Definitive methods for increasing warehouse efficiency for Beginners and advanced Users
Hello SAP Community!
my name is Dennis from the all4cloud group in Germany and I am a member of the Solutions Sales Team – mainly responsible for our solutions around the warehouse and production.
We from all4cloud are a SAP Gold Partner and focused on SAP Business ByDesign and also develope own solutions to extend the functionalities of SAP Business ByDesign. Currently we support around 11000 users worldwide and have around 20 own developed extensions.
With this posting I’d like to give you some methods and ideas to increase your warehouse efficiency and hope that it will help you to improve your processes in your warehouse.
Introducing warehouse management
For Beginners: Getting started
Determining the warehouse layout
For advanced Users:
Making the right choice
Adding advanced technology
1. Introducing warehouse management
Every warehouse is different and should be managed by a unique, customized
software solution. Although SAP Business ByDesign is a Cloud ERP
Suite with extensive standard processes and functions, you can use it to
develop a flexible and dynamic Warehouse Management System to meet the
requirements of every company that operates a warehouse.
The solution simplifies operation and boosts productivity. The capabilities and functions
of SAP Business ByDesign meet or exceed the vast majority of other
dedicated warehouse management systems.
In a study by ibi Research, 62 percent of surveyed online retailers state that
they use their merchandise management system to automate processes or
reduce manual processes. A total of 49 percent also wanted more transparent
processes, while 66 percent introduced merchandise management
because of the consistent data inventory it provided. Making the change to
software-based automation generally pays dividends even for businesses
handling small package numbers per day.
Intralogistics – the flow of goods in the company
The integrated merchandise management (WaWi) of SAP Business ByDesign
uses automated data acquisition and workflow compliance to streamline all
warehouse tasks. We drastically reduce errors that occur during tasks such
as goods receipt, placement in storage, picking, consolidation, and packaging.
SAP Business ByDesign introduces the concept of process validation,
which means that employees cannot continue until the current task is
Thanks to this simplicity, items are recorded, placed into storage, picked,
bundled, packed, and dispatched with greater speed and accuracy.
Warehouse workers can spend more time carrying out necessary tasks
instead of wasting time rectifying errors such as misplaced items and
incorrectly completed orders. Increased productivity boosts customer
satisfaction because customers receive their orders quicker and return
them due to errors less frequently.
Return on investment
The business benefits associated with ease of use and enhanced
productivity are sufficient to generate a rapid return on investment, so that
these functions and processes justify the use of SAP Business ByDesign –
in addition to all the other functions of this ERP suite.
2. Getting started
The use of software solutions delivers the most consistent increase in your
warehouse efficiency. The software reduces human error and misconduct
while at the same time ensuring that each action is validated and completed
First and foremost, your merchandise management system (WMS) administers
all operations involved in the receipt of goods and shipping of orders. It
assigns the orders by priority, allows you to sort them according to criteria
that are important to you, and creates step-by-step instructions to guide your
order pickers. Order priorities can be changed according to specified rules if
you wish. This would be virtually impossible using manual sorting procedures.
As a result, more orders are shipped and picked, and your team members
are informed at all times of their tasks.
Determining the warehouse layout
The warehouse layout is an important aspect when it comes to increasing
the efficiency of your warehouse. Many small companies begin with an overflowing
room that functions as a warehouse. Employees gradually stack
products or components there as they see fit. They find it very difficult to
find these items again later on. What you do next can determine the future
of your business. Successfully maintaining warehouse efficiency begins with
three simple steps:
- maximizing the warehouse space
- minimizing the physical steps
- Keeping order
Maximizing the warehouse
Your warehouse space is measured in three dimensions. When planning your
warehouse layout, you must take account of aisles and racks both at ground
level as well as in elevated areas. Good use of the available space can save
you a lot of trouble later on. You must also plan for large-scale locations to
store bulk goods and large items as well as small parts containers, wherever
Minimizing sequences and connections
Every additional step that your employees perform between the items affects
your productivity. Each time your employees leave a fingerprint on a product
while they move it is counted as a contact. Your warehouse layout should
help reduce the number of steps and unnecessary contacts. The movement
of your product and your team members should be minimized so as to
expedite the work being carried out and to promote maximum efficiency.
Consider the distance that your product travels between your goods receipt
and your production sites as well as the goods issue. Next, you need to consider
the average distance that your employees travel between locations
while they are picking orders or placing items into storage.Optimize the entire
Keep it clean
One final tip is simply to keep your warehouse clean. Product spillages on
the floor and suspended racks present hazards. Time lost due to accidents
has a serious impact on the efficiency of the warehouse. In some warehouses,
containers are placed at the end of the aisle so that every employee
can throw any objects that have fallen down into these containers and can
then continue with his or her designated task. At the end of the day, these
objects can be returned to their correct location instead of simply being
crammed into the nearest space available, which gets them out of the way
but may make it impossible to find them again.
Once you have decided how the rack systems will be positioned and how the
routes are to be organized, the next step is to create a location diagram.
A location concept helps you optimize your workforce by reducing the time
required to search for products. It also dramatically reduces accuracy errors
when goods and products are placed into storage and picked.
A location diagram describes how you identify the individual locations in
your warehouse, for instance, using letters, numbers, the building number,
zone, floor, aisle number, section, rack, and site.
If you only have one building or one floor, you can leave these parts out.
Using a map of your warehouse floor, you can assign logically coordinated
location numbers and then label all these locations on your floor so that your
employees know exactly how to find a specific point in your diagram. Once
your location diagram is ready, you must assign the products to the location
based on characteristics such as size, demand, type, or process. This generally
means that some locations are available for bulk goods and others for
small goods. Specific locations are often reserved for large-batch items,
which are collected directly from the hall again.
The use of assigned storage locations improves warehouse efficiency by
optimizing your human resources. Each item in your warehouse will have its
place and the WMS keeps an eye on this location for you. If the item is
ordered, your WMS informs your employees precisely where it is located on
the floor, so all they need to do is go to the correctly labeled aisle, section,
rack, and location number to pick it. In addition, items that are currently in
demand can always be kept at the optimum picking level so that they can be
picked quickly. Items that are frequently ordered together should be grouped
close together. This increases the picking density and reduces the number of
steps that your employees perform between the locations. It is much more
efficient to drive past 10 locations rather than 50 locations.
Tip: If you pick a great deal of products on pallets, it often makes sense to store the heavy
products in the storage area where the order picking path begins.
3. For advanced users
If you have been using merchandise management for some time, you can
continue to improve warehouse efficiency. Your goal should be to use performance
measurements and fine tuning to achieve further improvements.
There is always something to be learned from the process and transaction
data. The fact that the products also change means that there is constantly
scope for improvements on the floor. Use the analysis tools in SAP Business
ByDesign for this purpose: The integrated reporting quickly reveals the best
and worst sellers in the warehouse.
Measuring and evaluating
Since you now have a functioning warehouse layout, you should focus on the
areas where there are still problems. Do your reports indicate an area in the
warehouse that is still affected by heavy traffic that is slowing everyone
down? Do your employees find one area of the warehouse particularly difficult
for picking orders or placing goods into storage? Have you thought of an
additional step that could make their work easier? It’s possible that your first
layout was not perfect and simply needs some slight adjustments.
In all probability, your products will change over time. If this happens, your
warehouse layout must be flexible enough to adapt to the products. You will
notice that your first layout was too short-sighted and does not allow for
changes over time. It can take a whole year to see how your layout functions
in every season. Use all the evaluation possibilities in your system and determine
whether there are clear indications of a loss of warehouse efficiency
during specific weeks or months. How can you address these problems
without losing efficiency for the rest of the year?
Random vs. fixed locations
Many warehouses use fixed locations, which means that the products are
always stored at the same location or locations. More advanced systems
allow you to use random locations because your IT system knows the
location where you wish to store a product. You can also have the location
selected for you. This information is automatically accessed and then forwarded
to your order pickers. This makes it easier to improve the efficiency
of placing goods into storage and increase the picking density. It also opens
up various possibilities if your product is subject to seasonal changes.
Together with a more flexible and detailed location diagram, you have the
option of adding physical equipment that builds on your location diagram.
These include vertical lift modules that add more locations per square meter
and make it easier for your employees to choose from vertical spaces without
using their own ladders or elevators. Carousels operate in a similar way
and bring the product to the individual areas. This enables the use of fixed
workstations and eliminates steps. Ultimately, pick-to-light systems increase
the number of orders that can be picked at any time. They also offer your
employees additional step-by-step instructions as to how many products are
to be picked or which products are to be placed with which order – and
much more besides.
4. Optimizing Work
Optimizing your work is the next step in your warehouse evaluation. Your
WMS has many functions that directly influence the efficiency of your
warehouse because they relate to your personnel and can increase productivity
per employee without making their work more difficult.
For warehouses that contain a product mix with multiple zones and separate
as well as simultaneous picking processes, productivity can be increased as
Each employee remains in a zone and does not drive around the entire
warehouse. The withdrawals from each zone are then deposited at a collecting
station and combined as an order. Naturally, picking within every zone
is still controlled by the merchandise management to achieve maximum
Digitalizing the pick lists
If picking in a warehouse is not performed using mobile devices, it is generally carried out with the help of a printed pick list. This pick list provides the warehouse personnel with all the relevant information for fulfilling the current order.
In addition to information such as the item name/number, storage bin, and the quantity to be picked, it can also contain other optional information such as the manufacturer, weight, price, or customer data. Even though, picking in warehouses is still often carried out using this method, the majority of systems sold today support picking using mobile devices.
Although the pick list scores highly due to its simplicity and the fact that it gives warehouse personnel a great deal of freedom, the method is usually considered to be obsolete.
The advantages of working with mobile devices like laserscanners are obvious:
- Real-time synchronisation of entered data with your ERP-Software
- More productivity, higher customer satisfaction and reliable inventory thanks to lower error rate
We at all4cloud developed a WMS App called “scan4cloud” with an easy and intuitive interface to manage all logistic tasks on mobile devices like laserscanners, smartphones or tablets.
Leave a comment below or visit my profile for contact details!
5. Your Software
Making the right choice
You can choose between a special WMS or a software suite that integrates
all merchandise management processes in the ERP (Enterprise Resource
Planning). The latter offers many advantages.
The use of a specialized software solution that focuses solely on WMS
requires a degree of customization on the IT side. You must then link or connect
this system with your ERP. Please consider this when choosing your
solution because it will add to the cost. Providers already offer these types
of interfaces; simple plug & play is not possible. If, on the other hand, you
select an ERP suite that already incorporates merchandise management,
these interfaces can be omitted. Another problem is that you must also
always update the interfaces whenever new software versions are released.
Adding advanced technology
There is a broad range of advanced tools that can be integrated in your warehouse
management system. These days, RFID tags and scanners are tools
that can provide comprehensive support for the work carried out by employees
in the warehouse. The use of bar codes and their ongoing development
opens up additional dimensions in your warehouse. Other options such as
automated storage and retrieval systems, for example, vertical lift modules
and carousels, can work hand in hand with your software to solve less
work-intensive warehouse tasks.
Once you know how your new system functions, it is time to go one step further
and maximize warehouse efficiency by coordinating your movements
with your shipping schedule. Your WMS lets you prioritize the order replenishment
according to shipping windows. This also includes differentiation of
order shipping with different forwarding agents and their expected collection
times. By mastering these capabilities, you will ensure that your customers
can enjoy more punctual deliveries.
6. Closing remarks
Many beginners experience an immediate jump in productivity following the
successful introduction of a WMS. However, progress does not end here.
There are many other functions of your WMS that you can implement with
beneficial effect at the end of the process.
If your team has got a grasp of the warehouse layout topics presented in the
first half of the guide, then the changeover to additional solutions is a natural
next step that will give you added benefits compared with your competitors.
Hopefully, this guide has given you a better understanding of how a warehouse
management system can help improve warehouse efficiency. Whether
you are getting started or have many years of experience using these
systems: there are numerous optimization possibilities.
Feel free to use the comment section for a discussion or contact me directly – I am happy to to hear and read from you!