Reducing warehouse costs and improving efficiency in a multichannel warehouse really does come with a thousand things to think about and manage, it’s a huge task with so many different areas to cover off to ensure your warehouse is working for you – giving you the best possible return on investment.
Recently there have been new changes to the national minimum wage that will affect every business and as businesses take on these changes the cost of labour is increasing – we know our staff are worth it, of course, we do – but we have to ensure we can produce the income to keep our teams going. So, to achieve this, we need to look at gaining more productivity per labour hour and improving our warehouse productivity, possibly through incentive pay.
The number one balance sheet asset in most multichannel businesses is inventory. Location control and stock placement can help you track your products during the fulfilment process.
These following points on reducing warehouse costs and improving efficiency will help you to think about your current warehouse operation and ensure you are getting the best out of your buck.
Control your inbound and outbound freight
This has to be your number one focus to prevent profit erosion. You should seek guidance from an expert or consultant in this area who will assist you to bid competitively and help you negotiate carrier agreements without harming relationships already in place. By getting the best deals and service levels you are halfway towards winning the ‘cost reduction’ exercise.
Think about incentive pay
One of the best ways to improve your staff performance is to think about them and their needs. Incentive pay can bring the biggest percentage improvement in productivity. Consider the areas where you have the most staff and start with incentive offerings there i.e pick and pack teams.
Another consideration would be to use an app to find local labour – short term/last minute, pay for what you need and for the exact length of time you need workers – GrafterNow is a great solution for finding last-minute warehouse staff and a great way for you to keep your budgets in check!
Look at your processes, simply them, reduce touches and reduce costs
Are you guilty of layering new functions over longer existing functions? Is your product flow and order no longer proving to be as effective as it used to be? If so, stop, take a step back and have a look at your existing physical processes with fresh eyes, look at every step involved in product flow and order fulfilment and then make some changes. Remember, less steps equals fewer touches equals lower costs.
Your frontline Managers are your everything!
Your best Managers will give you the ultimate peace of mind, they know how to execute, they know how to manage all aspects of fulfilment, they are understanding and aware of worker morale and the quality of customer order fulfilment.
Look at your inbound supply chain
Changes to your inbound supply chain can make a big difference to your business output. Develop a clear and functional strategy and push value-added services up the supply chain and complete a Sales and Operating planning session. Your strategy should:
– Be clearly documented
– Acknowledged company-wide and should not be managed in silo
– Address any customer dissatisfaction to prevent further recurrence
– Is adapted to meet customer needs and help the business as they evolve
– Include the ability to make quick adjustments should they be needed
Making use of advanced technology (voice-enabled)
Using voice-enabled technology can be applied to all departments and processes within your warehouse set up. Many companies are now using advanced technology as a cost-saving solution. The systems available are generally quick to install and do not require additional IT or modifications, no real in-depth training is required to use these systems either, making the use of the technology a good ROI. It is important to ensure you undertake due diligence as not all applications are created equally.
Third party fulfilment, an option?
Many businesses believe they can do their own fulfilment cheaper and easier without using a third party, however, don’t expect a third party to understand and be as passionate about the product/service you are offering like your own employees would, potentially impacting on the service your clients receive. this might be an option to consider as a using a third party means capital isn’t tied up in new facilities and systems. For smaller organisations, third-party fulfilment gives the business the chance to concentrate on areas of the business that may become overlooked i.e marketing and merchandising – all areas that are essential to ensure future business growth.
Don’t forget, when reducing warehouse costs and improving efficiency, to keep looking at your processes and making improvements as and when necessary to ensure you are getting the best from your operation.
