What is Basic warehousing terminology | How Warehouse works – product | delivery | types
What is Basic warehousing terminology | How Warehouse works
Warehouses are like stopover points for inventory in between the factory and a retail store or a customer, and they all work about the same way. First, there’s a receiving area for inbound deliveries. During the receiving process, you inspect shipments to make sure you’ve gotten the right products.
You also check to ensure that the quantities match the shipping documents and that none of it is damaged. If there are any issues with the inbound material, it gets moved into a separate area called the Over, Short, and Damage or OSD Section.
If everything is okay, the material gets logged into the warehouse management system. That’s the computer that keeps track of all the inventory. The WMS provides putaway instructions so you know exactly where to take the product. And there it sits, patiently waiting until you receive an order.
Then, the warehouse execution system, or WES will issue a pick ticket. The pick ticket tells a person or a robot where to retrieve or pick the item from inventory. Then, the item gets sent to the pack and ship area and once it’s packaged and labeled it’s placed in the outbound area or the shipping bay.
Then it’s picked up by a carrier, usually a semi-truck or a delivery van, and it’s taken away. Bye-bye warehouse. Now, to keep things simple, I’ve used the term warehouse pretty broadly, but we’re supply chain professionals, so let’s be a bit more specific about the different kinds of warehouses. Distribution centers, fulfillment centers, and replenishment centers are warehouses that are optimized for specific parts of a supply chain.
A cross-dock is basically a warehouse too, but the goal of a cross-dock is to ship everything out every night. There are also warehouses that specialize in particular types of products, like warehouses for hazardous chemicals and refrigerated warehouses to keep food fresh.
And there are also bonded warehouses that allow companies to store products without paying duties. Now, the last thing I want to talk about is how we measure what goes on inside of a warehouse. The various products in a warehouse are called Stock Keeping Units or SKUs. Each different packaging type has a different SKU. So if your soda comes in a 12-pack and a 24-pack, each of these is a different SKU.
When a customer places an order, they generally want several different products and each SKU is listed on a separate line. Along with the SKU, that order line will also include a quantity. The most common metric for warehouses is the fill rate.
You can measure the item fill rate, meaning what percentage of the items ordered you were able to deliver, or you can measure the line fill rate. Either way, the higher the fill rate, the better job you’re doing of delivering the items your customers want when they want them.
In order to have a high fill rate you need to do a good job of forecasting demand, scheduling replenishment, and keeping adequate safety stock on-hand. Warehouses employ a huge number of people and they play a big part in getting products from factories to stores to customers, so understanding how warehouses work will help you with your company, and it’s critical for warehouse manager to help you manage your own supply chain.