How to reduce warehouse operational costs

 

How to reduce warehouse operational costs

The management of your warehouse is the pulse of your supply chain: it assists with the optimisation of processes, customer bliss, and thus ensures overall inventory profitability. It is easy to forget that inventory equals cash, so it’s essential that costs are minimised through proper management, whilst providing every party at every step with a detailed overview of supply chain operations.

8 Exercises to put your warehouse on track to spending less and making more.

1. Inventory Visibility

Inventory visibility across your entire supply chain provides obvious and essential benefits, especially as we welcome a new wave of online shoppers, different retail trends, and global shifts in spending.

Unfortunately this is often overlooked by business owners, busy with responsibilities in other areas. It can prove exceptionally frustrating relying on an employees memory in locating product, especially impossible when companies are enforcing social distancing and employees are absent.

It is evident and understandable that in 2020 consumer expectations - and emotions - are at an all-time high, advancing on a daily basis with IoT-enabled devices promoting a seamless and speedy experience.

2. Storage Optimisation

Ensuring optimisation of your storage capability appears obvious on the surface but in reality, this is far more complex and an often overlooked area. Especially with disruptions in global supply chains, stockpiling is an essential consideration, what the what and where pose serious challenges to flexibility, affordability, and access.

It is integral to save time, space, and resources whilst simultaneously reduce errors and improving flexibility, communication and management - successfully optimised warehouses are vital for an agile supply chain, and beat competitors on every level, consistently.

Warehouse storage optimisation considerations include:

• physical structure
• warehouse flow
• product placement
• storage
• retrieval methods

The latter are all important considerations to ensure a cost-effective storage optimisation plan, streamlining your warehouse inventory management to achieve increased efficiencies which is turn result in reduced costs.

3. Theft Identification & Prevention

Theft is a growing and widespread issue leading to inventory shrinkage, and one likely to escalate in the global stress of Covid. Theft is always a challenge to prevent, as the magnitude of goods moving through your system is tempting for staff at any handling point - it can be tricky to identify whether missing stock is due to theft, or simply misplaced inventory, and where it might have occurred, making it hard to identify culprits and stop it.

4. Cross Docking

One super-smart way to reduce warehouse costs is to employ cross docking, especially in a pandemic climate where supply chains and logistics are all under strain. This is the transfer of product from the supplier directly to the customer, thereby removing the middleman and reducing costs across several points.

Not only does this save time and money on product management, storage, but also on delivery and labour - especially at a time like this, where delivery and labour are two of the most variable and unstable resources. Being able to cut those dead pathways out to expedite shipments to customers fulfils the on-demand desire and trend.

5. Effective Slotting

Part science, part creativity, slotting optimisation is a must-have: it is the step-by-step process of analysing inventory data for the purpose of categorising and organising inventory throughout a warehouse or distribution center. This ultimately boosts productivity and profitability in your warehouse, and maximises the overall efficiency of your operations.

Look at the Australian toilet paper crisis of 2020 if you need reminding of how essential it is to have things where you need them!

It can be a key differentiator between your service and your competitors, so it's essential you get it right. Having the right product is in the right place at the right time is the ultimate goal, and a massive contributor to improving picking speed and order processing.

6. Optimised Picking Process

You’ve got the golden zone sorted, so what’s next? Previously you could make a small tweak to your picking process and see big changes... and then a global pandemic eliminates boots-on-the-ground.

7. The Right Technology

In the wake of COVID-19 and many retailers scramble to omnichannel and e-commerce, technology is improving by the day. You need a solution that is scalable and current to ensure you can constantly improve all functions across your supply chain. Modern distribution techniques are used across the globe, all thanks to innovative technology development, with more in the development pipeline.

Warehouse management systems (WMS) help individual businesses to find particular solutions for major challenges that many grapple with today, from transitioning to a cloud-based solution so staff can enforce social distancing and work from home, to improving inventory management and visibility, all ultimately with the goal of supreme customer service.

8. Benchmarking, and why you need it

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

“The process of improving performance by continuously identifying, understanding, and adapting outstanding practices and processes found inside and outside the organisation. Benchmarking (seeks) to improve any given business process by exploiting ‘best practices’ rather than merely measuring the best performance. Best practices are the cause of best performance. Studying best practices provides the greatest opportunity for gaining a strategic, operational, and financial advantage.”

The most common mistake businesses make when it comes to benchmarking is not clearly aligning and defining their goals around global industry best practices. In fact when benchmarking, supply chain thought leaders are looking globally to their peers - aiming to provide world-class solutions, not only the best in their specific country.

How to reduce warehouse operational costs