If you’re running a warehouse, there should be a constant focus on efficiencies and savings.
A well-organized warehouse with efficient shipping is essential for the company and a positive customer experience. If products are shipped late or misplaced, you risk losing your customers. Similarly, if the warehouse is costly to run it becomes a financial drain and can mean significantly less profit.
Applying these seven techniques will help you keep track of your costs and identify ways to make improvements.
1. Understand and Measure Costs and Processes
You can’t fix what you don’t know is broken. A constant analysis of costs and processes is needed to understand where you can make savings and improvements. Ensure your warehouse and shipping costs are all properly understood and accounted for. Benchmark them against best practices to understand where you can improve.
In addition, document your warehouse processes so they can be reviewed. The simple act of recording costs and processes often highlights where savings can be achieved. If processes can’t be documented easily, there are almost certainly areas that can be fine-tuned to improve efficiency.
Implement proper measures to understand whether changes are adding value. For this, you might consider whether key metrics like Return on Investment (ROI) are being improved. Bear in mind that a minimum investment is always needed to ensure the warehouse meets performance targets. Improvements should be made only to the point where warehouse performance remains optimal.
2. Employ Technology
If your warehouse is manual, consider converting it to some level of automation. Warehouse management systems (WMS) come in a variety of options and can be implemented piecemeal if budgets are smaller. These systems help track processes and stock in real time providing you with immediate insight into problem areas.
Use your WMS actively, in a feedback loop, so you are always reviewing what is happening in the warehouse and fine-tuning your processes. A properly run WMS will make significant improvements in processes and cost reduction.
3. Get the Basics Right by Labelling Properly
Simple things can make a big difference. Correct labeling is an important part of efficient warehouse management. Use printed barcode labeling to mesh with your automated warehouse management system. Printed barcode labels have been used in business for over 60 years. They play a significant role in reducing human error in the warehouse and interface well with customer systems.
Use printed labels for both inventory and bin locations to ensure everything is in the proper place and accounted for. Additionally, label movable items like, pallets and packaging materials, to keep track of their usage.
You should be aware of common printed label problems. Make sure you choose the right labels for the job. Rough surfaces require a special type of label with the right adhesive, as do labels in cold storage areas, or those that may be exposed to sunlight or contaminants. Labelling also needs to be complete to maximize efficiency, so all inventory needs to be labeled.
4. Reduce Options and Organize
The fewer options available, the more efficient you are likely to be. Reducing the number of package sizes or shipping carriers available for selection are two examples where efficiency might be gained. Preparing custom kits for items that are often packaged together is another time saver.
Ensure tasks are clearly understood and don’t overlap. Organize workstations with the minimum needed to get the job done properly. Processes should be standardized and contain only the minimum number of steps to achieve them.
Picking plans should be optimised, so staff take the shortest routes through the warehouse. Put high volume stock items together and at the front of the warehouse, with lower volumes items at the back. This arrangement is a simple step towards greater efficiency.
5. Look for Cheaper Alternatives
Continually look for cost savings because there is always a cheaper way. Tackle your larger costs first. Renegotiate shipping and freight costs if possible, and review alternatives for insurance and space costs. Turn lights off when they are not needed because small steps add up over time.
Be creative when it comes to saving costs. Go vertical instead of horizontal to save space. Consider outsourcing some tasks if there are workable and cheaper options.
Can you go green? Are there renewable sources of energy that will be cheaper for you in the long run? Is your warehouse at the correct ambient temperature, both for more efficient use of electricity and improved working conditions?
Discuss processes and options for cost saving with staff on the floor, and get feedback. They will have valuable knowledge to help improve processes and save costs. What do they see day-to-day that can be improved? Asking your employees these questions provide a sense of involvement too, and creates a positive feedback loop between managers and floor staff.
6. Synchronize the Physical Movement of Stock
Inbound, in-stock, and outbound movements of stock need to be in balance.
Bottlenecks easily occur when inbound items are not properly spaced or aligned with warehouse operations. Similarly, filling the warehouse with stock that is not regularly sold or shipped out is inefficient. Not having enough stock when needed is clearly a critical issue too.
Employ Just in Time (JIT) techniques to increase efficiencies and reduce waste. These techniques ensure that inventory levels are just large enough to meet requirements at all times. They also need open communications between inbound, in-stock, and outbound processes, in addition to commitment and constant monitoring. JIT is not easy to implement or maintain but there are proven benefits to this technique that will outweigh the cost.
7. Understand Staff Motivators
This employs human psychology and will require detailed discussion, and perhaps negotiation, with your staff to get results.
Not everyone is motivated by money. Some might prefer flexible working hours. Others are looking for great fringe benefits. Many warehouses use incentive plans to increase staff productivity, and these might work for you too. Understand your staff and what motivates them.
The key to an efficient warehouse and shipping process starts with properly documenting and recording all your current processes. Taking a holistic view will allow you to size up problems and issues completely. Armed with this information you can better assess where improvements are required and where your focus should be.
Regardless of where you are in the process, you should always adhere to basic standards. These include the proper use of labels, simplification of processes through better organization, a focus on costs, and communication between processes. Improve automation through warehouse management systems and employment of Just in Time techniques to further add value.