6 Effective Ways to Cut Down the Costs of Warehouse Operations

Posted by Caitlin Harry on October 23rd, 2019

In the attempt to save costs of their overall operations, businesses struggle to reduce expenses in every area including warehouse. This article explains how does a business can streamline its warehousing tasks and save up costs to a great extent.

Businesses have a key goal which is maximising their profits. No matter how vast their expenses are, they seek to optimise costs in each area of a business to achieve the desired profit level. However, out of all areas, warehouse operations involve the maximum costs followed by supply and distribution activities. Thus, if you want to benchmark your business in terms of profitability, then go for cost optimisation in your warehouse.

A well-planned strategy for all your warehousing tasks is the first thing needed to enhance the warehouse’s productivity, besides checking the costs. There are plenty of ways to streamline warehouse functions. Get the following easy hacks implemented first in your business.

Optimise the use of space

Costs of the land i.e. rent or lease take up the largest share in the pie of warehouse costs. Thus, optimising the space for each pallet will help your business to use the current warehouse space more wisely. So, as the production grows, you might not need more space to keep the inventory. Proper space utilisation in the warehouse demands the use of special racking facilities that will make use the height of warehouse too.

Fast forward the transfer of inventory

The faster the inventory is transferred from the storage point to the load truck for distribution, the better it is. For this, adopt a great forklift fleet management method. Decide the size and type of the forklifts needed for each group of products. Sorting the products according to aisle dimensions and forklifts carrying them will help to initiate the shipment procedure quickly.

Effective method for inventory protection

Businesses lose huge amounts due to product misplacements, stock damages, and even theft. While the use of proper packaging materials will help reducing damages to the stocks, installing security systems like CCTV cameras is the best way to prevent theft.

Adopt cross-docking

Cross-docking implies sending away the products to customers directly without involving any middle partner or agency. However, for that, you need a dedicated cross-docking terminal which is one-time investment though. Cross-docking saves up both costs and time in product storage and distribution.

Take measures for energy cost reduction

You can seek to reduce a few energy-associated costs in your warehouse operations. Make use of energy-efficient machinery, replace usual lighting with CFL and automatic lighting, and harness solar power for running electrical equipment within your warehouse and for building insulation.

Cutting the costs of labour

Automation is the key to reduce the costs of warehouse operations where labourers’ wages form a great part of its operating expenditure. Considering the use of WMS (Warehouse Management System), cloud interface or electronic data interface to keep track of goods flowing in and out of the warehouse. It will help in cutting down the use of labour resources and hence costs.

Optimising the warehouse costs is perhaps the first wise step to reduce the total costs of operations in your business. Any cost saving in the warehousing management will straightway improve the bottom line and benchmark your business’s profits. However, you need to keep in mind that adopting every measure needs some prior investment too, and that should not overweigh the gains when calculated over long-term.

Author bio: Dylan Munro is a business consultant who gives expert advice to entrepreneurs on cost optimisation ways to benchmark their business profitability. His blogs are chiefly related to the extensive measures for curbing the warehousing and distribution costs which include forklift fleet management system, use of WMS and other automation systems.