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Warehouse layout design best practices

Posted on | by Cin7 team | Leave a Comment on Warehouse layout design best practices

There’s more to running a warehouse than just piling inventory on shelves. The design of your warehouse can make or break your overall operational efficiency.

Warehouse layouts need to be optimized for clear visibility, smooth transfer of goods, and easy equipment accessibility. And no one design will work for everyone.

Most companies use one of three main warehouse layout styles. These layouts address items like the needs of different industries, the warehouse building size and shape, shipping and receiving volume, and budget.

So, what’s the best way to arrange your warehouse? Let’s dive into the options to help streamline your workflow and make the most of your warehousing space.

Here’s what we’ll cover:

What does warehouse layout mean?

Warehouse layout design factors

3 types of warehouse layouts for workflow

Best practices of warehouse layout design

Final step: Choosing a warehouse management system

Frequently Asked Questions

What does warehouse layout mean?

Warehouse layout refers to both the physical structure of your warehouse and the many components within it. A proper warehouse layout also ensures workers have enough space to operate at maximum capacity, leading to a smoother inventory flow with less wasted time.

Warehouse layout design factors

There are several considerations for optimal warehouse design and workflow. You’ll want to consider all of them before deciding on the best space for your team.

Budget

Building a warehouse from scratch to custom specifications is expensive and time-consuming. While hiring a warehouse design expert to create a layout based on your requirements would be ideal, most companies need to work within a more limited budget.

Make sure to conduct a cost-benefit analysis and see which structures and equipment best fit your budget. You’ll also want to take existing warehouses into account. There might be an available warehouse space already on the market that’s a pretty good fit for your business needs. In many cases, warehouses for lease might already include some warehouse equipment like shelving.

Warehouse space needed

When planning your warehouse layout, how you divide the space determines your warehouse’s capacity and ability to store goods. For example, if you need to include office areas and break rooms, you’ll have less space to store and prepare inventory.

To maximize your warehouse’s storage capacity, make use of vertical space by stacking products. You can form clusters of products by grouping and stacking them together — which leads to quicker sorting later.

Equipment needed

To operate at full capacity, warehouse equipment such as shelving, conveyors, forklifts, lifting and packing tools, pallet racks, and safety equipment are required. Forklifts, in particular, are one of the most important pieces of equipment for warehousing operations, and you need to consider this tool’s cost and the space it needs to operate as you design your warehouse.

In addition to the equipment moving around, you’ll need barriers to protect your inventory and workers. Barrier rails work great when combined with mirrors and bollards. After analyzing your equipment needs, you can evaluate the best-suited warehouse layout and go from there.

Staffing requirements

Understanding staffing requirements can help you estimate how many people you’ll need and shift timings.

It’s important to make sure your warehouse’s layout does not impede the movement and productivity of your employees. The layout should also be designed while keeping the future in mind — you should have enough space so new employees, products, and materials can be added comfortably down the line.

Safety regulations

The safety of your employees is a prime concern. While designing your warehouse layout, ensure compliance with safety guidelines according to your local authorities and government.

This helps prevent both employee injuries and legal actions.

3 types of warehouse layouts for workflow

The three most commonly used warehouse workflow layouts are U-shaped, I-shaped, and L-shaped. Each style has benefits and drawbacks; let’s look at them in detail so you can determine the best possible structure for your needs.

The U-shaped warehouse flow

U-shaped warehouse flows are the most popular due to their simplicity and ease of replication. All the inventory is arranged in a “U” shaped semicircle, the middle portion (the bend of the “U”) is used for storage, and then shipping and receiving are performed at the ends of the “U.”

After receiving orders, products are placed in the staging or reception area to be sorted and then placed at appropriate storage locations. Storage locations are split into two categories:

  • Static Storage is for slow-selling products that are more likely to sit on the shelves for a longer period of time.
  • Dynamic Storage is for products with higher demand and turnover.

The “U” shape helps streamline inventory flow and keeps everything separate. By keeping incoming and outgoing shipments apart, the U shape also helps avoid bottlenecks.

Plus, because shipping and receiving are on the same end of the building, employees can swiftly move products between these two stages, and you may need less loading and unloading gear.

However, some people consider this a downside because the proximity of the entrance and exit can lead to congestion.

The I-shaped warehouse flow

The I-shaped warehouse flow is most often chosen by enterprise businesses that have larger warehouses. The I-shaped design offers a clear “in and out” view of product workflow for these bigger companies producing higher volumes.

In this layout, receiving and unloading are on one end of the warehouse, storage is in the middle, and the shipping area is at the opposite end of the building. The I-shaped design allows for a linear flow from receipt to shipment.

From a bird’s eye view, the flow is similar to an assembly line, which both helps minimize bottlenecks and reduces back-and-forth movement.

The most significant drawbacks of an I-shaped warehouse design are that two sets of loading and unloading equipment are needed, and products must travel the complete length of the warehouse. With products being accessed on both sides of the “I,” you may also need a larger operational space for equipment like forklifts.

The L-shaped warehouse flow

For “L” layouts, the receiving and unloading areas are on one side of the warehouse, and the shipping and picking areas are on an adjacent side, creating a 90-degree angle. The remaining space is then designated for storage purposes.

While “L” shaped warehouse layouts are often used to fit an “L” shaped building, that’s not the only benefit. Like the I-shaped flow, the L-shaped flow also reduces back-and-forth movement. It also separates the receiving and shipping areas on different sides of the warehouse to help prevent traffic congestion.

However, the downside of the L-shape is that it requires considerable space to run your operation smoothly, and you’ll still need two sets of loading and unloading equipment.

Best practices of warehouse layout design

Regardless of your chosen warehouse layout, you’ll need to optimize it to ensure efficient operations. Here are some tips you can implement to make the most of your warehousing strategy.

Warehouse mapping

While finalizing the schematics of your warehouse’s design, you should make sure to get the most accurate measurements possible. You’ll also need to label each area of the facility according to its function. Keep in mind that a 2022 survey found the typical company only used 85.6% of its warehouse space.

Each workflow should be established from entry to exit. Once the workflow is designed, you’ll be able to understand how each function connects. After that, you can define the best work processes and train your employees correctly.

Optimizing picking processes

When you adequately plan your picking and packing workflows, you’ll be able to ship the right products to the right customers. There are several picking methods that you can implement to improve your processes.

  • Batch picking consists of picking similar orders in batches, all at once. This method is faster than picking one order at a time, and it allows you to fulfill similar orders that include the same SKUs.
  • Zone picking is when pickers are assigned specific zones and only pick orders from that area. Zone picking is commonly performed one at a time. If an order needs products that are outside a specific zone, a conveyor belt is often used.
  • Wave picking is helpful for warehouses with more significant volumes of products with many SKUs, and combines batch and zone picking. In this method, the picker has to stay within the zone assigned to them, and they are able to pick multiple orders simultaneously.
  • Discrete picking is often used in small businesses with fewer SKUs. Whenever an order is received, the picker retrieves all items for the order from different zones of the warehouse. This is time-consuming because pickers are only able to process one order at a time.

As always, you should select the picking strategy that best suits your business and your warehouse. Whatever method you choose, you should focus on maintaining high picking accuracy to reduce the risk of returns.

Ideally, it’s best to have picking areas close to storage areas — which can dramatically reduce the time spent to select ordered items. To increase the efficiency of the picking process, you can also install conveyors.

Improving warehouse accessibility

It’s crucial to place all necessary tools and equipment in spots that are easily accessible to your warehouse workers. There also needs to be enough space for equipment and staff to move freely along designated paths. This speeds up the order fulfillment process to deliver more quickly to customers.

Streamlining the shipping process

The shipping area is where final packing and preparation for shipping take place. Ideally, you want to keep this area separate from other spaces to avoid mixups. It should also be laid out so that staff doesn’t backtrack to complete steps in the process.

Keep best-selling products near shipping areas and products that don’t sell as well farther away. This helps minimize travel picking time and can be accomplished most easily with L- and U-shaped layouts.

Testing and collecting feedback

After finalizing your layout and warehouse flow, you should make sure to run tests and confirm that everything flows smoothly. Equipment like forklifts and conveyors should also be tested.

Allow the employees who will be handling the equipment to test it out and take their feedback into account. Since your picking team will constantly move around the warehouse, you should also work with them to optimize routes for faster fulfillment and less confusion.

You can optimize your strategy and determine the best possible configuration and processes based on feedback and test results.

Final step: Choosing a warehouse management system

Once you decide on your warehouse’s layout and flow, it’s time to choose your warehouse management system. You’d be surprised how much smoother your day-to-day operations and order fulfillment can become with the right management system.

A warehouse management system gives you a real-time view of your inventory’s performance and helps you significantly optimize your warehouse. In fact, 77% of organizations consider warehouse automation systems a crucial part of maximizing performance.

If you’re interested in implementing a warehouse automation system for your business, contact the Cin7 experts to learn more about how we can help.

Frequently Asked Questions

What is the most common warehouse layout?

The most common warehouse layout is the U-shaped warehouse. This shape is popular because it is easy to replicate and has a simple setup.

The U-shape also helps avoid bottlenecks by keeping shipping and receiving on opposite sides of the same end of the building while storage is in the middle.

What is the best warehouse shape?

The best warehouse design for your business really depends on a number of factors. Budget, inventory size and type, number of orders, safety requirements, and your warehouse space can all affect which is best for you.

U-shaped warehouses are good general designs that work for a large number of situations. I-shapes are great for large order volumes or the use of conveyor belts. L-shapes help reduce back-and-forth movement, which is helpful for large products and controlling traffic flow.

KARRICO

Working with Cin7 and SMB Consultants allowed KARRICO to successfully expand into new sales channels in the U.S. market while managing everything remotely from a different time zone in Australia.

Searching for the right technology

KARRICO’s existing business in Australia was heavily focused on product design and development. Julian Grant, GM of Commercial Operations for KARRICO Inc.’s parent company, Grant Studios, explains that prior to the expansion his team didn’t have to manage stock, handle logistics, or project sales demand.

That said, Julian knew expanding into the U.S. would involve increasing their capabilities to include inventory and logistics management.

However, he wanted to ensure that the company’s growth didn’t overburden his existing team, which was already inundated with work. As such, Julian knew being proactive about finding the right technology partners was crucial.

Without the right software and implementation, he explains, “You just end up creating more work manually…We needed to make sure we didn’t add too much stress to the business we have right now.”

Julian’s introduction to Jeff Atizado, the CEO of SMB Consultants, was facilitated by The Hope Factory, the agency responsible for designing and building KARRICO’s Shopify site. This meeting was pivotal for Julian, as it offered an opportunity to collaborate with Jeff in finding the ideal inventory solution for KARRICO, ensuring its effective implementation and optimization. KARRICO’s needs included:

  • An impressive 3PL system
  • Support for eCommerce platforms including Amazon and Shopify
  • Features that enable seamless automation

KARRICO also wanted software that could handle a diverse bill of materials and accurately calculate the cost of their products.

After meeting with Julian, Jeff recommended Cin7 Omni as the comprehensive inventory solution to empower KARRICO to grow without additional manual work.

Implementing a centralized business hub

Cin7 Omni proved to be a powerful solution that could handle KARRICO’s new 3PL integrations, easily calculate diverse costs, and generate precise figures for freight costs and volumes, enabling KARRICO to use accurate business data to inform their decisions.

During the implementation and execution process, Julian found that the key to success was the combination of Cin7 Omni’s well-integrated platform and the guidance he received from SMB Consultants.

Working with SMB Consultants allowed KARRICO to get their new inventory implementation right the first time and realize the value of Cin7 faster than they would have on their own.

“We didn’t know what we didn’t know,” says Julian. He goes on to explain that SMB Consultants “helped navigate us through the best way to achieve what we were trying to achieve through the software and help us configure those workflows. That was critical to us.”

With a custom Cin7 Omni integration enabled by SMB Consultants, KARRICO can operate with a centralized hub, transferring stock to different fulfillment centers and getting live inventory updates. That let them manage the new business remotely from Australia and sleep soundly, trusting Cin7 to keep inventory running smoothly at the U.S. warehouses.

“Having really sophisticated software and being able to basically key orders directly from Australia in our own time, and manage all branch transfers and workflows is absolutely critical since we don’t have a lot of crossover time with our fulfillment centers and with our warehouse,” says Julian.

Enjoying the benefits of a sophisticated solution

One of the main benefits of Cin7 Omni is the high level of customization it offers. With Cin7, KARRICO was able to tailor their tech stack to fit a sophisticated logistics model and enable smooth operations.

Julian cites SMB Consultants as critical for helping KARRICO understand the capabilities of software like Cin7 and tailor it to “optimize workflows…and optimize the goals and the value that you’re going to get out of that system.”

“Because the workflow had to deal with lots of different elements to that calculation like customs duties and tariffs, but also at the same time managing the volumetric size of the products that we were shipping and factoring that into the calculation, we were asking a lot. To have that expert knowledge from SMB Consultants to design that workflow has been incredible,” explains Julian.

When asked about Cin7 Omni, Julian noted, “It’s so feature-rich and has such brilliant architecture and integration capabilities that are open to do whatever it is that you want to achieve out of the system.”

Looking forward, Julian sees even more potential working with Cin7 and SMB Consultants, explaining that “As the business grows, we want to implement more and more features and solutions… We see it as a critical partnership that’s ongoing.”

Enabling growth now and into the future

Put simply, the Cin7 Omni solution and partnership with SMB Consultants is what enabled KARRICO to grow. “If we didn’t have this system, we wouldn’t be able to scale,” says Julian.

What’s amazing to Julian is how Cin7 Omni and SMB Consultants worked with him to achieve his goal of scaling the business without adding extra manual work. Julian says, “We haven’t added any staff at all to manage this new business…which is a completely new venture in a new country, a completely new business model that we’ve never done before.”

KARRICO can maximize its supply chain and margins and automate operations for less stress and better results. As Julian puts it, “This has given us the confidence to scale and not to worry about whether we’ll be able to handle the growth.”

If you’re ready to scale your business and enable seamless growth today, explore Cin7 Omni.

5 trends in 3PL to watch out for in 2023

Posted on | by Cin7 team | Leave a Comment on 5 trends in 3PL to watch out for in 2023

Third-party logistics is a growing area, and expectations are that this upward trajectory will continue into 2023 and beyond. In fact, ReportLinker’s Third-Party Logistics (3PL) Global Market Report 2022 found that 3PL is expected to jump from a $906.98 billion USD valuation in 2021 to a $1,418.70 billion USD one in 2026 worldwide. That’s a compound annual growth rate (CAGR) of 9.2%.

This rosy outlook almost belies recent events that have affected trade everywhere. As we all know, the sharp bounceback from the Covid shutdowns created bottlenecks that resulted in inflation. Transportation costs shot up, packing costs shot up, and the high demand for almost everything produced shortages.

But let’s not forget that Covid was a boon to online sales. Shut indoors, consumers relied on ecommerce for almost all their needs, from goods to groceries. And this reliance has turned into a habit, a new way of shopping for almost everyone. Because of this, more and more companies are using online platforms to showcase and sell their offerings, and that means more business for those organizations that specialize in taking care of fulfilling these orders and shipping them out to the customers: the 3PL companies.

Given this increased focus on 3PL and its growing importance in the supply chain, we thought it would be interesting to jump ahead and take a look at trends that are expected to take hold in the space in 2023.

 

5 trends in 3PL to watch out for in 2023

NTT 2023 Third-Party Logistics Study reported that the most frequently outsourced activities are as listed below:

Activity Percentage of outsourcing
International transportation 52%
Warehouse operations 43%
Domestic transportation 69%
Freight forwarding 60%

Let’s use the NTT 2023 third-party logistics study as a basis to figure out X 3PL trends to watch out for in the coming year.

1. Success through synergy

71% of the shippers said partnering with a 3PL company contributes to improving customer satisfaction. Naturally, they plan on leveraging this partnership increasingly in the future.
The trend of consolidating the powers of shipping and 3PL providers is creating a synergy beneficial to every party involved – manufacturers, customers, shipping companies, and 3PL providers. This synergy not only improves the effectiveness of logistics but also cuts costs. This year might see more consolidations as both shippers and 3PL providers realize the power of synergy.

2. More reliance on IT capabilities

Shippers expect more technological advances from 3PL providers. They believe 3PL providers should not only provide shipping but should also give tactical advice on transportation management and potential improvements for their supply chains.

For 3PL providers, this means they should invest more in technological advances in 2023 to gain a better hold on the market. When shippers were asked about the IT capabilities expected in 3PL providers, they listed some of the execution and transaction-based technologies as crucial. Sixty-two percent of shippers believed 3PL providers could assist them in transportation management planning (an increase of 11% from the previous year), 57% said transportation management scheduling (an increase of 6% from the previous year), and 40% said warehouse automation (an increase of 23% from the previous year). Thus, if you’re a 3PL services provider, investing in these areas could reap huge benefits for your company and your clients.

3. Efforts to counteract labor shortages

Right now, there’s a shortage in labor. In fact, 78% of 3PL companies say they are short staffed.

In answer to this, we predict that while 3PL companies will be offering higher hourly rates to low-level staff like pickers, packers, and drivers, they will be more reliant on technology like robots and storage and retrieval systems. The stats are that 84% of 3PLs are either replacing workers with tech already or considering it. We expect this trend to expand.

4. Banking on reverse logistics

The reverse logistics market – or goods that are returned by the shopper – was valued at $635.6 billion USD in 2020 and is projected to reach $958.3 billion USD by 2028, which is a CAGR of 5.6%. In other words, it’s huge.

There’s a lot that has to be taken care of when goods are returned. They have to be checked out and the inventory has to be updated. Plus, some items may need to be repaired or have parts replaced. It’s a whole logistical process in itself, and it needs a dedicated staff and planning. All this can be costly, but it’s important to remember that freely accepting returns without question encourages customer loyalty.

With this in mind, we expect reverse logistics to take a bigger slice of the business 3PL companies handle in 2023, and we predict that that will grow even more.

5. There’ll be more emphasis on sustainability

The entire world is moving towards sustainable practices, and 3PLs are no exception. Consumers expect it, and it’s the right thing to do.
For 3PLs, sustainable practices mean using electric vehicles and products like cleaners that are recyclable. We expect this trend to continue and expand in 2023.

 

Conclusion

As the online-sales market grows, so will 3PL companies. In that regard, 2023 should be a challenging but exciting year for them.

In anticipation of that growth, if you’re part of a 3PL company, you should have a good automated system in place. We suggest our Cin7 Omni. To learn more about our software and the superior advantages it offers, click here to request a demo.

Posted in 3PL

What role does EDI play in logistics and supply chains?

Posted on | by Cin7 team | Leave a Comment on What role does EDI play in logistics and supply chains?

Logistics was coined by the military to describe the complicated organization involved in moving troops and equipment from one place to another. Similarly within the supply chain, logistics is about getting everything from goods to equipment to people from one place to the other. Logistics is no easy matter. Things have to be in place when they’re needed, and they have to be there in the right quantity.

Vast in scope, both the supply chain and the logistics within it involve all the departments of a company and outside entities. This includes manufacturers, suppliers, distributors, wholesalers, and retailers. A great deal of information has to be passed back and forth between all of these entities. Basically instructions, this information is about the goods and raw materials needed, the quantity they’re needed in, where they’re needed, and instructions about transportation. These instructions take the form of purchase orders (POs), invoices, shipping notifications, insurance documents, licenses, and more. For large-scale logistics operations, transmitting these documents between companies is best handled electronically, through a digital system called Electronic Data Interchange (EDI).

 

What is EDI, and how does it work?

EDI enables businesses to send digitized documentation directly from the computer of one company to the computer of another company. In order to be able to do this, and to do it instantly, EDI software converts these digital documents into a standardized format that allows them to be first transmitted, and then read, by the computer system of the receiving company.

There are three stages to EDI:

  • Preparing documents, making them EDI ready.
  • Converting the EDI-ready documents into EDI documents.
  • Transmitting the converted documents to the receiving company.

Preparing in-house documents

The POs, invoices, and shipping instructions are either digitized or collected from their digital storage and converted to an electronic file that has the information needed for EDI. This makes them EDI ready.

Converting the EDI-ready documents

This is done with an EDI translator, software that puts the documents’ data into globally-recognized EDI formats. While there are quite a number of these formats, there are four that are used the most: X12, EDIFACT, TRADACOMS, and ebXML.

Transmitting the EDI documents

For this to happen, EDI messaging protocols are used. Examples of these are AS2, OFTP, and SOAP. For the EDI system to work, both sender and receiver have to be using the same protocol.

 

The role EDI plays in logistics and the supply chain

  • It saves time.

EDI software gets documentation to the relevant companies and departments within companies quickly, keeping them on the same page and the wheels of the supply chain running efficiently. This speedy communication makes it easier to forecast needs and results in better business decisions being made.

  • It makes the supply chain process more efficient.

With EDI, suppliers, distributors, shippers, and every other entity that’s part of the supply chain can communicate with each other in real time. This cuts out chances of delays happening in receiving, dispatching, warehousing, or transportation.

  • It makes it easier to monitor and track goods.

Because EDI uses a uniform format, it’s easy for relevant parties to search for information, and it’s easy to track and keep on top of purchases, orders, and bills of any kind. As a result of this, you can reduce errors in purchasing and shipping.

  • It streamlines logistics and the supply chain.

EDI is able to retrieve data from internal computer systems instantly and send it out securely. When you automate POs, invoices and the like with EDI, it speeds everything up and reduces errors, streamlining your supply chain.

EDI software integrates seamlessly with in-house systems like Enterprise Resource Planning (ERP), accounting software, your Warehouse Management System (WMS), and Customer Relationship Management (CRM) software.

 

How Cin7’s EDI helps supply chain management and logistics

Cin7’s EDI capabilities are robust, and the system has a large EDI network. A one-stop-shop, Cin7’s system will get you:

1. Automated workflow

Cin7 EDI automates order processing and shipping by:

  • Setting triggers for automation and reducing manual data entry.
  • Using an advanced messaging system that streamlines integrations with your trading partners and 3PL warehouses.

2. A one-stop-shop automated system

Cin7’s inventory management software has it all, inventory management, order management, and EDI. When businesses set up their EDI with Cin7, they can:

  • Seamlessly manage orders and scale up your business.
  • Reduce shipping costs and save time by optimizing cartons. Print Serial Shipping Container Code (SSCC) and generate Advanced Shipping Notifications (ASNs).
  • Keep their product catalogs up to date and track orders in real-time with a centralized and intuitive EDI dashboard. You’ll have absolute inventory control, and your order fulfillment will be at its optimum level.

3. Multiple fulfillment models

Cin7 EDI supports ship-to-store and 3PL.

  • Integrate with product distributors, 3PL providers, and commerce channels.
  • Fulfill orders effortlessly with an intuitive EDI dashboard.
  • Fulfill several orders simultaneously with a cartonization feature that picks the right box for items.

4. Prebuilt-in EDI mapping and protocols

  • Map order workflow between yourself and trading partners around the world.
  • Send EDI documents with these protocols: X12 American National Standards and EDIFACT- European Standards.

 

Summing up

We’ve shown how EDI facilitates both the supply chain and the logistics that move it along by producing and transmitting documentation quickly. EDI eliminates mistakes that can be made when people input data and ensures that different players in the supply chain are kept in sync by getting the same information, at the same time.

To learn more about Cin7 EDI, book a demo.

9 key steps for the ecommerce order fulfillment process you must know

Posted on | by Cin7 team | Leave a Comment on 9 key steps for the ecommerce order fulfillment process you must know

According to the eMarketer report, global retail ecommerce sales that amounted to $4.248 trillion USD in 2020 are expected to reach $7.391 trillion USD by 2025. The rise in ecommerce is indicative of the shift in consumer preference in shopping. You can sell your products online if you want to expand your business. If you are new to the ecommerce platform or want to improve your ecommerce sales profile, you are in the right place. We will guide you through the nine key steps you should take for the ecommerce order fulfillment process.

 

What is order fulfillment?

The order fulfillment process begins from the time the company receives an order to the time it is delivered to the customer. The order fulfillment process includes inventory management, as the products to be delivered should be acceptable in quality and quantity. The order fulfillment process should cover the goods returned if the customer is not satisfied with them.

A company can fulfill orders in the following ways:

  • In-house transfers: In-house transfer is when the company wants to transfer goods from one department to another. It is inclusive of transfers from the warehouse to factories.
  • Third-party logistics: Sometimes, the company uses third parties to carry out product transfers. This phenomenon is called third-party logistics (3PL).
  • Dropshipping: Dropshipping is a process where your supplier delivers the goods directly to your customer. This method of shipping saves transportation and overhead costs for the company. It is a good option for startups that want to save overhead expenses.
  • Hybrid: Companies don’t often stick to one type of shipping method but use different types of methods at once for separate orders.

As easy as it sounds, the reality is quite different if you don’t have a reliable system to follow. Inventory management systems like Cin7 can assist you in carrying out the order fulfillment process smoothly. Let’s discuss the nine key steps of ecommerce order fulfillment.

 

Nine key steps for the ecommerce order fulfillment process

If all the processes in your business organization run smoothly, your business can maximize its profits. Even if you already have an order fulfillment process, you must verify whether it is running efficiently. An optimized process can prevent damages and losses to the enterprise. The following steps should be followed for a well run order fulfillment process:

Step 1: Receive inventory

Every order fulfillment process starts with the receipt of inventory. The warehouse receives goods from the supplier. Goods received should be accounted for and adequately documented. The quantity and quality ordered should be verified. If there are any issues, concerns should be raised immediately.

As soon as the products are received and found satisfactory, identification codes, such as barcodes and QR codes, used by the company should be assigned to them. Identification codes allow the company to track these items and get information on them quickly.

Step 2: Racking the inventory

Some items need specific storage conditions, like lower temperatures, dry conditions, or sunlight exposure. All the items should be sorted and stored under the required conditions immediately to prevent deterioration.

Moreover, the goods should be arranged to reduce the space they take up in the warehouse. The storage location should be based on the frequency at which the items need to be moved from the warehouse.

Step 3: Receive orders

For receiving the order, it should be determined whether the company owns the stock and the time it would take to arrange the items. When a customer places an order, they should be informed about the expected delivery date and other delivery conditions based on the availability of the products. The company sends the confirmation of the order to the customer.

Step 4: Process the order

If you have inventory management software installed, the order fulfillment process is much simpler. It can automatically determine which warehouse or fulfilling station should be sent the order based on

  • the delivery location,
  • the warehouse location, and
  • the quantity of the goods ordered.

The order should be accounted for and passed to the relevant warehouse manager for further processing.

Step 5: Pick the order

Once the warehouse receives the order, the staff will start picking the items for that order. Picking means separating the items ordered from the warehouse inventory. A picking slip is used to list the items that are in the customer’s order. A picking slip can speed up the picking process and increase order fulfillment efficiency.

Typically, picking is carried out in the following manner:

  • Batch picking: The staff picks the items of several orders at once.
  • Piece picking: When one person picks one order at a time.
  • Zone picking: When every person is responsible for picking items for multiple orders from a specific part of the warehouse. The collected items are categorized into different orders for packing.

While picking the goods, the warehouse staff ensures that the products’ quality is according to the company standards. If the employee finds that some of the items have deteriorated in quality, they should contact the warehouse manager soon. The company’s reputation depends on the quality of the goods delivered to the consumer.

Step 6: Pack the order

The next step of the order fulfillment process is packing. The items should be packed in appropriate containers and wrapped in protective covering to ensure safe delivery. Delicate items must be packed separately and labeled accordingly. The containers must be sealed and a packing slip attached. The packing slip contains all the details of the order, including

  • Customer name and address,
  • Item details,
  • Payment method, and
  • Dimensions and weight of the package.

The packing slip should contain information on whether the delivery person is supposed to collect any amount for the delivery.

Step 7: Ship the order

A company has several options to ship the goods. They can ship the order themselves, use an agency to ship it for them, or ask the supplier to ship the goods directly to the customer (dropshipping). Except for when a company chooses dropshipping, it has to prepare the goods for dispatch. The company hands over the packed goods to the shipping partner.

The customer is informed that the goods are shipped and receive the tracking number. The company also has a tracking number to determine when and where the packet arrives.

Step 8: Deliver the order

The order is delivered to the customer. Typically, automation allows the company to notify the customers that their order has been fulfilled. Delivering the goods on time can boost the company’s reputation. The customer can communicate delivery preferences to the company, such as having their parcel left with a neighbor or changing the delivery timing for convenience.

Delivery is usually followed with customer feedback about the product and delivery experience. If the customer is happy, the fulfillment process is complete. If not, the customer initiates a return.

Step 9: Process the return

The company must handle the return of goods if the customer is unsatisfied with the products. It must arrange the return pickup and delivery. It is a crucial part of the ecommerce experience.

 

In a nutshell

In-person fulfillment doesn’t involve the complexity of the ecommerce fulfillment process, and therefore, the latter needs more attention. We have discussed the nine steps necessary for an efficient fulfillment process for ecommerce sales. Every company in ecommerce must audit their steps for optimization, and if they find some issue, they must resolve it immediately. This will increase the profitability of the company.

You can request a demo with our experts to learn how Cin7 can help you fulfill your ecommerce orders.

Application integration and the significance it has for inventory management software

Posted on | by Cin7 team | Leave a Comment on Application integration and the significance it has for inventory management software

In today’s automated world, retail and manufacturing companies control their business processes with several different software applications, each of which performs a specific function. For instance, there are applications for accounting, supply chain management (SCM), and inventory management (IMS). While they’re separate and perform their own clearly defined tasks, it’s vitally important for them to communicate with each other and for the data they use to be passed between them. Simply put: If your SCM can’t pass its data on to your IMS, information about your stock would have to be input manually.

When these different applications are able to communicate, you have application integration.

 

Different ways application integration can be performed

Application integration sounds simple enough, but there are four basic ways it can take place.

Data level integration

Called data level integration, this method puts the data stored in each application into a single, separate database. This separate database is called an enterprise database or an enterprise database repository. To create this centralized system, the data stored in each individual application are extracted, cleansed, and reformatted to be consistent with whatever standard the enterprise database uses. From that point, individual applications can tap into the central system to get the data it needs.

This method is the lowest-cost application integration due to the minimal amount of programming needed to set it up and the speed with which that can be done. Data level integration only takes the data an application stores, not the coding of the application itself.

Application interface level

Known as application interface level, this method doesn’t have a centralized database that stores everything. Instead, data extracted from one application are converted into a standardized format and then loaded directly onto the target application. Hence, application to application.

Application interface level is currently the most popular method for data sharing because most application codes now provide interfaces. Cin7’s IMS, for instance, offers over 700 integrations, and new integrations are being added regularly.

Method level

Here, it’s not data that are shared, but business functions. This may sound precarious, but the actual business functions are not included in the code that’s passed along. An evolving way of exchanging data, method level is promising because it’s compatible with technologies like Java RMI, DCOM, and Cobra. A big drawback, however, is that the application code has to be changed before it can be used.

User interface

User interface (UI) is about having the different applications designed in such a way that users (human) can log on to their company’s network and bring up the data they need from any computer in the network. Application codes don’t have to be changed for this method to work  – a factor that makes the cost minimal – but that also gives it less flexibility.

Benefits of application integration for inventory management software

When it comes to inventory management, application integration is essential. Having the ability to input data from other applications into IMS software or passing the data it stores into another system, and being able to do so accurately and quickly, is vital to business operations. The benefits are:

Inventory optimization

Inventory optimization, or having the right amount of inventory, means carrying enough to fill orders and prevent stockouts, while not having too much of it.

If your inventory management software is integrated with accounting and ecommerce applications, you’ll have a clear idea of the quantity of items you should be warehousing as well as information about which actual items you should stock. You’ll also be alerted when you need to reorder.  This means less worry about overstocking or understocking.

Making good financial decisions

Information about how well certain goods have sold in the past and predictions about how well they’re expected to do going forward informs decisions that are made in the present. In order to get this information, reports and forecasts have to be accessed from several applications in real time.

When this information is available to IMS systems, better decisions can be made about which stock to carry. Additionally, application integration with a variety of systems makes audits more accurate. You’ll be able to verify that the stock listed in your books is a real reflection of the goods you have in storage, and you’ll have complete information about items that are in transit.

 

Types of integrations available on Cin7

There are more than 700 integrations in Cin7’s software, but they can be categorized into the following business operations:

Accounting apps

Accounting software records and manages your financial transactions, everything from purchases and sales to operating costs and payroll. Cin7’s system can integrate popular accounting software like QuickBooks Online, Xero, and QuickBooks.

Ecommerce platforms

Cin7 can integrate with ecommerce platforms that include Magento, WooCommerce, Shopify, and others. If you’re selling through any one of them, IMS integration will give you oversight and let you know how your sales are going. If you’re selling items through more than one of these ecommerce platforms, Cin7 will allow you to integrate their data and accounts into a single platform on your system.

EDI retailers

Electronic data interchange (EDI) is the system through which documents like invoices and purchase orders are transferred electronically. There are several electronic standards to choose from for these exchanges, but whichever one is used, both sender and receiver have to be using the same one. Cin7 can facilitate most of them. Some larger retailers like Scheels, Sears, Sephora and Walmart have their own EDI systems, and Cin7 can be synced with them also.

EDI suppliers

EDI suppliers are organizations that provide EDI-compatible solutions and technologies to other companies. Two of the leading suppliers are Synnex and Tech Data, and Cin7 can integrate seamlessly with both.

Marketplaces

If the website you’re selling your goods through is charging you commission for each sale, you’re on a marketplace. Marketplaces are a good way to get your product out and make a name for yourself, especially if you have a new company or are small in size. To keep on top of your business in these marketplaces, you’re going to have to integrate them with your inventory management system. Cin7 can do this for all the major marketplaces, including Amazon, Etsy, Iconic, and eBay.

Payment gateways

When you sell online, you need a payment gateway to process payments. You also need to integrate this payment gateway with your IMS. More than just getting paid for your goods, integration with your IMS streamlines their flow and ensures you have enough in stock.  To make this easy, Cin7 can integrate with payment interfaces like PayPal, Dejavoo, EVO Payments, and others.

Sales and marketing

Sales and marketing software uses technology to get your advertising to the right audience. That means customizing and posting it on social media and other pertinent sites. To facilitate this, Cin7 inventory management software integrates with Customer Relations Systems (CRMs) such as Salesforce, Mailchimp, Senter, and HubSpot.

Shipping

The very nature of ecommerce involves shipping. Goods that are purchased online have to be physically transported to their buyers. If you hire a third-party to take care of this shipping, you still have to keep track of the items and maintain your records. Cin7’s software can integrate with shipping partners Shippit, GoSweetSpot, Shiptheory and many others, ensuring you’ll always have the information you need at your fingertips.

Supply chain planning

The supply chain covers every step in the fulfillment/manufacturing process from purchasing and inventory management to sales and deliveries. To organize all this in the best possible way, Cin7 integrates with supply chain planning apps like StockTrim, Streamline, and Easy Insight.

Third-party connectors

Sometimes a company uses another organization, a third party, to provide the application integration software (API) that allows different applications to speak to each other. To enable this, Cin7 can communicate with Syncware, Hyperspace HQ, and Pipe17.

Third-party logistics

Logistics is the physical act of moving items and people from one area of a business to another. If you’re parceling out your warehousing and transportation to another company, you’re using third-party, or 3PL logistics. Some of the companies that provide 3PL include JAS, JD Smith, Quiet Logistics, and Ship Depot. Cin7 lets you integrate your systems with any one of them.

 

Winding up

In summary, application integration refers to the process of connecting two or more applications so that the data each holds can be exchanged. When it comes to IMS systems, this ability to share data makes the entire inventory side of the business operate efficiently, and ensures that there’s enough of it all times in the right quantities.

Cin7’s inventory management software lets you integrate with all the relevant apps, making sure you have all the information you need to keep your inventory at optimum levels.

If you want to learn more about Cin7, book a demo by clicking here.

The strategic importance of order processing in supply chain management

Posted on | by Cin7 team | Leave a Comment on The strategic importance of order processing in supply chain management

For an online sales business or a manufacturing company, it’s all about the supply chain. It covers everything from the procurement of items for sale, or raw materials for the production process, to delivery of the items or products. Controlling the supply chain and keeping oversight on it is, as would be expected, supply chain management (SCM). Order processing is the central pillar of SCM; in a way, it’s the heart of the whole fulfillment process.

In this blog, we’re going to take a close look at how order processing works, and explore its importance to supply chain management.

 

What is order processing?

Order processing goes into effect the minute customers select and pay for goods online and continues until those goods are received. Broad in scope, it follows defined steps to get to that end point.

Here’s how the process breaks down:

Step 1: Orders are received

As soon as customers have filled their online carts and paid for their goods, their orders are transmitted to the warehouse or fulfillment center. Here they’re broken down into their component parts, which means product, quantity, size/color (if relevant), etc.

If the sales or fulfillment company is large enough, these order details are processed by an automated inventory management system (IMS). This sophisticated software will know if customers’ goods are in stock, and if so where they are. In essence, the system is able to determine the best warehouse to route the order to; and if some items aren’t available right away, it will give instructions to send them as, and when, they are. In addition, if a customer has put in more than one order, the IMS can consolidate them into one package.

Step 2: Items are picked

Picking describes the actual job of collecting items for an order from their storage spaces. Pickers do the job. Warehouses can be large—some are gargantuan—so getting organization into this process can be complicated. Picking can either be done on an individual-order basis, by warehouse zone, or in bulk – which means picking for several orders at the same time.

Irrespective of the method used, the whole process starts with a picking list that itemizes everything according to its storage location and sets out a route round the warehouse for the pickers to take. The aim, of course, is to cut down the picking time.

Step 3: Orders are sorted out

After picking, items are taken to a sorting area. If they were picked in bulk or by warehouse zone, this is the area where they’ll be sorted into their individual orders. This is also the time when items are checked against the original orders to make sure everything is there, is in good order, and of high quality.

Step 4: Order are packed up

Making sure the appropriate packaging is used is trickier than might be thought. The box itself should be the right size for the items and strong enough to hold them during shipping, and the padding inside should be enough to protect the contents, but light enough to keep transportation costs down. Sometimes this padding has to be specialized. If food is being packed, for instance, it might have to be kept cool with gel packs or dry ice.

After being packed up, shipping labels are attached.

Step 5: Orders are shipped

We’re now near the end of order processing. After boxing and labeling, shipments are organized by geographical location and assigned to their respective delivery trucks. Size and weight might also be a consideration when selecting transport: extra heavy items, or those that need refrigeration, will need specialized trucks. At this stage, the type of delivery a customer paid for also has to be taken into consideration. Expedited delivery, for example, will be given priority. The point is that it’s important to deliver an item at the time the customer expects it.

Step 6: Orders are delivered

Order delivery is the last step of the order processing system. The customer can choose a particular time to have their order delivered, or they can leave special instructions, like having the package be left with a neighbor. If a customer has opted for Cash on Delivery (COD), the delivery drive will be the one who collects the payment.

 

The importance of order processing in supply chain management

Order processing is the core, the beating heart at the center of the supply chain system that everything else more or less has to service. In essence, for any sales, fulfillment, or manufacturing entity, processing orders – getting them together and getting them to the right customer in time – is what they’re about. It’s true that without proper management in any area of the supply chain businesses won’t perform at their best, but when it comes to order processing, its efficiency, speed, accuracy, and cost-effectiveness are actually the determining factors of success and, ultimately, profit.

Whatever way you look at it, though, supply chain management is a complex operation. That’s why it’s a good idea to automate it.

The upsides of automation are:

  • maximized profits,
  • minimized costs,
  • improved customer satisfaction,
  • increased market share,
  • reduced workload for employees, and
  • an overall boost to the company’s brand and reputation.

 

Final thoughts on order processing and its importance to the system as a whole

Having looked closely at the complete supply chain, we can see that everything centers on the order processing part. Putting orders together and getting them to customers is, in effect, the commercial activity that reasons for the company’s existence.

Automating all or some of the areas of supply chain management with an inventory management system can be of great benefit to a company, both logistically and financially. Cin7 is one of the best.

To learn more about how Cin7 can help your business, you can book a demo from one of our experts by clicking here.

Lockabox®

Like a lot of the best product ideas, Lockabox® grew out of a simple day-to-day frustration.

When he was living with hungry roommates, founder Peter Morris found himself asking that question a lot more than he’d have liked. After a long night, Peter would wake up and shuffle to the refrigerator looking for a slice of last night’s pizza for breakfast — only to find that someone had gotten there before him.

“Who stole my lunch?”

The solution Peter came up with was simple: a combination of a simple three-digit combination lock with strong polycarbonate construction. In short, a lockable storage container. Manufactured in the UK, these portable, lightweight boxes are today used for much more than food storage. Their primary product, Lockabox One®, is used by elder care facilities to store patient medications, and office admins are putting desk sensors in Lockaboxes® to gauge office traffic and optimize floor plans.

With annual sales of £2M GBP, Lockabox® expects to grow from a small product seller into a major player by investing in R&D over the next 12 months and expanding the Lockabox® product range. They’re moving from success to success — all with the help of Cin7.

Cin7 and Xero provide a single source of truth

Lockabox® Operations Specialist Rory Fitz-Gerald says he’s “relieved” to have put Cin7 into action in early 2021, especially as the company creates new SKUs and sales increase. Their old system, Rory, says, simply wasn’t up to the task.

“Our previous system was very inaccurate. We could never really trust the information we were working with,” Rory says. “I feel like we can trust what Cin7 is telling us on stock. Which obviously, for a small business like ours, is quite a big advantage.”

Lockabox® relies on Cin7 to help them to reconcile their weekly inventory counts (stocktakes). Without Cin7, coordinating stock between 10 warehouses across the globe could be an incredibly complex task. Luckily, Cin7 makes everything much simpler. Rory easily runs weekly stock and sales reports from Cin7 to facilitate stock audits and reconcile any discrepancies. He says the software acts as the single source of truth against which he can compare manual counts, and that Cin7 on side, Lockabox® needs far fewer people than it would otherwise need to manage operations.

The efficiency boost from Cin7 is multiplied by its powerful integration with Xero accounting software, with invoicing and sales data shared between Xero and Cin7 in real-time.

“Cin7 gives us that extra accountability because all sales go through it,” Rory says. “With the reporting coming out of it too, we know where stock has gone, and we can better manage distribution.”

On the B2B side of the business, Rory credits Cin7 for expediting wholesale orders. Once a quote is generated, “having the ‘accept now’ button on the quote automatically flips the quote to a sales order, so our wholesale customer can make immediate payment.”

Cin7 helps avoid financial setbacks

Lockabox® leverages Cin7 to manage their multiple Amazon and WooCommerce sales channels, as well as third-party logistics (3PL) and fourth-party logistics (4PL) partners who are directly integrated with Cin7. The system proved its value when the operations team suffered a mishap that could easily have become a costly catastrophe.

One of Lockabox’s® 4PL partners failed to log a shipment of 700 units with a retail value of £30,000. Fortunately, Cin7 exposed the discrepancy during a weekly reconciliation, and Rory was able to investigate and determine what had happened.

Without Cin7, Rory explains, the operations team would have assumed that the warehouse had 700 more SKUs of one particular product than was actually being held. The warehouse would have run out of stock prematurely and Lockabox® would have suffered a temporary outage of product to sell.

“Cin7 is our failsafe system,” says Rory. “We were able to pin the 3PL to the wall and say ‘no, our stock numbers are correct – you have made the mistake.’ Having Cin7 alongside gives us the ability to keep accurate branch transfer data to catch human errors.”

Cin7 is the key to product business growth

Lockabox® says that Cin7’s flexibility is key to the future growth of the brand, and they’re already gearing up for expansion, with the introduction of a new and improved version of Lockabox One™ Shelf Packs which help to organize and partition contents. With their expansion into accessories, Rory says the team is looking forward to leveraging Cin7’s ability to support product bundles.

Here at Cin7, we’re excited to have Lockabox® join a family of over 8,000 businesses that rely on Cin7 to manage their inventory and online sales. Lockabox® is currently building a manufacturing facility in the US, and with Cin7 as their foundation, we’re going to enjoy watching them grow.

If your business could benefit from the extraordinary inventory visibility and increased efficiency that Cin7 brings, don’t miss out — book a demo with one of our brilliant sales staff today.