Warehouses are the unsung heroes of the supply chain. They are rarely noticed until something like a global chip shortage paralyzes manufacturing. Now, with inflation and rising costs everywhere, it makes sense to look for reliable ways to reduce warehouse operating costs.
Many warehouses in the high-tech industry are highly automated and may have entire sections that are unheated, unlit and operate without human supervision. But as inflation causes prices to rise, organizations in any market will benefit from reduced operating costs. Warehouses and fulfillment centers are some of the most expensive to maintain across the business world.
Knowing how to implement cost-saving strategies can mean the difference between a business going under or continuing to thrive and wow its customers.
- Optimize the space you have
It’s tempting to move to a larger facility when space becomes a problem, but a move is completely unnecessary most of the time. A whopping 66 percent of warehouse teams are looking to upgrade their capacity right 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 utilized more effectively.
The easiest way to leverage all that space is to implement a more efficient storage solution, like tiered shelving with smart technologies. A smart shelf robot could acquire goods or items located high up in seconds – speeding up the picking process and allowing better utilization of the available space.
The upfront investments are not trivial, but the long-term cost savings are worth it. Plus, you’re not exchanging facilities – you’re making use of what you have.
- Speed up picking and packing
The bigger the property and the more manual tasks your workers have to do, the greater the costs. Try to reduce how much effort your manual laborers must put in.
Bring the inventory and goods to your workers through smart picking and packing solutions rather than making them locate the items, walk there, and handle all of the manual efforts. This will do two things: cut down costs for manual labor and improve the performance and efficiency of the operation.
In turn, you’ll enjoy faster response and delivery times and create more satisfied customers. Amazon is the prime example of this, and a glimpse into its smart automation technologies makes it apparent why.
- Smarten up inventory management
According to one study, about 83 percent of warehouses use a warehouse management system (WMS) to keep track of inventories. They’re a comprehensive solution for managing many aspects of the facility, from locating items to interacting with vendors and ordering materials.
To vastly improve efficiency, adopt advanced inventory solutions like barcodes or smart RFID tags. All goods are labeled using smart tags to enable real-time tracking, both within and without the warehouse. It doesn’t necessarily mean you’re going to every unit and attaching smart technologies. Even labeling pallets, cartons, or entire shipments can achieve incredible granularity for tracking.
This ties in directly with digital automation support. Machine learning platforms can dig into the insights of the operation. You can start to speed up how picking and packing work, locate goods faster, and classify them better – such as damaged or returned items. It enables types of automation that would never have existed otherwise, which further reduces warehouse operating costs.
- Make the floor safer
Workplace injuries are costly and it’s important to understand how and when they happen. The cause is not always an obvious event like a spill or fall. Repetitive movements with poor posture or without proper lifting techniques can cause a lot of damage to the human body. The same is true for tasks requiring personal protective equipment. If these aren’t worn properly, or at all, or the equipment is poorly maintained, injuries will happen.
Injuries see workers leaving the warehouse to recover and carry costs associated with wages, medical bills, and sometimes facility repair if the accident damages a fixture or piece of machinery. This has sweeping implications for performance and productivity, especially if the injured worker played a pivotal role. It’s more cost-effective to make a warehouse as safe as possible and ensure everyone follows the necessary protocols. This may call for additional safety and operational training.
According to research, non-fatal serious injuries cost workplaces nearly $59 billion in compensation per year – or more than $1 billion spent per week by U.S.-based businesses.
- Find alternative sources
Delays happen, but the longer they occur, the more revenue is lost, the less satisfied your customers become, and the higher your costs rise. In the face of shortages, for example, an operation must have alternatives figured out and in play. This includes everything from goods and parts to the equipment used within the warehouse, like wood pallets, which are seeing cost hikes right now.
Soaring costs affect the bottom line and slow down operations, especially when you need to spend time finding suitable alternatives, putting in orders, and making the necessary changes. It’s best to have this information available so you can deploy your fallback plans with as little effort as possible.
In the case of wooden pallets, a smart operation would already have a contingency plan in place to order resin pallets, with a contract together and prices determined, along with all of the related process data in the automated systems and management tools.
- Maintain equipment and hardware
Malfunctioning hardware causes delays, ruins performance, and balloons costs for fuel, parts, replacements, and damaged goods. It’s wise to keep your equipment and hardware maintained and in optimized condition.
Traditional maintenance policies are not useful here, as most deal with servicing hardware after a setback has occurred. Predictive maintenance is a much better approach and involves addressing concerns early, to prevent outages or failures altogether.
When coupled with IoT or smart data solutions, this becomes an incredibly easy system to use. For example, performance data could reveal when there’s a productivity drop in certain equipment. Maintenance teams could launch an investigation to find out why the equipment is not running as well, discovering potential issues and fixing them before it halts productivity.
This highlights how the industrial internet of things (IIoT) will transform modern industry. Smarter, data-driven solutions can conserve costs and create a more reliable, predictable environment within the warehouse.
It’s possible to vastly reduce warehouse operating costs. At a time when inflation is high, costs continue to climb, and challenges are plentiful, the above strategies can make all the difference. It might even be the reason why your operation continues to thrive in such an unpredictable market.