Tips for Cutting Warehouse Costs

Every business is a delicate balance between leveraging assets and minimizing costs, and warehouses are certainly no exception. If anything, the importance of inventory management to warehouse profitability makes this idea even more applicable in this industry than almost anywhere else.

Taking steps to increase warehouse productivity should not mean you have to spend more money and lose more profit. Here are some tips for cutting warehouse costs that could help you and your workers get the best of both worlds.

Organization Is the Key to Efficiency

The more empty space there is in your warehouse, the more you spend on land you don’t need. Racking products vertically rather than spreading them out horizontally allows for optimal use of space without sacrificing inventory storage capacity, and it can even help workers fill orders faster.

In the same vein, inventory that is damaged, lost, or stolen is inventory that cannot be sold, meaning storage and shipping costs have to be written off as losses. Standardized sorting and packing, electronic inventory control systems, and even external security measures can all be excellent investments for warehouse managers looking to cut costs.

Beyond inventory management, it may also be a good idea to take a look at how you utilize manpower and whether there are ways to restructure your shift schedules to save money in the long run. For example, if a lot of your employees are consistently working overtime, replacing those overtime shifts with flex labor from a service like HapiGig could give you more money in your budget and your employees a less exhausting workload.

Optimize Internal Processes for Speed and Accuracy

Every warehouse has items that move quicker and more often than others, but not every warehouse streamlines their fulfillment system to take advantage of these trends. Something as simple as putting big-ticket and high-volume products closer to the front of the warehouse can help reduce foot traffic and increase efficiency for pickers, both of which lead to reduced labor costs compared to output.

Furthermore, you shouldn’t restrict this kind of optimization to just your biggest sellers. Effective slotting of similar goods throughout your entire warehouse can reduce bottlenecks, decrease lead times, and allow for more efficient inventory tracking and appraisals.

Most importantly of all, though, an organized back end means fewer errors on the front end, which can be crucial to saving time and ensuring costs stay low. Keeping units separated, stocking high-volume items closer to the ground, and having clear labeling practices can help make sure orders are fulfilled both quickly and accurately.

Use Technology and Labor Effectively

Optimizing your use of technology in the warehouse isn’t always a complex matter. For example, the vast majority of electrical expenses in warehouses stem from simply from keeping the lights on and the building heated or cooled. Ensuring your warehouse is well-insulated, installing motion-activated or timed lights, or even putting in a few extra windows are all small endeavors that can have huge cost-saving implications.

Additionally, the machinery and tools you have in your warehouse are just as much assets as your inventory, so put them to good use. If possible, find ways to safely reuse equipment or use it to fill multiple needs.

Most of all, make sure to stay flexible when it comes problem-solving methods. New forms of warehouse technology—as well as new flex labor services like HapiGig—are launched every day, so above all, stay aware of your options and consider what new solutions might have the biggest positive impact on your business.