Warehouse efficiency directly impacts both customer satisfaction and profitability. For warehouse operations, optimization isn’t merely about implementing flashy technology—it’s the methodical pursuit of handling more orders with greater accuracy, speed, and cost-effectiveness month over month.
This steady progress translates to improved margins for 3PLs or better consumer experiences and growth for brands. Don White, Sr. Director of Solutions Engineering at Da Vinci with over 20 years of experience in warehouse management and supply chain software implementation, puts it simply:
“A warehouse manager’s job isn’t creating a revolution—you’re creating small, incremental improvements.” These seemingly modest gains, when applied consistently over time, can transform warehouse operations and significantly impact the bottom line.
What Is Warehouse Optimization?
Warehouse optimization is the systematic process of enhancing warehouse operations for efficiency, cost-effectiveness and performance. It encompasses everything from physical layout and inventory flow to labor management and technology implementation.
“Optimization is a totally broad term,” White says. “If I walk into one warehouse, ‘optimization’ could just mean making sure everyone shows up to work on time and works the whole eight hours. In another warehouse, you’re doing a discrete trend analysis to understand the life cycle of an order and inventory and the interaction of people with those demands.”
“In both cases and a lot of others,” he explains, “you’re driving optimization.”
Benefits of Warehouse Optimization
Implementing warehouse optimization strategies delivers substantial benefits that impact both operational efficiency and margins:
Increased Throughput Capacity
“If I know I need to ship out 20,000 orders a day and my average is 15,500, I need to figure out how to go faster,” White says. Optimization is the process of identifying and removing constraints that limit your capacity.
For example, strategic wave planning can balance workload across zones and times of day and prevent bottlenecks at packing stations. Or reconfiguring your warehouse management system (WMS) can also enable simultaneous picking, packing, and shipping operations (rather than sequential processing), dramatically speeding fulfillment.
Reduced Labor Costs
Seemingly minor efficiency gains from better optimized workflows and processes compound dramatically at scale. “If an optimization saves you just a second per pick while you’re doing 4 million picks a year,” White says, “I have now given you the opportunity to reduce your workforce by a full-time employee.”
Improved Space Utilization
Optimized warehouses make better use of vertical space and improve slotting strategies to increase storage density without compromising accessibility.
Faster Order Fulfillment
By streamlining picking paths, reducing bottlenecks, and making inventory accurate, better optimized warehouses can process orders more quickly, enabling higher throughput.
“The hidden killer is when an item is deeply stored six levels up, and the person who needs it is standing in front of a pick cubby with no inventory there,” says White. Optimization addresses inventory discrepancies to ensure items are where they should be.
Lower Error Rates
Systems that guide workers through standardized procedures ensure consistency across different shifts and personnel, leaving less room for human error. An example: A properly configured scanning verification system within your WMS can enforce a match between the picked item’s barcode and the ordered SKU, catching potential mis-picks before they leave the facility.
17 Expert Tips for Optimizing a Warehouse
We asked Don White to share his most effective warehouse optimization strategies. Combined with industry best practices, here are 17 expert tips to transform your warehouse operations:
1. Start with Your Shipping Maximum
“I tend to focus on shipping and try to understand, given your current workforce and processes, what’s the maximum number of orders you can ship?” says White, who has helped lead operations at four major WMS companies—Red Prairie, SnapFulfill, ShipHero, and Da Vinci.
White prioritizes shipping because it establishes your true throughput capacity—how many completed orders your entire system can produce. Once you’ve established this capacity ceiling, you can work backward to identify which specific constraints or bottlenecks are limiting your total output, whether they’re in picking, packing, receiving, or elsewhere, rather than optimizing processes that won’t increase shipped orders.
If actual throughput is far lower than the shipping maximum, you’ve identified excess capacity, and can optimize by reduced staffing, reallocated resources, or generating more orders.
2. Design and Redesign for a Logical Flow Path
When designing warehouse layouts, arrange your storage areas, picking zones, packing stations, and shipping docks in a sequential arrangement that minimizes backtracking and cross-traffic. “I should be able to track any given piece of inventory logically through functional areas, from receiving all the way to shipping,” notes White.
3. Optimize Bin Min/Max Settings
Configure your system with appropriate minimum and maximum quantities for each picking location. White stresses the importance of safety stock: “When I hit my bin minimum, the number from bin minimum down to zero is called ‘safety stock.’ If I know it takes me two days to do a replenishment, then from bin minimum down to zero should last those two days based on historical demand.” If it won’t, your bin minimum is too low.
4. Understand Receiving’s Critical Role
“If receiving is wrong, there’s a chance an item’s entire inventory life cycle stays incorrect until a person interacts with the inventory again,” cautions White.
For example, if a shipment of 100 blue widgets is mistakenly entered as 1,000 during receiving, your inventory records will show far more stock than exists, causing you to accept orders you can’t fulfill and pickers being sent to locations with no product left. Invest in training your receiving team in quality control processes, as mistakes here cascade throughout operations.
5. Slot Based on Velocity and Relationships
Position your fastest-moving items in prime picking locations, but also consider items frequently ordered together. Place these related products near each other to reduce travel time.
6. Master Your Replenishment Process
Proactive inventory management is critical because when pickers encounter empty locations, their productivity drops dramatically. They must either skip the item (creating incomplete orders) or spend time searching for inventory in reserve locations (slowing down the entire picking process).
Warehouse replenishment is how you create an uninterrupted flow of picking that significantly boosts overall warehouse throughput.
“The dirty little secret of replenishment is it’s so labor-intensive,” White says. “It’s the WMS saying, ‘In that cubby, you have told me that if the number of widgets goes below 10, someone will grab 40 blue widgets from a storage location and put them in that cubby.’”
“Even if one of my pickers has to do that for 40 hours a week, it’s worth it,” he says. “Then none of my pickers will ever go to a location and have to stop what they’re doing. The blue widget will always be available to pick, pack and ship as quickly as possible.”
7. Know What’s Beyond Your Warehouse
To truly optimize a warehouse, you need visibility beyond its four walls. “Understand one step before you in the supply chain and become an expert at it, and understand one step after you,” advises White. “Otherwise, you’re just blind to what’s going wrong right from the start or right at the end.”
A distribution center struggling with receiving bottlenecks, for example, should be aware that implementing a vendor appointment scheduling system will give them visibility into inbound shipment timing and volume so they properly staff docks to reduce unloading times.
8. Implement Measurement Before Technology
Simple measurement tools are the best way to figure out what’s holding you back from your maximum output. White shares this practical approach:
“Before I ever start pulling apart data, the first thing I do is ask a manager, ‘This person is fulfilling an order. How long should it take them?’ And they’ll throw out a number—12 minutes.
“’All right,’ I’ll say, ‘let’s buy 50 99-cent egg timers, set them for 12 minutes and put them on each of their picking carts. When you hear that timer go off and they haven’t dropped off their cart yet, your job is to go figure out what slowed them down.’”
9. Distinguish Between Productivity and Efficiency
Understanding this distinction transforms optimization from a labor management challenge to a process improvement opportunity, which typically yields sustainable gains with less resistance from your team.
“Think about productivity as ‘in eight hours, I picked 215 orders, I need to work faster,’” White explains. “Think about efficiency as bringing in a continuous improvement consultant to watch and advise, ‘Try this instead,’ and you go from 215 to 225 orders— just with that little rework.”
Instead of simply pushing workers to move faster (productivity), you identify systemic improvements to work methods that make each action more effective (efficiency), helping you achieve higher throughput without burning out your workforce.
10. Optimize Pick Paths
Redesign pick paths to minimize travel distance and time. You can configure a worthwhile WMS to sequence picks in the most efficient route possible.
11. Consider Batch and Zone Picking
Implement batch picking (one person picks multiple orders simultaneously) or zone picking (each picker covers a specific area) strategies to reduce travel time and increase throughput.
12. Focus on Middle Performers
Don’t concentrate exclusively on your poorest performers or on making your stars even better, White says. “If you have a bell curve distribution of labor performance, you want to get the bulk of people from average to good. The folks in the middle tend to be the largest population. If I can get them to good, I get a bigger bump than taking the good guys and making them great.”
13. Implement Cross-Docking Where Possible
To eliminate wasted time handling items, analyze your order and inventory data for products that consistently ship within 24-48 hours of receiving. Then configure your WMS to flag these items upon arrival and create a designated staging area near both receiving and shipping so products move directly between them and skip over putaway.
Train your receiving team to identify cross-dock opportunities and use visual indicators like colored labels or totes to distinguish cross-dock items from regular storage items.
14. Use ABC Analysis for Inventory Management
Categorize inventory into A (high-value, high-velocity), B (moderate value and velocity), and C (low-value, slow-moving) items. Focus your most experienced pickers and supervisors, premium storage locations, and frequent cycle counts on A items that typically represent 20% of SKUs but generate 80% of revenue. Apply standard controls to B items and minimal oversight to C items, ensuring your warehouse management effort is invested proportionally to each category’s business impact.
15. Place Returns Processing Using Common Sense
If you handle significant returns volume, position your returns processing area near where returns enter the facility.
White gives a painful hypothetical of what happens when you ignore this tip. “If I ship out 100 packages in apparel, I’m going to get 30 returns on those orders,” he says. “If I put my return processing on the other side of the warehouse from the door where those items come through, I’ve got a forklift or a person traveling an eighth of a mile there and back each time.”
16. Break Down Interdepartmental Silos
Some warehouses implement daily 10-minute cross-functional huddles where receiving, inventory management, picking, packing, and shipping team leads share their challenges. This practice can reveal, for example, that receiving is prioritizing unloading items from a vendor that is low priority for the putaway team while high-priority goods are left waiting.
17. Implement Cycle Counting
Instead of shutting down operations for annual inventory counts, implement a program where a small subset of items is counted each day. For instance, a warehouse can assign pickers to count five high-value, high-velocity locations each shift while counting slower-moving items monthly.
Planned well, the effort can improve inventory accuracy rates day to day and eliminate heavy-lift one-time inventory audits.
Warehouse Optimization Trends
1. Automation With Caution
While robotics and automation are transforming warehouse operations, White cautions against blindly pursuing technology. “Once I’ve brought in this equipment and it’s stapled to the ground, and I’ve done the $200,000 install on the electrical and connections, that place and that equipment now has a function, and your warehouse is now restricted in what can happen going forward.”
He advises, “Always look three to five years ahead and figure out whether that automation still works with your company’s strategic plan. Because once I’ve bolted it to the floor, it costs just as much to uninstall as it did to install.”
2. Integrated Labor and Inventory Analytics
Modern WMS platforms are beginning to merge traditionally separate data streams—labor management systems, inventory records, and order management—into unified dashboards that enable warehouse managers to make decisions that simultaneously optimize labor and inventory. Such insights can include:
- Which specific product types consistently take longer to pick
- How specific teams or shifts compare in inventory accuracy
- What are the optimal staffing levels for variable inventory profiles?
3. Training-Focused Technology Adoption
White emphasizes that technology alone isn’t enough: “The WMS is a tool, but having a great tool doesn’t make you a craftsman. Someone has to teach you to use it.” The most successful warehouses invest time and dollars into training when they implement new technology. This trend is manifesting in:
- Extended implementation timelines
- Creation of internal “super users” who become system experts
- Detailed process documentation that combines system instructions with warehouse best practices.
The point is for employees to understand not just which buttons to press but why those actions matter to the overall operation.
4. Data-Driven Decision Making
Given the new analytical power brought by AI and machine learning, predictive capabilities are moving beyond simple historical trending. Historical receiving data set alongside weather forecasts can predict dock congestion and recommend staffing adjustments before issues arise. With AI tools, a warehouse might predict not only the order volume increase brought by a specific product promotion but also learn in advance what the order composition and return rates will be.
Warehouse Optimization Checklist
Use this checklist to assess your current optimization efforts and identify areas for improvement:
- Map and analyze current process flows to identify bottlenecks
- Establish clear KPIs for all warehouse functions with real-time visibility
- Implement a reliable cycle counting program to maintain inventory accuracy
- Review slotting strategies quarterly based on velocity changes
- Optimize bin min/max levels for fast-moving SKUs
- Calculate and implement appropriate safety stock levels
- Evaluate picking strategies (wave, batch, zone) for your specific order profile
- Establish standardized training programs for all warehouse positions
- Develop a cross-training matrix to create workforce flexibility
- Implement a continuous improvement program with regular staff input
- Analyze and optimize receiving procedures to ensure accuracy
- Review and improve replenishment processes to minimize stockouts
- Evaluate technology needs against actual operational bottlenecks
- Review layout for logical flow from receiving to shipping
- Position returns processing strategically to minimize movement
- Establish communication channels with upstream and downstream supply chain partners
- Create a change management protocol for implementing new processes
Finding a WMS Built for Warehouse Optimization
Warehouse optimization is an ongoing journey, not a one-time project. Incremental improvements applied consistently over time and supported by a robust WMS with the needed configurations and features significantly impact the bottom line.
Da Vinci’s Unified WMS includes robust cross-docking functionality, integrated returns processing that can be strategically positioned within your workflow, and cycle counting tools that maintain inventory accuracy without disrupting operations. In addition,
- The system’s proactive replenishment management uses sophisticated algorithms to calculate optimal bin min/max levels based on your specific velocity patterns.
- Its intelligent pick path optimization reduces walking time.
- The built-in labor analytics help you identify those crucial middle performers who represent your biggest improvement opportunity.
Our team doesn’t just configure software—we transfer knowledge, ensuring your team understands not just how to use the system, but why each function matters to your optimization journey.
“Any WMS you choose is going to fix your top three problems,” White notes. “At Da Vinci we know our job is to understand and solve your next five problems too.”
Contact Da Vinci today to learn how our WMS can help you achieve greater efficiency, accuracy, and throughput while reducing costs.