (see Figure 11.12). When your racks are labeled, it's time to drill down to the details of each rack.

Figure 11.12. Example warehouse floor plan.


The first rack in aisle A is called A01 (aisle A, rack 01). Let's assume that rack 01 has three shelves. Starting at the floor, label the bottom shelf as A, the middle shelf as B, and the top shelf as C. On those shelves, your product is contained in boxes or "bins." Starting left to right, each bin can be labeled 01, 02, 03, 03, and so on. You do this for each shelf, so, in this example, products in the fourth bin on shelf B of rack 02 in aisle A would have a bin location of A02B04 (see Figure 11.13). The key thing to remember is that the bin location is not tied to an itemit's tied to the rack.

Figure 11.13. Example of rack setup.


At first, organizing your warehouse may sound confusing and look like a lot of work, but, believe me, it will pay big dividends over time! As TheFerretStore.com quickly grew from Joe and me picking out orders by memory to hiring our first employee and ultimately dozens more, it became necessary for us to have a system in place to make picking easy, while at the same time making it easy to teach others in a short time. Today the time spent training new employees on how to pick product takes no more than 5 or 10 minutes because the system is easy to learn. With a system in place like this, when you need to bring in temporary help to pick and pack during the holidays, your training is minimal.

When your bin location system is up and running, you can tweak it even more to improve warehouse efficiency. For example, you may want to put your most-picked products right at the beginning of your pick route so your pickers don't have to go three aisles back to get the most popular items they pick on a constant basis. Or if you have items that sell only in the winter, move them to the end of the pick route and put your summer merchandise at the beginning during the spring and summer months.

Establishing a bin location system is essential as your business grows.

Shipping and Packaging

Neeps uses United Parcel Service (UPS) to ship all orders. With an average of 400 packages per day, UPS makes two trips daily to the warehouse for pickup.

All packages for the first pickup are placed on a crate and wrapped. UPS loads the entire crate onto the truck.

Negotiating Shipping Cost

Anything you can do to cut cost without cutting quality is more money in your pocket. If you are shipping enough packages per day, the shipping company will do whatever it can to keep you as a customer, including giving you a steep discount rate or giving you computers, software, and even bar codescanning equipment. UPS, FedEx, and DHL are all competing for your business. Get rates from all three, and use that as your negotiating power. Neeps was able to get a discounted shipping rate, computer equipment, and software for free.

Tip

You can request refunds or discounts for late packages. You can simply do it yourself by calling the shipping company or use a third-party company such as www.refundpackage.com or www.shippingrefunds.com to do it for you. There is no up-front cost, and you pay only 50% of whatever they recover.

If you are shipping hundreds of orders per day, that can mean thousands of saved dollars per month.





Succeeding At Your Yahoo! Business
Succeeding At Your Yahoo! Business
ISBN: 0789735342
EAN: 2147483647
Year: N/A
Pages: 208

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