Warehouse Management Terms You Should Know

 In Best Practices, Business Intelligence

Here at SalesPad, we believe that your warehouse is an extremely valuable aspect of your business. A chaotic warehouse can negatively affect your customers’ buying experience. After all, you can’t offer good customer service if you can’t make sure products ordered are in stock or guarantee that customers get what they purchased. The right software can help you manage your warehouse effectively, keeping your customers happy and making your life easier. 

We offer several great features for managing a warehouse, but confusing terminology can make understanding what our software does difficult. So, we’re here to help clear up any confusion!  Whether you are adding another warehouse location, managing a warehouse for the first time, or are a warehouse veteran, here’s a list of terms we have compiled that you should be familiar with:

Warehouse Management Terms You Should Know

Must-Know Terms: 

Barcoding: A barcode is a visual, machine-readable representation of data that describes what an object, such as a product, is. Barcoding is the most common form of identification used in automatic data-capture technologies, allowing computer systems to capture data about items or products without the need for human involvement. There are several types of barcoding systems, such as handheld scanners, mobile applications, or even a physical “phone case” that turns smart phones into data collection devices. This system is used to physically capture data from the labels of your products to track inventory, avoid lost revenue, and better plan for the future. 

Bin Replenishment: When a specific bin is low on inventory and needs to be refilled, the bin needs to be refilled (replenished) in order to keep your warehouse running smoothly. There are multiple ways to calculate bin replenishment, so it is important to understand the different ways to help you choose the best method for your warehouse needs.

Drop shipping: Although the name is misleading, drop shipping isn’t packages falling out the back of a mail truck. This is an order fulfillment method in which a company enlists a third-party vendor to ship the order directly to the customer, rather than keeping the inventory in stock. Companies often utilize drop shipping in order to avoid stocking certain products or to get back-ordered items to the customer faster.

Blind Shipping: Otherwise referred to as a “blind drop-ship”, blind shipping is the vendor’s role in the drop shipping process. This conceals that a third-party vendor shipped an order, rather than the seller. Therefore, the customer is “blind” to who actually fulfilled their order.

Double Blind Shipping: Similar to traditional blind shipping, the customer is unaware of where the product came from. But, the vendor is also “in the blind,” meaning they are unaware of where their product is being shipped to. The shipping carrier picks the inventory up at the supplier’s warehouse and ships it without the vendor ever knowing where it is headed. Because of its complexity, double blind shipping is normally only used by businesses that coordinate drop-ship orders. 

To learn more about blind and double blind shipping, read “What is Blind and Double Blind Shipping?”

Tracking Inventory: Tracking inventory gives you an item’s “sum” cost, meaning the cost of each item is usually a static field where a user can enter a price. Therefore, the “cost” of an item doesn’t reflect any information about how much the item actually costs you — cost is simply what you determine it to be.

Managing Inventory:  Managing inventory shows you cost stacks and cost layers, which is key for making business decisions based on inventory costs and actual profit. Every time a business brings inventory in, there’s a unique cost associated with that inventory quantity — and if you’re unable to see and record the individual layers of cost, you’ll have no way to see the actual cost and profit of individual sales. Compared to tracking inventory, managing inventory offers more insights that allow you to grow your business.

To learn why the difference between tracking and managing inventory matter, read this blog post.

Manual Picking: This method involves the process of “picking” products or merchandise from the warehouse’s inventory without using software or other equipment that would automate part of or all of the process. This method can be effective, but leaves room for errors and does not verify accuracy. 

RFID: This refers to radio frequency identification. Similar to barcoding, RFID involves a tag attached to a product that identifies and tracks the product via waves. Since RFID works on radio, no visible contact is needed in order to read the code. This makes it possible to read many codes at the same time from far away.

Wave Picking: With this process, multiple orders are grouped into small groups or “waves.” All orders within a wave can be selected in one pass using a consolidated pick list. Wave picking allows managers to make additional picks while in the same area, saving them travel time. 

That’s a wrap!

We understand that warehouses can be chaotic, but with the right warehouse management software, you can ensure that orders go out the door correctly, inventory is accurate, and your operations are always fully synced. In fact, operating on a iOS or Windows Mobile device equipped with a scanner, warehouse management through SalesPad allows you to perform all essential inventory transactions while Dynamics GP is automatically updated in the background, making managing chaos less… chaotic.

Are there any important terms related to warehouse management that you didn’t see covered here? Let us know in the comments section!

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