How to Design a Warehouse Layout for Secondhand Inventory Fulfillment

David Engle

David Engle

  • operations
How to Design a Warehouse Layout for Secondhand Inventory Fulfillment

After optimizing the flow for 30+ e-commerce fulfillment and processing centers, each of which manages over 250,000 packages per month, the Upright Labs team wanted to share inventory storage best practices, particularly for secondhand items.

Optimizing your warehouse flow begins with prioritizing good design. When designing your fulfillment center’s inventory management system, you should focus on three things:

  1. Reducing time and quantity per product touchpoint
  2. Mitigating time from purchase to outbound shipment
  3. Ensuring the right item reaches the right customer, without damage

Before you design your new fulfillment center, however, it is important to ensure every product has a unique SKU. Using SKUs go hand in hand with design and will make completing tasks easier for any stakeholder involved in your day-to-day operations.

Single barcode example

You should have SKUs for every single item flowing through your warehouse. Even if you carry multiple units of the same product, attaching unique SKUs to each of those unitis critical for maintaining the location of all of your items. It is also important to note the SKUs you attach to in-warehouse items will be for warehouse purposes only, and will not represent the products’ original manufacturer or retailer.

The next thing to prioritize after generating product SKUS is creating scannable location barcodes. Location barcodes should use numbers instead of letters as using letters is the biggest mistake we’ve seen in fulfillment systems. Using letters in fulfillment can cause employees to waste time by reciting the alphabet to figure out which letter comes next and to determine which direction they should go in your warehouse. Figuring out which number comes after another is much easier and faster for people to determine than doing the same for letters.

The first step to integrating numbers is changing how you label your warehouse rows. Instead of a row being labeled as Row A or Row AA, for example, the row should be labeled as Row 1 or Row 27 instead.

Yellow sections in photos represent aisles

And after changing rows from letters to numbers, we recommend segmenting Rows into Bays where all corresponding bays are located on the same end of the row. For example, Row 2 - Bay 1 should be directly across the aisle from Row 3 - Bay 1.

Preferred inventory layout

After you segment Rows by Bays, you’ll have to decide whether you’d like to segment each Bay by Bin, Shelf, or keep it at the Bay Level.

Labeling by bin is great for items smaller than 144 cubic inches (12 in x 12 in x 12 in), as well as art and musical instruments. Labeling by shelf is most convenient for items that are shippable by parcel mail but too big to place in a bin. And lastly, labeling by bay is best for items shipped in packages larger than 576 cubic inches (24 in x 24 in x 24 in) via parcel mail or items sent via freight.

Bin Storage

Bins allow for more items to fit in a smaller amount of space and require fewer touchpoints. Bins should be filled with items either at the shelf location or the inventory processing/listing station (In the latter case, the bin is removed from the shelf, brought to the inventory processing station, and then brought back to the shelf once filled).

When organizing bins in English speaking countries, always place Bin 1 in the top left. People's eyes are programmed to move in the way they read, which is left to right, top to bottom in these countries. If your warehouse is in a country where people read right to left, however, place Bin 1 in the top right of your shelves.

Row layout

The bin size you use will depend on the product categories you are storing. Standard bins for secondhand inventory storage can be found here, which are 11 inches by 17 inches and made out of cardboard with handles on each end.Storing art and musical instruments will be a different process; you can store them using the same type of box they will be shipped in. Below are the steps our warehouse teams follow to store and fulfill art and musical instruments:

  1. Seal one end of the box
  2. Cut off the flaps on the other end of the box
  3. Place the box on the shelf and assign it an inventory location
  4. Place the listed unit in the box
  5. Once the unit sells, go to the inventory location and remove it from the box
  6. Ship the unit in a new box to the customer
  7. Keep the original box, with no flaps, on the shelf and refill it with newly listed inventory

Shelf Storage

Shelf storage is great for large, shippable inventory as well as heavy and breakable inventory. When storing inventory by shelf, be sure the shelf is simple to navigate. An employee should be able to walk to the shelf and, within 10 seconds, identify the exact item they are looking for. If it takes longer than that, the shelf may contain too much inventory or mislabeled items and should be segmented into smaller parts.

Row shelf layout

Large items that are too big to ship should be stored in Bays. Bay labels should be hung directly above the section or placed on the floor in a laminated covering.

Bay fulfillment

Once you have identified the layout of Rows, Bays, Shelves, and Bins, it is important to properly label the inventory.

Creating unique identifiers for  each location is equally as important as creating them for your items. When an item is ready to switch locations, you should be able to scan the item SKU and then the location barcode. Scanning both the item and its location will ensure you and your employees know where every item in your fulfillment center is located and who last touched an item.

Every item’s barcode should have a scannable field and state its inventory location. While just writing “Shelf 4,” for instance, on a barcode may seem like enough, you should include the whole inventory location (Row 1 - Bay 5 - Shelf 4) to avoid preventable mistakes.

Bin labels should also display the full location to prevent item misplacement using a format similar to “Row 1-Bay 5-Bin 2” so employees know exactly where to return bins if they take them off shelves.

Barcode labels

If your items go through other touchpoints before being placed in their end location, be sure to barcode those touchpoints as well. Whether the touchpoint is a cart, another area in the warehouse, or something else, barcoding these points is essential for preventing item misplacement and overall efficiency. Ultimately, your inventory management system should be able to scan both item and location barcodes so your team can easily identify each item’s touchpoints and which employee facilitated each move.

After seeing the results of implementing barcode based systems for unit and location tracking at e-commerce operations, implementing a similar system at your operation will decrease item misplacement and refunds, expedite processes and touchpoints, and reduce pilferage.

Upright Labs provides multi-channel listing and inventory management software for power resellers. Use our cloud-based software to list to multiple resale platforms with one form, fulfill and ship orders in 2 clicks, leverage multi-carrier shipping, visualize top KPIs in pre-built dashboards, track inventory and employee touchpoints, save 30-50% of photography time for each listing with our mobile app, and so much more.

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