Inventory Management and Warehouse Operations.


The Basics of Warehouse Operations.

By Dave Piasecki


If you are someone that has come to be in charge of a warehouse, yet know next to nothing about warehouse operations, you are not alone—this actually happens quite often. This article is intended to help people like you get a very basic understanding of key aspects of the warehouse. It won’t make you an expert, but it should help point you in the right direction for furthering your knowledge. If you run into warehouse terms you don't understand, check out my Glossary of Inventory Management and Warehouse Operation Terms

Key warehouse processes.


It all starts with receiving. Inbound shipments are delivered to the warehouse. The typical receiving process involves checking in the receipt against the vendor’s packing list. This makes sure you received what the vendor claims was shipped to you. Next, you enter the receipt into your inventory system using your purchase order number. This makes sure what was shipped to you was actually ordered by you. This also updates your inventory balances and provides information that you will use when paying the vendor.


This is the process for putting away that inventory you received. You will typically put away into fixed picking locations (the item is stocked in the same place every time), or more random locations (item goes where you have room), or a combination of the two (you fill a fixed picking location, then put the rest in overflow storage)


If you have fixed picking locations and additional inventory in overflow locations, you will need a replenishment process to fill the fixed picking locations as they are depleted. In a small warehouse this could be completely manual, in busier warehouses you may have system support to help identify locations requiring replenishment and quantities to replenish. The most important part of replenishment is making sure you are actually doing it. Replenishment supports the order-picking process. If you don’t do the replenishment, the order-picking process suffers.

Slotting and bin locations.

Slotting is the process of deciding where each item is stocked. Basic slotting involves getting your fastest moving items in close accessible locations, and making sure the locations are the right size. Bin locations allow you to keep track of where you slot items. Slotting and bin locations can provide significant benefits, even in small warehouses.

For more information, read my articles on Warehouse Slotting and Using Bin Locations.

Order Picking.

Order picking is the process of . . . um . . . picking orders. There are so many ways to pick orders that someday I may get around to writing a book on it. But in the meantime, I do have an article on Order Picking that should help to get you started.

Order Packing/Shipping.

After orders are picked, they need to be prepared for shipment. In parcel-shipping operations this is typically called order packing, while in truckload and less-than-truckload operations this is typically just called shipping. The tasks involved here vary based on the types of shipments. For parcel shipments it’s primarily choosing the appropriate carton size, using void fill or other methods to help protect the items being packed, sealing the carton and applying the shipping label. Running the shipping label is obviously an additional process, and may be done by the order packer, a separate person after the order is packed, or may be done prior to picking the order.

For LTL and truckload shipments preparing shipments can be more complicated. For mixed loads (multiple items in the same shipment) you may be assembling orders onto pallets and stretch wrapping and/or banding them. In some operations you may be building crates or similar items to contain/protect the inventory being shipped. You are then producing a bill of lading to be used as the shipping document.

Some customers may require you to produce advanced shipment notifications (ASNs) and compliance labels for their shipments. The requirements for these vary based on the supply chain and specific customer, but it usually involves applying a label with a unique ID to each container (carton, palletized load, etc.) and electronically communicating with the customer what is in each container. Your customer should provide you with their specifications for this process, and some of them are very picky about you following their process.

Warehouse Equpment.

Storage Equipment.

While there is a wide variety of storage equipment used in warehouses, the most common storage equipment used in warehouses is single-deep pallet rack and bin shelving.

Single-deep pallet rack, also called selective pallet rack is designed to store pallets placed by a forklift, but is also commonly used to hand-stack inventory onto decked shelves. Pallet rack is made of uprights and cross beams. The most commonly used design is known as teardrop pallet rack ("teardrop" describes the mechanism used to connect the cross beams to the uprights).

The most commonly used depth of pallet rack is 42-inches deep. This allows you to set a standard 40”x48” pallet into it with 3-inches overhang front and back. For pallet storage, this rack is typically set up back-to-back rows with 12-inches between the racks. Other common depths include 24”, 36”, 48”, and 60”. Uprights heights are typically available in 2-foot increments.

The most common load beam width is 96 inches, other common widths include 48”, 108”, 120”, and 144”.

Bin Shelving, also called static shelving is shelving units with steel shelves. There are many different designs of bin shelving. Some require bolting the shelves in place, and others have boltless designs. This is often called bin shelving because it is what is typically used when you store inventory in corrugated or plastic parts bins. Typical depths used are 12-inches, 18-inches, 24-inches, 30-inches, and 36-inches. Shelve widths are typically 36-inches or 48-inches. Unit heights are typically around 6 to 8 ft, but can be higher.

While the above is the most common storage equipment used, there is a wide variety of other storage equipment used in warehouses. Some other storage equipment you may want to look into would include drive-in rack, push-back rack, cantilever rack, and carton flow rack. See Racking Pics.

Lift equipment.

The 3,000 to 4,000 pound capacity sit-down counterbalanced lift truck (what is typically called a forklift) is still the most common lift truck used in warehouses, but don’t just assume you should be using a “standard forklift” for your operation. There is lower cost equipment such as pallet jacks and walkie stackers that can be a better choice in some operations, as well as a wide variety of other lift equipment such as articulated lift trucks, turret trucks, man-up order pickers, and reach trucks that can provide significant advantages in certain types of operations. Check out my article Lift Truck Basics as well as Lift Truck Pics.

Automated equipment.

There is a lot of automated equipment available for warehouse operations. Here we have everything from pick-to-light and automated conveyor systems to carousels, vertical lift modules, and ASRS systems, and automated guided vehicles and robots. The key to looking at automated equipment is making sure it is the right fit for you. Some of this stuff is really expensive, so it’s not good enough to just make sure it can work in your environment, you need to make sure it provides a great enough advantage to justify the cost. Despite what the trade magazines would lead you to believe, most warehouses don’t have or need high levels of automation. This doesn’t mean you shouldn’t consider it; it just means you need to be diligent when doing the math that supports this decision. See Automated Equipment Pics.

Work stations.

A properly designed work station can have a significant impact on productivity, safety, and quality. Make sure the work station is the right size for the task. Too small is obviously a problem, but too big is also a potential problem. Make sure the work station is the right height for the task. If workers are reaching down into large cartons or totes, the work station (or at least that part of it) should be lower than if they are just working off the surface. For most warehouse tasks, work stations should be designed to be used by people standing up (not seated). Make sure the most frequently used supplies and tools are within arms reach, and make sure less-frequently used items are not cluttering up the workspace.


Sometimes it’s the little things that make or break a process. Warehouse tools include tape dispensers, tape guns, utility knives, stretch-wrap dispensers, banding tools, scales, stock carts, rolling ladders, pallet jacks, etc. Make sure you have the right tools for the job, and that you have enough of these tools. Don’t underestimate how important these things are. Check out my article on Warehouse Optimization . . . The Little Things for more information on tools and related items.


Labels are an important part of the warehouse. Labels on cartons and pallets should be clearly readable from several feet away, as should labels identifying locations. The key information used should be in larger fonts than additional information that isn’t as important.

Processes, procedures, and training.

Most warehouses do a very poor job of defining procedures and training employees. Defining and documenting the way tasks are supposed to be executed is very important. A good process helps workers to be more productive, safe, and meet quality and accuracy standards. While it may not be practical to have a fully documented procedure for every task, you need to at least focus on the key warehouse tasks. Proper training will ensure the workers understand the procedures. For more information on warehouse processes and procedures, check out my article Fix My Warehouse and my book Inventory Accuracy: People, Processes, and Procedures.


Supervision is the part where you make sure people are doing what they are supposed to be doing. As much as we’d like to believe workers will follow the procedures they were trained on, the reality is some of them won’t. If you don’t monitor what workers are doing and take action when they don’t follow policies and procedures, you will end up having even more people not following procedures. See my article on Warehouse Supervision for more tips.

For more detailed information on warehouse equipment and how to best utilize your warehouse space, check out my book

Saving Warehouse Space: Equipment, Methods, Strategies, and a little Math.

Saving Warehouse Space explains storage capacity. Not just theoretical capacity (how much you can potentially store), but more importantly, the book explains utilization and working capacity. Without an understanding of utilization and working capacity, you may be making the wrong equipment and layout decisions. In addition, Saving Warehouse Space explains how choices related to pick faces and slotting impact utilization and working capacity.

And, of course, Saving Warehouse Space covers equipment choices and options for aisle widths. Going to narrow or very narrow aisles can provide significant space savings, but you need to make sure you are making the right choices for your specific facility. Saving Warehouse Space even covers lower-cost options to go very narrow aisle.

Other topics include options for offsite storage, and how cost models such as Economic Order Quantity and Equipment Return-On-Investment calculations may need to be tweaked to account for space limitations.


More Articles by Dave Piasecki.


Dave Piasecki, is owner/operator of Inventory Operations Consulting LLC, a consulting firm providing services related to inventory management, material handling, and warehouse operations. He has over 25 years experience in operations management and can be reached through his website (, where he maintains additional relevant information.

BookBook Banner02