The supply chain involves various activities, such as procurement, transportation, storage, and distribution. Here, warehousing acquires a critical position in supply chain optimization for storing cargo as backup inventory or for distribution purposes. The role of warehousing in supply chain optimization can’t be ignored as it contributes to overall efficiency and profitability. The main function of warehousing is to help optimize the flow of goods and ensure they are available wherever needed. Strategic warehousing planning can significantly and positively affect the global supply chain. 

This comprehensive guide explores the strategic role of warehousing in supply chain optimization. It outlines the functions warehousing performs, the best practices for ensuring supply chain optimization, and its impact on global trade. 

What is warehousing in supply chain optimization? 

In supply chain optimization, warehousing mainly involves storing and managing inventory in a building or a godown. Warehouses act as mediators between the manufacturer and the end customer. There are two types of warehouses: general warehouses, where cargo is kept as a backup inventory, and distribution warehouses, from which cargo is taken into the ships and distributed to their assigned places. 

What is the role of warehousing in supply chain optimization?

Warehousing is the backbone of supply chain management. This affects both inventory levels and delivery times. Efficient supply chain practices can help you ensure cost-effective and efficient management. Here are the role of warehousing in supply chain management: 

1. Storage rooms: Warehouses efficiently store goods meant to be transported. The better the way goods are stored, the better their condition will be. The goods are stored in a way that maintains their quality. Also, these warehouses are structured to protect goods from external weather conditions and accidents such as thefts or natural disasters. 
2. Inventory management: Warehousing plays an important role in maintaining inventory levels. It is a backup inventory that ensures products are provided to customers and retailers when needed. Warehouses employ inventory management systems to trace inventory levels and manage stock replenishment to balance inventory levels. 
3. Supply chain visibility: Warehousing offers visibility into inventory levels, shipment tracing, and real-time order data, which helps businesses make informed decisions about their supply chain. Real-time data tracing helps you analyze errors and determine the scope for improvement in the supply chain. 
4. Consolidation: Warehousing’s indispensable role in supply chain logistics is consolidating shipments from multiple suppliers, ensuring cost savings and enhancing efficiency.  This consolidation streamlines and accumulates the operations and improves customer satisfaction. 
5. Value-added services: Warehouses also offer certain value-added services, such as labeling, packaging, and assembly of goods. These value-added services help to improve the quality of the stored goods.  
6. Cargo handling: Warehouses help to handle cargo with care after receiving, loading, unloading, shipping, and storing goods. They also make it easy to shift goods from one mode of transportation to another. 
7. Reduction in expenses: Warehousing in the supply chain reduces the expense of storing or distributing cargo. It accumulates shipments and optimizes the routes, reducing costs, energy consumption, and other expenses. 
8. Risk management: Warehouses help manage risks in natural disasters or supply chain disruptions. In warehouses, you can maintain stock that will help you respond quickly to changing demand and supply chain disruptions. 
9. Data management: These storage houses also store data on inventory levels, the exact entry of cargo, and key performance indicators. This data is very useful for the shippers to improve their performance by analyzing the main problems. 
10. Technological advancements: The integration of technologies like Warehouse Management Systems (WMS), Transportation Management Systems (TMS), and Enterprise Resource Planning (ERP) Systems improves operational efficiency and reduces costs. 

How can warehouse management systems (WMS) improve supply chain operations?

A WMS (Warehouse Management System) is software that helps manage and operate regular warehouse operations from when the gods enter and exit the warehouses. The role of warehousing in supply chain offers transparency into the company’s inventory in warehouses and transits. Let’s look at how WMS can improve the supply chain operations: 

1. Decrease waste and costs: The WMS system manages temperature-sensitive or perishable items with a comprehensive data record and real-time information and compliances prescribed by IMDG code. It then suggests a time for replenishment and the priority items to pick first so that they will not damage or rot. 
2. Enhance labor management: A WMS can also forecast labor requirements, optimize travel time in the warehouse, and assign tasks to employees based on their skills and training. An efficient WMS can also make the process easier with its advanced technologies. 
3. Better customer-supplier relationship: With the improved efficiency of order fulfillment and reduced costs, the customer receives the product on time and at a lower rate. Because of this, the relationship between customer and supplier improves, leading to customer satisfaction and a cost-effective logistics cycle. 
4. Visibility of real-time inventory: A WMS uses barcodes, RFID sensors, and other tracking methods to ensure inventory visibility as it enters and exists in the warehouses. This helps in accurate demand predictions, manages on-time inventory, and enhances traceability. 
5. Enhanced operational efficiency: A WMS enhances the operational efficiency of managing port logistics, including loading, unloading, and placing and shifting cargo. 

Strategic warehousing for optimized logistics

There are some warehousing strategies available that will help you to optimize your logistics. The following strategies will streamline logistics strategy, maximize space, and ensure efficient operations. Let’s have a look at those strategies as a part of the role of warehousing in supply chain:

1. Optimization of warehouse layout: The layout and location of the warehouse have a considerable impact on the logistic operations. If the layout and location of the warehouse are elected with factors like distance for the trade routes and availability of facilities and equipment, then logistics can be made easier. 
2. Technological integration: Automated technologies, automated guided vehicles, and robotics usage at the ports will also lead to warehouse automation. This will increase efficiency, decrease time, and reduce the cost of manual labor. 
3. Demand forecasting and predictive analytics: Accurate demand forecasting is essential for optimizing warehouse efficiency. This will help optimize inventory levels and manage stockouts and replenishments accordingly. 
4. Sustainable warehouse operations: With increasing environmental pollution, sustainable warehouse operations become essential. Energy-efficient lighting, renewable energy sources, waste reduction, and recycling initiatives are some of the practices for sustainable warehouse operations. 
5. Employee training and management: Labor management and training are two significant components of warehousing optimization. This involves optimizing labor resources, providing training and development opportunities, and improving employee productivity and efficiency.
6. Continuous monitoring and improvement: Continuous monitoring maintains warehousing’s optional efficiency. Analyze the key metrics, order accuracy, on-time delivery, inventory turnover, and workforce performance, and then understand the scope for improvement. Implement that in your strategy. 
7. Vertical storage: Storing inventories vertically by pilling them up in a line will optimize the storage capacity of the warehouses. It will reduce the cost of renting a large quantity of warehouses. 

Challenges in warehouse management

Warehouse management is very important in businesses that move goods and services from one location to another. The role of warehousing in supply chain is challenging at times. They face the following challenges: 

1. Inventory shrinkage: Inventory shrinkage due to theft and damage affects logistics. This occurs mainly during people’s seasons and with highly sensitive and valued goods. 
2. Stockouts or overstocking: The availability of stocks and stock availability both affect the businesses. Stockouts need replenishments, and overstocking needs to speed up the container transportation process. 
3. Labor shortage: A labor shortage adversely affects business economics. This happens especially in areas with low unemployment rates, as retaining highly skilled workers is challenging. 
4. Returns and reverse logistics: Managing reverse logistics and returns is difficult as extra warehouses are required to store the returned inventory. Also, if the returns are not processed on time, it leads to customer dissatisfaction. 
5. Managing hazardous materials: Warehouses must deal with the challenges of managing hazardous materials. Improper storage and temperature can also lead to accidents, fines, and environmental degradation. You must follow the guidelines to handle hazardous and fragile cargo to prevent accidents. 

Warehouse safety and compliance

You can ensure a successful operation by adhering to the warehouse safety and compliance regulations. Here are some best practices for optimizing the role of warehousing in supply chain and maintaining safety and compliance:

1. OSHA regulations: Compliance with the Occupational Safety and Health Administration (OSHA) regulations is essential for maintaining a safe working environment and safeguarding employees. 
2. Recognizing hazards and controls: The environment in the warehouses can be harmful to the employees. So, you must identify the potential accidents that can occur and prepare a plan B to prevent the hazard from occurring. An emergency Action Plan (EAP) is a comprehensive action that employees must follow during any unexpected incident. 
3. Exit routes and fire safety: Warehouses must have at least two exit routes in case of an emergency. A company with more than 10 workers should also have a written fire prevention plan to prevent potential logistics challenges. 
4. Medical and first aid: Warehouse operators must have a medical and first aid kit if something happens. Due to the unsafe use of forklifts and cranes and the unsafe environment of the warehouses, medical kits are essential. 

The role of warehousing in supply chain management helps decrease costs, improve customer satisfaction, and achieve competitive advantage. A proper warehouse location is essential, as it must be near trade routes and equipped with all the necessary facilities. In addition, You must adhere to all safety guidelines. If you are properly optimizing your warehousing operations, you will be able to see smoothness in the work of the supply chain. 

With its efficient container solutions, LOTUS Containers provides services for managing port operations. It partners with more than 300 container ports, which can help your logistics management.