8 Tips To Reduce Warehouse Costs

1. Brief introduction

An unstable and unpredictable economic environment rarely remains stable.

Maximizing corporate profits requires carefully planned strategies to increase productivity while reducing operating costs.

Competition is fierce, but warehouses can easily fall into the trap of spending money on things they don’t need.

Reducing warehouse costs is a top priority for professionals, while improving quality and customer service levels is critical.

For the principle of supply and demand to work properly, a warehouse needs to have the right product in the right place at the right time.

Protection and accessibility are the cornerstones that make warehouses add value to the products they transport.

In short, running a warehouse is far from being as easy as it seems. Read the article below to get your warehouse on track to spend less and make more profit!

Working within the parameters of these targets, you can begin to narrow down where the loss is and how to correct it.

The following 8 tips may be a useful starting point:

2. Reduce space by optimizing storage

Land costs are a large contributor to the overall expenditure.

Smaller spaces are the most cost-effective, and by changing the storage procedure, you can take advantage of storing more with less.

Warehouse aisles are critical to the process of handling equipment such as forklifts.

The sooner a product is located in the warehouse, the sooner it can be loaded onto a truck for distribution.

Learn about the various forklift sizes required for each type of product.

Sort your inventory by the aisle size your forklift requires and minimize the width of inefficient aisles.

Shelves are the best choice for efficient inventory storage and storage space optimization.

By doing this, you will see an increase in the allowable square footage of the pallet.

Narrow and tall is the most common shelf structure. Be sure to factor in the safety factor, so use the appropriate shelving system for your current inventory.

3. Protect your inventory

Some companies lose billions of dollars each year in warehouses due to issues such as how their goods are stored or poorly managed.

Some losses occurred due to misplacement or theft, and a large portion was due to damaged inventory.

Proper packaging and storage procedures can help eliminate accidental damage.

Extensive training of employees is also critical.

Using a proper control system will avoid major product misalignments.

If appropriate, consider RF, RFID or VDP.

Post a guard at the gate and designate one or two for employees and visitors entering and leaving the warehouse.

Theft can happen both internally and externally.

Warehouses are high-value targets for thieves simply because of product inventory value.

To reduce the chance of warehouse theft, control all access points by locking the door.

Implement a key card system if necessary.

Install a state-of-the-art security system and use a rotating guard system during off hours if your warehouse is not operating 24/7.

4. Use cross-transport

Move products directly from suppliers to customers, reducing costs by cutting out intermediate processes.

Using a cross-dock is very simple.

Incoming goods are unloaded on transport vehicles and then quickly transferred to outbound docks destined for customer delivery.

Cross-dock saves time and money in product management and storage, delivery and shipping, product transfer, and labor costs.

5. Buy used containers

Buying used containers instead of new to transport or store perishable and non-perishable warehouse inventory can save consumers up to 40%.

High quality used containers can include pallet containers, metal boxes, wire baskets, food trays, IBC totes, Gaylord boxes, barrels, etc.

Established suppliers of used industrial containers usually ensure that products are inspected, cleaned and rinsed where applicable, especially food grade containers.

With so much cost savings utilizing second-hand containers, it’s a no-brainer!

6. Implement energy cost reductions

Reducing energy-related costs can have a huge impact on your bottom line.

There are many ways to do this, two of the most important are better building insulation and automated lighting systems.

The cost of these improvements will pay for itself relatively quickly, and you’ll notice the savings immediately.

Install windows where appropriate to get as much natural light as possible.

Not only will this reduce electricity bills, but it can also greatly help with winter heating costs by harvesting the sun’s energy.

Another area that is often overlooked is water.

Consider ways to reduce consumption, such as automatic flushing of low-flow toilets and hands-free faucets.

7. Reduce labor-related costs

Labor is a large part of any warehouse operating budget.

Paying less employees isn’t an option, but reducing their length of stay will improve overall profits.

Time is money, and idle employees don’t contribute to the warehouse.

A professional forklift management system can help you understand the working efficiency of your personnel.

There are several other recommendations that need to be put in place immediately.

Focus on retaining employees. Paying experienced employees is cheaper than hiring and training new employees.

Provides cross-training and provides ongoing training workshops on new procedures to increase productivity.

Also, if this were an option, automation would reduce costs considerably.

While installation and new maintenance costs will cost a lot of money, machines can run for as long and as often as needed.

8. Let technology work for you

There are many ways to make technology work for you.

If you’re not already using a dedicated warehouse management system, it’s time to implement one.

Key information and specifications are at your fingertips, saving you time and making it easy to find anything you need.

Consider initializing a voice-directed picking system.

At the same time, put-to-light and pick-to-light systems will further simplify warehouse processes.

It may also be wise to install RFID portals at strategic points throughout the warehouse.

It is easier to find misplaced or lost inventory, saving overall labor costs.

9. Use equipment wisely

There’s no getting around the fact that running a device costs money.

However, there are ways to cut without compromising the standard.

Use each piece of equipment for as many tasks as possible.

Running two separate parts is not cost-effective when one person can do both at the same time.

Establish a regular maintenance program with a supplier that services your equipment.

Taking precautions to ensure that everything is in good working order will reduce the occurrence of unexpected breakdowns.

Think carefully about renting equipment you use occasionally.

The purchase expenditure required to idle the equipment makes no economic sense.

Again, consider the cost of leasing versus the cost of outright purchasing the required machines.

10. Concluding

Once you start digging into every aspect of how your operations work, you can identify where cost-reduction measures are most needed.

Every change made could lead to finding other ways to cut costs in related areas.

Every repository is different, and some ideas won’t work for everyone.

Remember, every warehouse safety management measure has huge potential benefits in the long run.