2 Warehouse Functions and Flows

“Success is a process, not an event.” —Richie Norton

2.1 Learning Objectives

Recognize the main internal operations inside a warehouse.
Understand how receiving, put away, storage, order picking, and shipping link together to create an efficient flow of goods.
Identify optional value-added activities such as pre-packaging, kitting, and cross-docking.

2.2 Typical Warehouse Functions and Flows

Warehouses perform several everyday activities regardless of size or industry. The terminology may change, but the tasks remain remarkably similar:

Receiving. Accepting and inspecting inbound shipments.
Put away. Moving goods from receiving to their designated storage location.
Storage. Physically containing goods until they are needed.
Order picking. Retrieving goods from storage to satisfy customer orders.
Shipping. Consolidating, packing, and loading orders for dispatch.

The classical linear view of a warehouse process emphasizes the sequential nature of these main activities. In this simplified model, goods flow from receiving to put away, then into storage, out through order picking, and finally to shipping (see Figure 2.2 and Figure 2.1).

graph LR
  R("Receiving") --> P("Put away")
  P --> S("Storage")
  S --> O("Order picking")
  O --> SH("Shipping")

Figure 2.1: Traditional Warehouse Process Flow.

Terminology

Terminology varies across industries. Some authors refer to functions, others to internal activities or operations, but they all describe the same underlying processes.

2.3 Extended Warehouse Functions and Flows

Figure 2.2 provides a comprehensive view of the intricate internal flows within a warehouse. Products from suppliers enter through Receiving, where they are inspected and processed. From there, goods can be routed to reserve storage for bulk inventory, primary picking areas for faster access, or directly to Shipping through cross-docking for immediate dispatch. Customer returns follow the same entry point, ensuring seamless reintegration into the warehouse flow. Replenishment processes maintain the connection between reserve storage and case picking areas, while broken case picking areas supply items to Accumulation, Sortation, and Packing, ensuring orders are consolidated and prepared efficiently before reaching Shipping.

flowchart TB
  S["Suppliers"] == Products ==> R(["Receiving"])
  C2(("Customers")) == Returned<br/>products ==> R
  subgraph Warehouse
    direction TB
    R -- "Direct put away<br/>to reserve" --> RS(["Reserve storage and<br/>pallet picking"])
    R -- "Direct put away<br/>to primary" --> CP
    R -- "Cross docking" --> SH
    RS -- Replenishment --> CP(["Case<br/>picking"])
    CP -- Replenishment --> BCP(["Broken case<br/>picking"])
    CP --> ASP(["Accumulation,<br/>sortation,<br/>and packing"])
    BCP --> ASP
    ASP --> SH(["Shipping"])
  end
  SH ==> C(("Customers"))

Figure 2.2: Comprehensive overview of warehouse functions and flows, highlighting Receiving, Storage, Picking, and Shipping processes.

2.3.1 Receiving

Receiving is the gateway to the warehouse. The process encompasses unloading trucks, verifying that incoming goods match purchase orders and quality expectations, and recording them into the warehouse management system (WMS). Each step is critical because errors made at receipt propagate through the entire supply chain:

Unload and check: Workers unload pallets or cartons, count items, and compare them with the supplier’s packing list and purchase order. This step verifies quantities and item identifiers (SKUs).
Inspect quality: As items are counted, they are inspected for damage or defects. Early detection allows issues to be addressed before goods enter inventory.
Record receipt: Accepted items are logged into the WMS using barcode or RFID scanners; this updates stock levels in real time and generates labels or reports. Accurate data capture prevents future stock discrepancies.
Stage for put away: Goods are temporarily placed in a staging area and labelled so that put away staff know where they should be stored.

If the warehouse uses standard operating procedures, such as receiving checklists or electronic advanced shipment notices, staff can process receipts faster and with fewer errors. Accurate receiving is also the only moment to identify overages, shortages, and damage (OS&D), file claims with carriers or vendors, and ensure that what is recorded matches reality.

Cross Docking

Sometimes, goods do not need to be stored at all. In cross-docking, inbound shipments are immediately sorted, packed, and loaded onto outbound trucks for customers. This technique is used when fulfilling back orders or handling high-velocity items, reducing handling and storage costs. Successful cross-docking requires precise scheduling and real-time information so that inbound and outbound flows are synchronized.

Pre Packaging and Kitting

Warehouses often go beyond basic receiving by adding value to incoming goods. In pre-packaging (also known as pre-pack), certain products are packed in advance (often into fixed kits, bundles, or retail-ready packaging) before the actual order is placed. Typical scenarios include promotional bundles, subscription boxes, and retail distribution, where the same combination of SKUs is repeatedly shipped. Pre-packaging reduces last-minute packing and helps move inventory faster through the outbound dock, but it requires accurate demand forecasting and inventory planning.

Kitting takes pre-packaging a step further: individual items are gathered and pre-assembled into ready-to-ship kits. Rather than picking a yoga mat, resistance band, and water bottle separately, for example, a warehouse might create a “fitness kit” that becomes a single line item. Kitting is widely used in e-commerce, healthcare, and manufacturing to reduce labor costs, improve order accuracy, and enhance the customer experience. Both pre-packaging and kitting transform receiving into a value-added service, but they require space and labor. When storage volume or product variety makes pre-packaging impractical, warehouses may store items in bulk and package them only when demand materializes.

2.3.2 Put Away

Put away is the act of moving goods from the receiving area to their optimal storage location. Efficient put-away maximizes space utilization, reduces labor costs, and improves inventory accuracy. The basic steps are:

Select product to put away: Pickers retrieve pallets or carts from the staging area.
Identify and scan: Using RF or barcode scanners, they identify the job and the specific SKU to be put away.
Travel to location: The WMS directs them to a designated slot based on criteria such as item size, weight, turnover rate, or family.
Place and record: Goods are placed into the assigned location, and the location’s barcode is scanned to confirm.
Repeat until complete: The process continues until all items in the pallet or cart have been stored. A variety of put-away strategies exist. For example:`

Directed or slotted put-away relies on rules or real-time data to guide storage decisions (e.g., placing heavy items on lower racks, fast-moving SKUs near the front, and slow movers in more remote locations).
Random or chaotic storage assigns goods to any available slot, maximizing space utilization but requiring a robust WMS to track locations.

Several factors influence put-away decisions, including the product’s weight and dimensions, its fragility and stackability, as well as transaction volume (distinguishing between hot and slow-moving items). Other considerations include the quantity received, the product’s value, and the picking method employed. Additionally, automated storage and retrieval systems (AS/RS) and conveyor systems enhance the speed and accuracy of the put-away process.

2.3.3 Storage

After put away, goods reside in storage until a demand arises. Storage is more than just “shelving”: it requires careful design to balance accessibility, space utilization, and product care. The storage method depends on the size and quantity of items, the handling characteristics of the product or its container, and environmental requirements.

Pallet storage systems accommodate bulk or palletized loads and often use high bay racking or automated pallet shuttle systems.
Case storage systems store products in cartons or cases on shelving or flow racks, often with a forward picking location where small quantities of frequently picked items are staged.
Broken case (each) storage systems store individual units in bins, drawers, or carousel systems for piece picking. These areas often feature ergonomic workstations and pick-to-light or voice-directed technologies.

Proper storage and material-handling practices maximize space utilization, reduce handling costs, and maintain product integrity. Efficient layout design and material handling equipment help goods flow smoothly through the facility. In temperature-controlled warehouses, dry storage, cold storage, and ambient zones may be separated to protect products. Positioning fast-moving SKUs close to picking areas (forward pick locations) reduces travel time and improves productivity.

2.3.4 Order Picking

Order picking is the process of removing items from storage to meet a specific demand. It is the basic service a warehouse provides for its customers and the function around which most warehouse designs are based. Accurate and efficient picking underpins customer satisfaction and profitability because picking errors are expensive to fix once orders leave the warehouse.

Different picking strategies exist, and the optimal method depends on order profiles and warehouse layout:

Single order (discrete) picking: A picker gathers one order at a time—simple but inefficient for high volumes.
Batch (multi-order) picking: Several orders with similar items are picked together to reduce travel time.
Zone picking: The warehouse is divided into zones; pickers work in one zone, and orders move from zone to zone until complete.
Wave or cluster picking: Orders are released in waves based on shipping schedules or carrier cut-off times; cluster picking uses multiple totes to pick items for multiple orders simultaneously.

Technology such as pick to light, voice directed picking, and automated picking systems can dramatically improve speed and accuracy. Effective routing and real-time guidance from the WMS ensures that pickers follow the most efficient paths through the warehouse.

2.3.5 Shipping

The shipping process transforms picked items into customer shipments. It includes multiple steps:

Sort and accumulate: Batch picks are sorted into individual orders, and distributed picks are accumulated into orders when multiple items are required.
Check for completeness and accuracy: This is the last opportunity to verify that orders contain the correct items and quantities.
Package goods: items are packaged in appropriate containers (polybag, box, pallet, etc.), using protective materials as needed. Packing methods may be manual or automated; automated packing systems use carton erectors, auto baggers, and document inserters to speed the process.
Prepare documents: Shipping labels, packing lists, and bills of lading are generated and attached to the packages.
Weigh and cube shipments: Orders may be weighed and measured to determine shipping charges.
Accumulate by carrier and load: orders are consolidated by outbound carrier, staged at the dock, and loaded onto trucks.

Efficient packing and shipping protect goods during transit, reduce the risk of damage and returns, and ensure that customers receive their orders on time. Many warehouses invest in transportation management systems (TMS) and route optimization software to schedule pickups and select the best carriers. High-volume operations use automation to reduce manual labor and maintain throughput, especially under tight delivery schedules.

2.4 Conclusion

Warehousing is more than just storage; it is a series of interdependent processes designed to move goods quickly and accurately:

Receiving lays the foundation by verifying quantities and quality, updating the WMS, and staging goods for put away.
Put away assigns each item to an optimal location based on its characteristics and expected demand; WMS guided strategies and automation improve accuracy.
Storage balances space utilization with accessibility; pallet, case, and broken case systems cater to different unit loads while forward pick locations speed picking.
Order picking retrieves items to meet customer demand; choosing the proper picking method and leveraging technology reduces travel time and errors.
Shipping consolidates, packs, and dispatches orders, ensuring that goods are protected, documents are accurate, and carriers are properly scheduled.

Optional activities such as cross-docking, pre-packaging, and kitting add flexibility and value. Cross-docking bypasses storage for high-velocity items; pre-packaging and kitting assemble items in advance to simplify downstream operations. Together, these processes create a warehouse capable of meeting today’s fast-paced supply chain demands.