As your retail business scales, there’s a good chance you’ll need to start working with multiple warehouse management. That way, you’ll save on shipping costs, deliver orders faster and keep your customers happy. 

There’s just one problem, of course—managing stock across multiple warehouses is hard. Without the right tools and systems, you can find yourself under- or over-stocking, losing track of inventory and spending more on warehousing without seeing much benefit. 

In this article, we’ll break down: 

• Why it’s worth investing in multi-warehousing, despite the potential downsides 
• The main challenges and how to avoid them 
• Best practice tips on how to manage multiple warehouses without all the chaos 

The challenges of multi-warehouse management  

There are some obvious downsides to adding additional warehouses to your supply chain: 

Increased storage and labor costs

For starters, there’s the increased cost. Warehousing costs are on the rise—prime warehousing property costs (comprising rents, service charges and taxes) increased globally by over 10% in 2023. Labor costs are also going up worldwide. 

More complex operations 

And that’s before we get into the complexity of managing inventory across multiple warehouses. Managing one warehouse isn’t easy—managing multiple sites can make it exponentially harder to track stock, optimize the layout and manage staff effectively.  

Harder to manage inventory 

Even with just one warehouse to keep tabs on, managing inventory isn’t particularly easy. You’ve got to track your products, handle order fulfillment and accurately forecast your inventory levels. Add in two or more possible locations and you run the risk of stockouts and overstocking, costing your business money and upsetting your customers. 

Why you should use multiple warehouses anyway 

All that said, for many ecommerce businesses the benefits outweigh the costs. With multiple warehouses, you can:  

Reduce shipping costs

Depending on the distribution of your customer base, the increased cost of warehousing will be more than made up for by the reduction in shipping costs. For ecommerce retailers, the average cost to fulfill an order is 70% of the average order value—so anything you can do to reduce fulfillment costs can have a major impact. 

Plus, reducing your shipping times isn’t just good for your bottom line; cutting down on your carbon footprint is also better for the planet. Never a bad thing! 

Keep your customers happy 

Reduced shipping times and costs will help you deliver your customers’ orders faster and also give you the option to pass on shipping savings or even offer free shipping. 

Reduce your business risk 

Multiple warehouses means that you always have a Plan B if you run into a logistics crisis at a given warehouse. You’ll be able to handle surges in demand more easily if you can distribute it across multiple locations, so you won’t run into supply bottlenecks. 

Different approaches to multi-warehouse management 

If you’re ready to add more warehouses to your operations, there are a few different ways to go about it: 

Regional warehouses

If you’re increasing your warehousing to reach global customers more easily, then regional warehousing (opening up additional warehouses in your main markets) is the logical approach.

Urban warehousing

If you’re getting a lot of orders from specific cities, it can makes sense to have an urban warehouse nearby to process orders faster. The downside, of course, is the cost—warehousing in London, for instance, can cost as much as $42 per square foot.

Dropshipping 

Skip warehousing altogether and ship directly from the supplier. Of course, this is likely to hurt your profit margins, but you’ll have lower upfront costs and less risk of being left with unsold stock. 

Third-party Logistics (3PL) providers 

Instead of renting your own warehouse space, you can partner with a 3PL provider and use their warehouses. Of course, you’ll have to pay a fee to work with a 3PL, but you also get to benefit from their expertise, network and discounted shipping. 

On-demand warehousing

You don’t have to go all in on multi-warehousing. On-demand warehousing lets you rent temporary storage space if you know you have a spike in sales coming up. 

Micro-fulfillment Centers 

Small fulfillment centers based in high-density areas can help you deliver faster to urban areas without forking out the big bucks for urban warehousing. 

How to manage multiple warehouses efficiently 

It isn’t easy to manage multiple warehouses well, but it’s certainly possible. Here’s how: 

Get your inventory management under control 

Frankly, if you’re working with more than one warehouse, a spreadsheet isn’t going to cut it. You need an inventory management platform that will let you create a single source of truth, so you always know where your stock is, can check on levels in real time and don’t accidentally over-order or under-order.

The right inventory management platform will let you: 

• Automatically transfer stock between warehouses, based on pre-defined rules. So, if stock falls below a particular threshold in one location, a shipment from another location will be sent without you needing to do anything. 
• Automatically assign orders to the best warehouse, based on either proximity to the customer or stock availability. 
• Save money by making sure you don’t carry more inventory than you actually need
• Get better at forecasting demand and automate your reorder points, so you avoid stockouts and excess stock
• Provide a better customer experience, because you’ll always know where your products are, can spot issues in the supply chain before they become a problem and make sure that you’re shipping all your products quickly, accurately and efficiently. 

Curious about inventory management software? Linnworks can help you consolidate your entire inventory operation into one central hub, simplifying your management processes—no matter how many warehouses you’ve got. Why not get a demo and see how it works? 

Standardize your warehouse operations 

It’s not just about getting your inventory management sorted—you also need to figure out how you’re managing your warehouses. The success of your ecommerce business often comes down to how well you run your warehouses—and any mistakes you’re making in your warehouse will compound as you add more of them. 

Effective warehouse management comes down to the basics, really: 

• Keeping costs down by managing the space well.
• Using standardized processes to make sure that staff are picking and packing stock optimally.
• Thinking carefully about where you put your stock—storing top-selling items closer to packing stations so staff don’t have to go off looking for them, for example.
• Prioritizing careful storage and handling for high-value stock and cutting down on space usage for low-value stock.
• Using cross-docking—transferring goods directly to outbound shipping where possible, to save on shipping. 

If you’ve decided to move into multi-warehouse management, it’s probably worth adding a warehouse management system (WMS) to your tech stack. It’s not just about keeping customers happy, or even about being more organized—it comes down to your profitability.  To quote Simon Curd, Chief Product Officer at Linnworks, 

“Making sure that you’ve got the right stock in the right place at the right time means you’re able to fulfill orders at the speed your customers expect. Ultimately, the faster you can fulfill those orders, the lower your fulfillment costs.”

Simon Curd

A warehouse management system is a key tool for working efficiently across multiple warehouses. It helps you make sure that receiving, put-away, picking, packing, shipping, inventory tracking and layout optimization are all being done in the most efficient way possible. It also means that you can standardize your operations across your new warehouses as you add them. 

For best results, integrate your WMS and your inventory management system. For instance, with Linnworks, you can manage your entire fulfillment process: 

• Product listings across multiple channels
• Order management
• Inventory management 
• Stock forecasting 
• Warehouse management 
• Shipping management 

Yup, the whole shebang. No more struggling with spreadsheets. No more reinventing the wheel with each additional warehouse. No more wondering where your stock is. Fewer manual errors. Sounds good, right?  

Train warehouse staff 

Of course, you can’t do it all with software. If you’re managing and staffing your own warehouses, then you’ll need to offer your warehouse staff training in best-practice warehouse management. This isn’t just about safety and equipment training. They’ll also need training on: 

• Accurately managing inventory, including proper receiving, storing, picking, packing, shipping, labeling, scanning and tracking
• Optimized workflows, to save them time and make operations run smoothly 
• Organizing storage areas effectively, both to keep your stock safe and to save on space

You can also make things easier by using colored orders or pick lists to help your staff out. For instance, use a specific order color to flag up top-priority orders so they’ll get processed first. 

If you’re looking for training resources, we’ve got a whole series of free tutorials on warehouse management for you. 

Hold safety stock 

Safety stock is simply additional stock that you hold to avoid stockouts. It’s a good idea to keep safety stock when you’re working with multiple warehouses, especially when you’re just starting.  You’ll be dealing with more uncertainty around lead times and shipping times and safety stock will help give you peace of mind. 

A word of caution though—don’t use your best guess to calculate safety stock. You can use the basic safety stock formula to calculate how much stock you need: the number of products you sell per day multiplied by how many days you want to have on hand. There are more sophisticated ways to calculate it, too—in fact, we wrote a whole guide on how to calculate your safety stock, if you’d like to take a look. 

Keep your inventory up to date

Great systems and software can’t help you if they aren’t up to date. You’ll need to set up processes to make sure that all your warehouses are well run and that inventory is being tracked and stored correctly. We’d recommend giving your warehouse manager a daily checklist that includes at least the following: 

• Is inventory positioned so that warehouse staff can get to it easily and safely? 
• Are high-traffic SKUs particularly easy to grab (between waist and shoulder height)? 
• Are damaged items attended to daily? 
• Are inventory levels accurate? 
• Are racks and shelves well-organized and free of hazards?

Use inventory cycle counting 

If you’re used to doing a physical inventory count, you may want to switch to cycle counting if you’re adding additional warehouses. Physical counts are a massive time sink, even with just one warehouse—they’ll soon become unmanageable as you add more. 

If you’re not familiar with cycle counting, it’s simply a way of simplifying the inventory counting process by breaking it down into smaller chunks. During one period, you’ll count in one area of your warehouse (or count one type of item). During the next period, you choose another thing to count. You continually cycle through the inventory until you’ve counted everything and start again from the top.

There are different ways of managing cycle counting—you can count a random sample of items, prioritize counting your high-value stock first, or count all of a defined segment of items before moving on to the next. Whichever approach you try, we’d recommend that you use your warehouse management system and inventory management system, rather than doing the whole thing by hand and tracking with a spreadsheet. The manual approach is far more subject to human error.

 If you’d like to learn more, check out our guide to inventory cycle counting. 

How Linnworks can help you manage multiple warehouses

If you’re planning to add more warehouses or distribution centers to your supply chain, Linnworks can help. Our CommerceOps platform can help you: 

• Get a single source of truth for all your inventory
• Automate tedious, time-consuming inventory tasks, like transferring stock between warehouses 
• Track and manage your inventory data in real-time across multiple warehouses and bin locations 
• Integrate your warehouse management and inventory management systems
• Ship faster with automated picklists that show the most efficient fulfillment route
• Optimize your storage space across multiple locations 

Schedule a demo to see how Linnworks can make multi-warehouse management easier and more cost-effective.