6 Best Ways to Reduce Warehouse Operating Costs

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Warehouses are the unsung heroes of the supply chain. They are rarely noticed until something like a global chip shortage cripples manufacturing. Today, with inflation and rising costs everywhere, it makes sense to look for reliable ways to reduce warehouse operating costs.

Many high-tech industry warehouses are highly automated and may have entire sections unheated, unlit, and operating without human supervision. But since inflation leads to higher prices, organizations in all markets will benefit from lower operating costs. Warehouses and distribution centers are among the most expensive to maintain in the business world.

Knowing how to implement cost-cutting strategies can be the difference between a business going under or continuing to thrive and impressing its customers.

  1. Maximize the space you have

It’s tempting to move to a larger facility when space becomes an issue, but a move is completely unnecessary most of the time. As many as 66% of warehouse teams are looking to improve their capacity now. How many should actually upgrade?

The key is to optimize the space you have – not just horizontally but also vertically. Many facilities are filled with empty spaces that could be used more efficiently.

The easiest way to take advantage of all that space is to implement a more efficient storage solution, like tiered shelving with smart technologies. A smart shelving robot could acquire merchandise or high-located items in seconds, speeding up the picking process and making better use of available space.

The initial investments are not negligible, but the long-term cost savings are worth it. Also, you don’t trade facilities – you use what you have.

  1. Speed ​​up picking and packing

The larger the property and the more manual labor your workers have to perform, the higher the costs. Try to reduce the effort your manual workers have to put in.

Bring inventory and goods to your workers with smart pick and pack solutions rather than requiring them to locate items, get to them, and manage all the manual effort. This will do two things: reduce manual labor costs and improve the performance and efficiency of the operation.

In return, you’ll enjoy faster response and delivery times and create happier customers. Amazon is the best example of this, and a look at its smart automation technologies helps explain why.

  1. Improve inventory management

According to a study, approximately 83% of warehouses use a warehouse management system (WMS) to track inventory. It is a complete solution for managing many aspects of installation, from locating items to interacting with suppliers and ordering materials.

To dramatically improve efficiency, adopt advanced inventory solutions such as barcodes or smart RFID tags. All goods are tagged using smart tags to enable real-time tracking, inside and outside the warehouse. That doesn’t necessarily mean you go to every unit and put smart tech on it. Even labeling pallets, cartons or entire shipments can achieve incredible granularity for tracking.

This is directly related to the support of digital automation. Machine learning platforms can deepen the knowledge of the operation. You can start speeding up the pick and pack process, locate goods faster, and classify them better, such as damaged or returned items. It enables types of automation that otherwise would never have existed, further reducing warehouse operating costs.

  1. Make the floor safer

Accidents at work are expensive and it is important to understand how and when they occur. The cause is not always an obvious event like a spill or a fall. Repetitive motions with poor posture or without proper lifting techniques can cause a lot of damage to the human body. The same applies to tasks requiring personal protective equipment. If these are not worn correctly, or not at all, or if the equipment is poorly maintained, injuries will occur.

Injuries see workers leave the warehouse to recover and bear the costs associated with wages, medical bills and sometimes facility repairs if the accident damages a device or piece of machinery. This has considerable implications for performance and productivity, especially if the injured worker played a central role. It’s more cost effective to make a warehouse as safe as possible and ensure everyone is following the necessary protocols. This may require additional safety and operational training.

According to research, serious non-fatal injuries cost workplaces nearly $59 billion in compensation annually, or more than $1 billion spent per week by U.S.-based companies.

  1. Find alternative sources

Delays happen, but the more they happen, the more revenue is lost, the less satisfied your customers are, and the higher your costs rise. In the face of shortages, for example, an operation must have alternatives found and in play. This includes everything from goods and parts to equipment used in the warehouse, such as wooden pallets, which are currently experiencing cost increases.

Soaring costs affect the bottom line and slow down operations, especially when you have to spend time finding suitable alternatives, placing orders and making necessary changes. It’s best to have this information so you can deploy your backup plans with the least amount of effort.

In the case of wooden pallets, a smart operation would already have a contingency plan in place to order resin pallets, with a contract set and prices determined, along with all associated process data in automated systems and Management Tools.

  1. Maintain equipment and materials

Faulty hardware causes delays, ruins performance, and increases the cost of fuel, parts, replacements, and damaged goods. It is wise to keep your equipment and materials maintained and in top condition.

Traditional maintenance policies are not useful here, as most deal with maintenance material after a setback has occurred. Predictive maintenance is a much better approach and involves solving problems early, to avoid breakdowns or breakdowns altogether.

When paired with IoT or smart data solutions, it becomes an incredibly easy-to-use system. For example, performance data could reveal a decrease in the productivity of certain equipment. Maintenance teams could initiate an investigation to find out why equipment isn’t performing as well, uncover potential issues, and resolve them before they halt productivity.

This shows how the Industrial Internet of Things (IIoT) will transform modern industry. Smarter, data-driven solutions can reduce costs and create a more reliable and predictable environment within the warehouse.

Warehouse operating costs can be significantly reduced. At a time when inflation is high, costs continue to escalate and challenges abound, the above strategies can make all the difference. It may even be the reason why your business continues to thrive in such an unpredictable market.


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