Opening a second warehouse is a big step. It puts inventory closer to customers, cuts shipping times and costs, and adds capacity. It also adds a new question to every single order: which warehouse should ship it?
Get it wrong and you pay to ship across the country when a closer warehouse had the stock, or you split an order into two packages when one location had everything. This guide explains how multi-warehouse order routing works and how to set rules that make the right choice automatically.
Common routing strategies
Closest warehouse that has everything
For each order, the system finds the warehouses that can ship every line, then picks the one closest to the customer. This usually gives the lowest shipping cost and fastest delivery, and avoids split shipments.
Priority order
Some businesses prefer a fixed order: ship from the main warehouse first, and only use the second location when the main one can't fill the order. This keeps most activity in one place.
Rules for special cases
Order rules can set the warehouse, carrier and priority automatically for specific situations, such as a customer who always ships from one location, a product that's only stocked in one building, or rush orders.
What happens when no warehouse has it all?
This is the hardest case. Common choices are:
- Ship short: ship what's available from the best location and back-order the rest
- Hold: wait until one warehouse can ship the complete order
- Default warehouse: send it to a chosen warehouse to deal with
The right answer depends on your customers. Retail and wholesale customers often prefer complete orders; e-commerce customers may prefer speed.
Transfers vs. buying more
When one warehouse runs low while another has plenty, the cheapest fix is often a transfer between your own warehouses, not a new purchase order. Rebalancing stock regularly keeps each location able to fill more orders on its own, which means fewer split shipments.
Reorder planning across locations
Reorder suggestions should consider each warehouse's own sales history, supplier lead times and case sizes. A product that sells fast in the West and slowly in the East needs different reorder points in each location.
An example
The fictional ABC Company runs warehouses in New Jersey and Nevada. An order arrives from a customer in Arizona for three items:
- Nevada has all three items. It ships from Nevada, the closest location with everything.
A second order from Pennsylvania includes an item New Jersey is out of. Nevada has everything, but it's far away. ABC Company's rule is to ship complete orders, so the order ships from Nevada, and the system suggests a transfer to restock New Jersey.
Checklist for multi-warehouse operations
- Decide your default strategy: closest-with-everything or priority order.
- Decide what happens when no warehouse has it all.
- Add order rules for special customers and products.
- Review transfers weekly to rebalance stock.
- Set reorder points per warehouse.
How Fulfillt WMS routes orders
Fulfillt WMS includes multi-warehouse order routing:
- Ships each order from the warehouse closest to the customer that has everything
- Or follows your own warehouse priority order
- Choose what happens when no warehouse has it all: ship short, hold, or default
- Order rules to set warehouse, carrier and priority automatically
- Transfers and rebalancing between your own warehouses before buying more
- Reorder suggestions from your own sales history, lead times and case sizes
Additional warehouses are $199 per month on the 3PL plan.
The bottom line
With more than one warehouse, routing decides your shipping costs. Ship from the closest location that has everything, decide in advance what to do when none does, and transfer stock before buying more.
