How to Reduce Warehouse Costs & Increase Profits

It is essential that your warehouse productivity and operational costs are reduced in order to achieve any tangible success in today’s economic climate of low stability and high competition. We will show you how to reduce warehouse costs and increase profits.

For survival, maximizing profits is crucial. This requires a well-planned strategy and deliberate execution. It also requires a larger net to ensure that best practices are applied to reduce dead weight and streamline processes.

Your warehouse management is vital to the success of your supply chain. It helps you optimize processes and ensures that customers are happy, which in turn, increases inventory profitability. It’s easy to forget that inventory equals money. Therefore, it is essential to reduce costs and provide every person involved with a complete overview of the supply chain operations.

8 Ways to Reduce Warehouse Costs & Increase Profits

1. Inventory visibility

The obvious and vital benefits of inventory visibility throughout your supply chain are evident and important, especially when we welcome new online shoppers, changing retail trends, and global shifts to spend.

This is often overlooked because business owners are too busy with other responsibilities. It can be extremely frustrating to rely on employees’ memory when it comes to finding products. This is especially true when companies enforce social distancing and employees are absent.

It’s clear and understandable that in 2020, consumer expectations and emotions are at an all-time high advancing on a daily basis with IoT-enabled devices. This promotes a seamless experience and speeds up the process.

These requirements are critical for businesses to meet. Businesses that fail to meet them will quickly lose the market to those who can. It is evident that being able to see inventory at all times is key to meeting consumer demand. This requires you to dedicate resources.

Recent research revealed that nearly two-thirds (63%) of companies think their fulfillment process efficiency is below average. It is easy to order too many stocks and have people fight over sanitizer, or too much stock and not be able to move it while your cash investment remains on shelves. This can cause fulfillment problems and, depending on your business’s nature, may also result in losses due to expiration.

Every business is unique, so ensuring the visibility of your inventory across your supply chain requires careful evaluation of the challenges, demand cycles, and distribution channels.

This will make it much easier to find a solution for improving your company’s inventory visibility will be far easier and most likely include a combination of technologies, It may include RFID, barcode scanners, and other automation technologies.

2. Storage Optimisation

Although it may seem obvious to optimize your storage capacity, in reality, this is a more complicated area that is often overlooked area. Stockpiling is essential, especially in light of disruptions to global supply chains. What the what and where can pose serious challenges for flexibility, affordability, access, and accessibility.

It is essential to save time, space, and resources, while simultaneously reducing errors, and improving flexibility, communication, and management – well-optimized warehouses are crucial for an agile supply chain and beating competitors at every level.

Considerations for optimizing warehouse storage include:

• Physical structure
• Warehouse flow
• Placement of product
• Storage
• Methods of retrieval

These are important considerations in order to ensure cost-effective storage optimization. You can streamline your warehouse inventory management to increase efficiency, which will result in lower costs.

For maximum efficiency, optimize your warehouse storage. It is important to work with professionals who use world-class design and layout principles.

It stands to reason that a fully optimized warehouse will increase traffic flow, decrease stock loss, and improve productivity. All of this leads to overall efficiency. This is good news for every business as it drives profit and delights customers.

Also read: 15 Ways to Maximize Warehouse Space Utilization

3. Theft Identification and Prevention

Theft is a major problem that causes inventory shrinkage and will likely increase with the increased global stress caused by Covid. It is difficult to prevent theft. Staff at all handling points are attracted to the sheer volume of goods that move through your system. It can be difficult to determine if missing stock is theft or misplaced inventory. It is difficult to pinpoint the cause and how it happened, so it is hard to stop it.

These are the red flags that indicate theft from warehouses:

• Stock levels that don’t correspond with your sales records
• Staff rumors of theft
• Sales dip when certain staff members are on duty
• Invoices that are missing or unusual
• Stock is continually discovered in the wrong spot (e.g. Close to exits or loading docks

There are many reasons why theft can occur. These could be employees struggling with their financial situation, a sense that they have entitlement, frustration at work, or simply pure opportunity. Even in an economic crisis like the Coronavirus, even If your employees are not well cared for, they might feel stressed to provide for their extended family members or accounting for rising living costs.

It is important to be able to stop theft in your workplace immediately.

4. Cross Docking

Cross docking is a smart way to reduce warehouse costs and employ cross docking, especially in a pandemic when supply chains and logistics are under strain. Cross docking is the direct transfer of product from the supplier to the customer. This eliminates the middleman and reduces costs at multiple points.

This saves time and money not only on product management and storage but also on delivery, and labor, especially in a time such as this when delivery and labor are two of the most volatile and unstable resources. This allows you to eliminate dead paths and expedite shipment to customers, fulfilling the demand.

Cross docking can take many forms, depending on the product being shipped.

• Flow through
• Ship to Mark
• pure cross-dock

Merge in Transit (which can be combined with multiple warehouse processes like put to storage, opportunistic substitute, and allocation). Cross docking is more efficient for some products than others.

Cross docking solutions come with risks that all businesses need to consider before implementing them in their standard operating procedures. Inventory control may suffer from increased losses if products aren’t stored in the company’s preferred way.

Cross docking is a solid solution that can help ensure a successful supply chain. Cross docking has one main purpose: to ship the inventory out without making any changes to the way it was received.

This is a common problem for warehouse management. A seamless solution that matches open orders with inventory received is needed. Implementing a top-notch warehouse management system is crucial.

5. Effective Slotting

A combination of science and creativity, slotting optimization is a must-have. It is the step-by-step process of analyzing inventory data to organize and categorize inventory in warehouses or distribution centers. This will increase the productivity and profitability of your warehouse, and optimize the efficiency of your overall operations.

If you need to remind yourself of the importance of having things where they are needed, take a look at the 2020 Australian Toilet Paper Crisis!

This can make a significant difference between your service and those of your competitors. It’s important to get it right. The ultimate goal is to have the correct product in the best place at the right time. This will greatly improve picking speed and order processing.

When trying to reduce costs in your warehouse, the first thing you should do is locate and create your “golden zone”.

• The most accessible location in your warehouse
• Where should you store your most-used items?
• The back should be used for heavier, slower-moving inventory.

This will allow staff to pick quicker, and more accurately, and reduce overhead costs. order picking accounts for up to half of your warehouse operating costs. Slotting optimization will help you lower your overall costs.

Other benefits of slotting optimization in your warehouse include:

• the elimination of bottle-necking
• Superior inventory control
• Safety and replenishment
• Reduced handling costs and shorter lead times
• Planning accurately for demand

All these benefits contribute to a positive customer experience. This is precisely where a great retailer’s focus lies. Remember that people expect more service from service providers, even when it’s difficult to provide it. Positive things are that people will remember the company that provided them with what they needed during stressful times. Happy customers = repeat customers.

Also read: Supply Chain Mapping: Definition, Benefits and Process

6. Optimised Picking Process

Now that you have the golden zone in place, what is next? You could previously make small changes to your picking procedure and notice big changes… until a global pandemic wipes out boots on the ground.

You now realize that you must be able seamlessly to adapt your picking process to achieve a new optimal speed and accuracy.

These are our top tips for managing disruptions and expectations in the Covid chaos

• Prioritize urgent and VIP orders first
• Don’t mix your SKUs
• Keep SKUs that are frequently selected together, close to one another
• To allow more than one collection, arrange items in groups or clusters.
• Vertical picking should be avoided wherever possible
• Horizontally, keep your fastest stock in the golden zone
• Vertically keep slower stock
• Make sure that all your stock is clearly labeled
• Stock inventory in the best storage space, whether it’s a bin or pallet
• Automate, Automate, Automate!

We again stress the importance of data in order to gain important insights and trends into your warehouse.

These tools will help you streamline your processes, increase productivity, and reduce warehouse costs. This is how you can keep stressed customers happy and satisfied.

With very little effort, a solid Warehouse Management System will take care of all the heavy lifting, increasing efficiency and giving you a competitive edge.

7. The Right Technology

Technology is rapidly improving in the wake of COVID-19, as many retailers attempt to move to omnichannel and online shopping. To ensure that you are able to continuously improve the functions of your supply chain, you need a solution that can scale and is current. Innovative technology development has enabled modern distribution methods to be used around the world. There is more on the horizon.

Warehouse management systems (WMSs) can be used to help businesses find solutions to specific challenges. These include transitioning to cloud-based software so employees can work remotely and enforce social distancing. They also improve inventory visibility and management. All of this is in the pursuit of superior customer service.

A WMS can help you manage your entire supply chain. It is an effective way to find solutions that balance your business problems. A WMS can automate and optimize all of your supply chain processes, resulting in up to 99% inventory accuracy.

Alerting stockholders to important stock issues or highlighting emerging trends, the best WMS technology will allow you to have all of the critical information you need at your fingertips. This will save you time and enable you to make informed decisions.

• Do you think RFID portals could be installed at strategic locations throughout your warehouse? This allows for quicker identification of misplaced inventory and saves on labor costs.
• Consider the benefits of voice-directed picking systems, which use speech recognition to communicate with your WMS.
• Put-to-light, pick-to-light, and other warehouse automation systems streamline warehouse processes and allow for faster and more efficient picking.

8. Why Benchmarking is important

According to the American Productivity and Quality Center, benchmarking is:

When it comes to benchmarking, the most common error businesses make is not aligning their goals and defining them around global industry best practices. Supply chain thought leaders look globally at their peers when benchmarking – they want to offer world-class solutions and not just the best in their country.

Why? Why? Because customers have more options and technology doesn’t limit them geographically.

It is a great way to benchmark your warehouse and identify deviations from the ideal standard. This will give you an immediate insight into where and what’s going well, which makes it much easier to correct and streamline processes. It also helps to keep employees happy, reduce overheads, and increase profits.

WMS can provide your business with significant benefits throughout your supply chain. This will help you achieve your business goals. What is the cost of a WMS? How can you save money in the long term?