In the recent time of high competition and low stability, enhancing warehouse productivity and decreasing the operational costs of the warehouse has become a crucial necessity.
Reducing warehouse costs has become a top priority for many businesses. However, one cannot ignore quality or customer service.
Proper planning strategy with the correct execution can help businesses streamline their operations and increase profits.
So, if you have a question about how to reduce warehouse costs, Prime Associates presents this blog that will help you get your warehouse on track, decrease the expenses and increase your earnings!
Before we dive deeper into how to lower warehouse costs and increase profits, let’s first have a brief understanding of what warehouse costs are.
“The expenses a company incurs about warehouse management and their operations are termed as Warehouse Costs.”
Such costs are inclusive of
So, how much does it cost to rent a warehouse? The cost of the warehouse may vary according to the business operations and the type of warehouse the company operates in for its business activities.
There are several practices you can apply to reduce costs and increase productivity. In addition to saving time, energy, and resources, you can also reduce costs by optimizing your storage space, arranging your stock, selecting the optimum storage techniques, and protecting the inventory.
How can I improve warehouse efficiency?
How can I improve warehouse productivity and reduce costs?
If you have such questions lingering in your mind, have a look at the 13 effective ways to lower your warehouse costs and increase your profits.
According to a study, almost two third of companies' fulfilment process efficiency is below average.
As every business is unique in nature, keeping track of the inventory and having perfect visibility is crucial for successful demand fulfilment.
If the company lacks inventory management skills,
Hence, a business needs to ensure inventory visibility across the entire supply chain with strategic planning, challenge assessment, and studying the demand cycles.
Technological advancements have made it easier to keep track of inventories with barcode systems, RFID(radio frequency identification), and VDP.
A company can reduce costs and increase productivity by improving inventory visibility.
Some benefits of inventory visibility:
Optimizing the storage space may seem simple, but in reality, it is a much more complex and often overlooked area. To achieve storage space optimisation, one must address all the challenges related to accessibility, affordability, and easy access.
An optimized warehouse is integral to saving time, resources, and space while also decreasing errors and enhancing flexibility and communication. A successful warehouse is crucial for beating the competition as it increases productivity and prevents stock loss.
“A fully optimized warehouse will reduce mistakes, boost productivity, ensure a successful supply chain, and enhance inventory flow. It also results in more storage capacity.”
To optimize a warehouse and lessen warehouse costs, consider the following aspects:
By taking these factors into account, ensure maximum efficiency and optimize your warehouse with professional help.
Read our article on the essential warehouse KPIs to track and improve your warehouse performance.
Theft is a substantial and widespread problem for businesses that leads to inventory loss. It is always challenging to comprehend if the stock is missing because of theft or misplacement.
Some of the red flags that indicate warehouse theft:
It is not a new problem for any warehouse. Its negative implications affect you and your company and highlight the security breaches, endangering the reputation of your warehouse.
“In the warehouse, preventing theft is crucial to reducing warehouse costs, since the loss is greatly reduced by preventing theft.”
But the question is- how to prevent theft in the warehouse?
You can protect your warehouse from the possibilities of theft with the help of these tactics:
One of the most effective ways to reduce warehouse costs and improve productivity is to adapt cross-docking for a better supply chain. But what is cross-docking?
“Cross docking is when the products are distributed from a manufacturing plant or supplier to the customers directly, reducing the need for middlemen and reducing costs across various points.”
This streamlined logistics operation has numerous advantages, such as
However, cross docking also comes with its own set of risks. Consider all the operating procedures thoroughly before implementing this practice. And to make sure your cross docking system is effective and successful, ensure inventory control to optimize the supply chain.
Implement a functional WMS(Warehouse Management System) for seamless warehouse operations and management, ultimately reducing warehouse costs.
While e-shopping is becoming a trend, it has also become necessary to incorporate technologies into warehouses.
Embodying technology can make your work more efficient and faster. Here in warehouses, it doesn’t limit to mobile phones or barcode scanners. It expands to a broader term known as Warehouse Management System (WMS).
Inventory, supply chain, and fulfilment operations are managed in warehouse management software. Integrating Warehouse Management System (WMS) allows you to easily track your inventory under your fingertips, reducing picking errors and improving accuracy.
An accurate Warehouse Management System can help you improve business and work efficiency. You can get alerts about your inventory, packing, shipping, and other critical information with just a click.
In warehouses, items are often misplaced, leading to more labour work. You can find them easily with the installation of RFID (Radio Frequency Identification).
Furthermore, WMS helps to make the warehouse process more streamlined and accurate.
Currently, voice-picking systems are very popular as they enhance efficiency and safety by simply listening to the user. This technology can reduce the costs of misplaced inventory and labour costs.
There are plenty of technology choices available in the market. Choose wisely; a perfect technology can help you to gain profit, track all your progress, and improve work efficiency.
In any business, measuring the best performance is not enough. You need to incorporate best practices. That’s where benchmarking comes in.
“Benchmarking is the process of constantly evolving by identifying, understanding, and adapting different practices across the industry.”
With benchmarking, you can set goals and implement best practices around your warehouse, leading to a decrease in warehouse costs and an increase in profits.
It gives you a clearer picture of where you made a mistake, what you need to improve and how to improve.
Benchmarking
Often companies make a grave mistake by benchmarking by keeping only one or two countries in mind. Avoid these! Instead, think bigger; instead of targeting one or two countries, target globally.
Implementing world-class solutions in your warehouse will help to increase your visibility worldwide. And thanks to technology, people are not limited to specific locations.
Slotting is organising inventories according to their category in the warehouse. The main goal of slotting is to make picking faster. An effectively done slotting can increase profits.
These you should follow for effective slotting:
Following the above steps will help your employees to move and pick faster and more accurately. Such a streamlined process will reduce warehouse costs and enhance productivity and the supply chain.
The picking process requires the most time and cost for the warehouse, so an effective slotting method can lower warehouse costs and increase productivity.
Following the above steps can save you a chunk of money. But, if you are interested in reducing warehouse costs more, then here are the other ways:
Equipment is costly but handy when you want to run different tasks simultaneously. Here are some tips for cutting down the warehouse costs by handling equipment:
A wrong pick can cost a chunk of money. And there are a few ways to get rid of that:
This will help reduce costs and make your warehouse operations more efficient, resulting in faster delivery.
A single scratch on the product can result in chaos. Late delivery, customer dissatisfaction, plus damages also charge you money.
To avoid this, make your aisles broader, and insert bollards or guard rails. These will save your employees as well as your products.
Moreover, add prevention training to your employees’ training programme.
Warehouse employees play an essential role in operating various warehouse operations. And their minute mistakes can lead to package returns or worse accidents.
To reduce these mishaps, hire experienced personnel, which is cheaper to hire freshers and train them. Or organise incentive programmes to encourage employees to improve their productivity and efficiency.
Electricity bills are no joke and can also decrease your net profit. Moreover, temperature control warehouses consume more energy. Just these three strategies can help to save.
You can also save up by avoiding water waste as much as possible to reduce the costs of operating the warehouse.
Make use of old containers. Buying new containers when you already have old ones will not help you financially.
Buy high-quality containers to store products and use them several times.
Additionally, these containers have been inspected thoroughly and even sanitised in case of food-grade products. Containers include pallets, baskets, food trays, and many more.
Once you start understanding every aspect of the warehouse, finding the loops in operations will become easier. As you find the cost-reducing measures and implement them, it will automatically increase the productivity and profits of the warehouse.
We hope this article sheds some crucial light on how to reduce warehouse costs. Just keep in mind that every warehouse and its operations are different. Some ideas may work in your favour, while some may not. Hence implement the ones that suit your interests the best.
Warehouses, industrial sheds, factory space, and built-to-suit facilities, Prime Associates offers it all. Take your business to new heights with us. To know more, visit our website or get in touch with us by filling up the form. Our team would be more than happy to guide you!
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