The economic climate rarely stays stable, profit or loss are part of maintaining a business. Maximizing profits for businesses takes a planned strategy to increase the productivity of the warehouse which includes cutting down operational costs.
Reducing warehouse costs is the main focus of the list for professionals. However, it is also crucial that the levels of quality and customer service continue to rise. It might seem an easy task on the papers but when you are out on the field planning how do you deal with cutting the operational costs of the warehouse.
It’s crucial that warehouse productivity is increased while your operational costs are cut. Some of the objective that you need to keep in mind while making cuts in costs are:
1. Protecting the Item
2. Available Equipment
3. Space available
4. Labor required
5. Accessibility of items
One should keep in mind that these factors are the most important while deciding to cut the operational costs, as the labor required for a particular space will be more than labors required for a large warehouse.
1. Optimize Storage
A big unused warehouse will be of no use if the storage isn’t precise and shipments are not placed orderly. The large warehouses will require more space and land cost plays an important factor in deciding the size of your warehouse.
A small and cost-efficient warehouse is more efficient for the business, as the shipments can be easily packed and picked without wasting time on finding the shipments in the large warehouses. Space must be optimized in the warehouse, there is no point in keeping the warehouse untidy.
Racking is the best option for efficient inventory storage and optimizing the storage space. Narrow and tall type rackings are most common and can really optimize the space, also make sure of the safety factor and use the appropriate system of racking for your current inventory.
2. Inventory Protection
A large amount of money is wasted yearly in the warehousing business. Misplacing the item and unintentional damaging of the shipment can lead to loss of shipment.
Proper packaging is a must to eliminate the unintentional damage, employees must be trained to work in the warehouse. Using proper control systems will avoid major displacement of packages. Consider using RF, VPD or RFID if appropriate.
To reduce the chance of burglaries and thefts, guards must be deployed at every gate and the latest security systems should be installed to protect cases of internal theft, as theft could be internal or external, security cameras provide extra security of the shipments in warehouse. If your warehouse does not run 24/7, use a rotational guard system during off-hours to ensure more security.
3. Cross Docking
One of the super-smart ways to reduce warehouse cost is to utilize the cross-docking method. For those of you who don’t know what cross-docking means, cross-docking is the transfer of product from the supplier directly to the customer, removing the middleman and reducing cost at several intermediate points.
Cross-docking can be done in different forms, all the methods depend on the type of product being shipped with some products better suited to cross-docking then others. Different forms of cross-docking are:
Cross-docking can save both time and money on product management, storage, delivery, shipping and labor costs.
4. Reducing Labor Related Costs
Make sure your warehouse has the required number of laborers required, divide the work equally among each labor. Never consider paying your employees less, but reducing their dwell time will improve profits overall.
From delivery to shipping, laborers play an important role, so focus on employee retention instead of hiring a new employee. In the near time, automation will significantly reduce the cost.
5. Using Equipment wisely
Equipment in the warehouse utilizes a lot of resources while in use. Using each piece of equipment for more than one task when possible is a cost-effective solution, rather than running the equipment every single time for single use.
6. Using the Right Technology
There are multiple technology solutions available today that can be helpful for your business. It’s time to implement a dedicated warehouse management system if you are not using one. Having important information in your hand saves a lot of time and makes it simple to find whatever you require. Using suitable technology makes your business faster and reduces the cost of labor.
7. Reusing items for warehouse
Reusing old containers to ship or store warehouse inventory could save consumers up to 40%. High quality can include pallet containers, metal bins, wire baskets, drums and more. The reused products must be ensured of being in a clean state and rinsed where applicable.
Each change that is made will likely lead to finding other ways to cut costs in related areas. Don’t get greedy, don’t start cutting everything to save more and more. Just keep in mind that every cut in costs would result in potential gains over the long term.
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