Online shopping is growing fast. By 2025, experts predict that 26% of all retail sales will happen online. This big shift means retailers need more warehouse space and better ways to manage it.
From the way they store inventory to the method of picking orders, strong warehouse management processes help retailers run their warehouses like a well-oiled machine. This guide shares how.
Warehouse management is the set of operational processes that help a warehouse run efficiently. An effective warehouse management solution includes tracking inventory levels, locating goods, managing staff schedules, fulfilling orders, and optimizing warehouse space.
A good warehouse management system (WMS) helps retailers:
With the right warehouse management system in place, retailers can stay ahead of the growing online shopping trend and turn what could be a logistics headache into a business advantage.
A well-designed warehouse management process addresses several key areas to ensure your operations run smoothly and efficiently. Let’s explore these essential components that work together to optimize your warehouse performance.
Unlike a warehouse management system, which manages the entire operation of running a warehouse, an inventory management system (IMS) is responsible only for managing inventory within it.
Retailers can use this technology to:
An IMS is a subsection of the warehouse management process, so it should be integrated with your WMS. Use the inventory software to track data and forecast customer demand. The WMS will pull this data and streamline the process for how warehouse staff source inventory, like displaying the location of a single SKU within a 10,000-square-foot warehouse.
Modern consumers have a long list of demands they need brands to meet. For many, speedy delivery is the most important.
Fast and free shipping is the new standard for customers. A WMS streamlines this order fulfillment process and helps warehouse staff pick, pack, and ship orders in as little time as possible. The technology will:
This speedy order processing gets products to your customers as soon as possible, meeting cutoff dates for one- or same-day shipping and giving your warehouse staff more time to process orders that follow.
A good warehouse layout helps teams store, find, and move products quickly and correctly. It creates a smooth flow that saves time and reduces extra handling.
Part of this involves smart slotting, deciding where each product should go based on how often it’s picked, its size, and how it moves through the warehouse. When done right, slotting reduces travel time, prevents congestion, and makes it easier for staff to locate inventory fast.
A good WMS helps:
A WMS automatically collects important data on what’s selling and what’s expected to sell. With this information, managers can make smart decisions about where to put items, like placing fast-selling products near packing areas or grouping related products to make picking easier.
Material handling is about moving products safely, on time, and accurately within a warehouse. This includes using the right equipment, like forklifts and pallet jacks, and following standard processes that reduce damage and waste.
Warehouse managers can use a WMS to:
For warehouses, logistics managers say their inability to attract and retain a qualified workforce is their biggest problem.
Keep hold of the employees already inside your warehouse. With a WMS system, merchants can plan resources to keep inventory in the warehouse constantly moving, and keep employees in their roles. Look for one with workforce management features that help to:
Protecting both workers and inventory is very important in any warehouse. From following safety rules to stopping theft, keeping a secure workplace keeps operations running smoothly and reduces costly incidents.
You can send automatic safety reminders to staff, like equipment checks or restocking safety supplies. Plus, keeping real-time records of where each item is, which greatly reduces lost or stolen goods.
Modern warehouse management is part of a larger retail ecosystem. Unified commerce brings your ecommerce storefront, POS, ERP, customer data, and WMS together into a single platform. A real-time data exchange ensures that inventory levels, order statuses, and customer profiles are always up to date, no matter where the purchase happens.
With a unified commerce strategy, retailers can:
💡 Tip: Connect with other systems (like Shopify’s unified commerce solution) to create a single source of truth for inventory, orders, and customer data.
Predicting which products customers will want, and when, helps warehouses keep the right amount of stock without tying up money in slow-moving inventory.
Good demand forecasting keeps popular items available and prevents expensive overstocking that can waste space and lead to markdowns.
By using these forecasting tools along with a WMS, warehouse teams can confidently plan when to restock, reduce waste, and make sure the right products are always available.
Your warehouse management processes aren’t over once a product leaves the warehouse. A good WMS has order-tracking capabilities to show:
Parcel transparency is important to consumers. Use a self-serve portal, such as the one found in the Shop app, that shows the location of their order at any time. It’s your WMS that will pull this data once an order has been marked as fulfilled in a distribution center.
Once products are received and verified at the warehouse, the next step is putting them in their assigned storage locations. A strong putaway process reduces the time it takes to store goods and ensures inventory is organized and easy to retrieve later.
A WMS can automate and improve this process by:
Putaway efficiency directly impacts how fast orders can be fulfilled later. The faster and more accurately items are shelved, the easier they are to pick when orders come in.
It’s inevitable that some products shipped from your warehouse will make their way back. Research puts the return rate for items at 16.9%. Use warehouse management software to process returns, approve them for refunds, relabel inventory, and get it back on the shelf.
The best part? Data from your WMS can be used to preempt returns from plaguing your warehouse.
As Kurt Ellis, president of GLF E-Commerce Fulfillment, explains, “Data-driven insights from warehouse and inventory management software can also be used to identify customer behavior patterns and help make policy adjustments, like limiting the number of items a customer can buy in different sizes or colors to reduce the rate of returns, and help avoid the need to discount unwanted items.”
Warehouse management technology offers clear advantages for busy warehouses. To maximize efficiency in yours, follow these best practices.
Continuing with the speed theme, help warehouse employees fulfill customer orders faster with an order-picking system. It’s a strategy used to determine which items are sourced from the warehouse first, reducing step counts and collecting sold inventory more efficiently.
Options include:
Any ecommerce brand with a vision of going global needs international warehouses. By stocking inventory in locations that are sales hotspots and global trade hubs, such as Houston or London, you’ll expand your geographical footprint.
International orders can be sent from the closest warehouse, already cleared by customs—a tactic with the potential to reduce shipping costs. Customers also have products in their hands within as little time as possible.
Take it from Jason Wong, CEO and founder of Doe Lashes: “The way we respond is to place our inventory near those cities to reduce the overall miles traveled by those packages. We’re now stocking inventory outside of the country for our international customers, just to reach them faster. We have a warehouse in China and that helps us reach Australia and the whole Southeast Asia region.”
Not only does this localized inventory strategy result in faster orders and fewer carbon emissions, but Doe Lashes’ formula to minimize the distance between products and customers helps it build a supply chain that’s resilient against disruptions.
The warehouse robotics market is set to reach $9.5 billion by 2025. The surge in valuation derives from the benefits of ecommerce automation—a strategy that takes repetitive tasks off your warehouse employees’ plates.
A mad dash to store, pick, pack, and ship orders leaves room for mistakes. Those mistakes, like adding the wrong product to a parcel, wreak havoc with customer experiences.
Automations in workflows eliminate the chance of human error, while also leaving staff more time to focus on higher-impact tasks. For example, if your warehouse management system shows that 500 units are ready for sale but 400 of them are still in the receiving area, use Shopify Flow to automatically display a low stock message for that SKU on your ecommerce store.
Nick Malinowski, cofounder of OTW Shipping, also advises, “If you have the budget, utilize barcode scanners. Not only will this make inventory management quicker, but it will also make your pick and pack more accurate. Higher pick accuracy means fewer returns and corrective orders that need to be compensated by you. The result is happier customers and more five-star reviews.”
Your warehouse is a machine with many moving parts. Periodically check whether yours is working at its optimal level by paying close attention to these performance metrics:
Find a warehouse management system with these advanced reporting capabilities, such as Easyship or ShipBob. The more data you have, the better decisions you’ll make when operating a busy warehouse.
A third-party logistics provider (3PL) is an external company that handles your logistics and supply chain management process.
You’ll deliver inventory to the 3PL’s warehouse, offloading all warehouse management operations to your partner. They’ll receive order details as soon as they’re processed through your ecommerce store. It’s their job to pick, pack, and ship inventory to your customers—no intervention required.
The Shopify Fulfillment Network makes this process seamless for Shopify merchants. In partnership with Flexport, Shopify Fulfillment Network offers fast, affordable fulfillment with easy onboarding and direct integration into your Shopify admin. You can track everything—from orders and returns to inventory levels—in one place.
Warehouse technology has clear impacts on how efficient a distribution center is. Yet investing in your own technology stack is a big commitment.
A 3PL’s entire business revolves around warehouse management. They’ll absorb the cost of warehouse technology that helps them pick, pack, and ship orders faster and more accurately, such as:
Shopify Fulfillment Network builds on this foundation with a data-driven logistics network that positions your inventory closer to your customers. Thanks to Flexport’s strategically located fulfillment centers, Shopify Fulfillment Network enables two- and three-day delivery nationwide—helping you meet rising consumer expectations for fast shipping without the overhead of owning and managing a warehouse.
Third-party logistics providers send large volumes of parcels each month. As a result, many shipping carriers provide them with discounted shipping rates—often to persuade the 3PL to continue using their services. Many 3PLs pass on these discounted rates to their customers, making shipping costs cheaper than they would be if parcels were shipped from your own warehouse.
For merchants like The Dad Hoodie, relying on Shopify Fulfillment Network for shipping and fulfillment has made a big difference to their bottom line. Average shipping costs have been cut by 40%, with founder Taylor Llewellyn saying, “As a business owner, fulfillment is only something you think about when it isn’t working well, and luckily, I never have to think about it.
“Knowing that we have a premium partner that gets orders out of the warehouse quickly and at a cost we could not achieve elsewhere [means] we’re able to focus on growing our business.”
When you’re using a 3PL’s warehouse, you pay storage and fulfillment fees for its services. The same applies to labor management, allowing you to reduce overhead by leaning on warehouse employees already contracted by your 3PL.
Depending on sales volume, employee count, and inventory levels, this could be a much cheaper warehousing option than fronting an entire lease of your own.
Lean on a 3PL’s existing collection of international warehouses to reach global shoppers in less time, rather than opening up your own in popular warehousing locations with expensive leases.
Take it from Noelle Taylor, senior marketing manager at Taylor Logistics, who says, “Partnering with a 3PL to handle warehouse management allows brands to focus more on what’s important—growing their business and delivering the best possible customer experience.
“Committed 3PLs see their relationship with brands as a long-term partnership. As a result, they may be willing to invest in space, technology, and equipment to take your business to the next level.”
There’s nothing else for a 3PL provider to focus on other than running an effective warehouse. It’s safe to assume that they’ll have boundless expertise on how to run one, with tried and tested processes to:
With Shopify Fulfillment Network, you also gain access to Flexport’s years of experience in global logistics, giving you peace of mind that your operations are being handled by industry leaders.
As Elliott Davidson, ecommerce consultant at Parcel Master says, “Not having to think about and manage a process as complex as warehouse management, and knowing that someone who specializes in it is taking on the pressures and responsibilities, allows you to focus on other areas of growing your business.”
Any business owner with a conscience knows that shipping parcels to the other side of the world has some negative consequences on the environment. Unfortunately, it’s an issue only set to worsen as the years go on.
Consumers are becoming increasingly aware of this, and they’re voting with their wallets—choosing brands they know are actively working on reducing their carbon footprint.
Look for a 3PL that has measures in place to reduce its carbon footprint. From using lightweight packaging made from sustainably sourced materials to LED lighting within the warehouse, customers are already looking for brands who support these climate-friendly options.
Despite the benefits a warehouse management system has to offer, not all systems are created equal. Find the right WMS software—one that grows as your ecommerce brand does—by asking these questions to potential vendors:
Warehouse management is a tough thing to get right manually. By investing in a WMS, repetitive tasks will be taken off your warehousing team’s plate. You’ll improve order accuracy, ship parcels faster, and have the data you need to make the warehouse run at peak efficiency—even when you’re scaling internationally.
The five essentials of warehouse management are accurate inventory, efficient space utilization, optimized picking and packing, timely and accurate shipping, and continuous improvement.
Enterprise software company SAP makes customer relations and business management software. Warehouse management system software helps warehouses and distribution centers manage inventory, pick processes, and audits.
Keeping inventory levels accurate is the most important part of warehouse management. This ensures a quick delivery, which keeps customer satisfaction high, and prevents you from overstocking or understocking, which can hurt the bottom line.
In general, warehouse management is called “warehouse management system” (WMS) when referring to the specific software solutions used, or “warehouse operations” or “warehouse logistics” when referring to the broader aspect of warehouse management.
