In the current competitive business environment, the focus can be on reducing the operating costs to improve bottom line. The warehouse is the core of your supply chain: optimising the procedures and bringing in operational efficiencies will make both your customers and investors happy.

We have discussed 6 ways to reduce warehouse costs and improve efficiency and thereby Profitability.

1. Inventory Management
Inventory transparency across the supply chain delivers clear and critical benefits, particularly when you are an ecommerce company dealing with online buyers. Ensuring inventory visibility across the supply chain requires a detailed assessment of demand cycles, and distribution methods.

Appropriate packaging and storage can prevent extensive losses due to damaged goods; while a good inventory management system can reduce pilferage or misplacement. Well trained employees can help in maintaining accurate inventory.

2. Efficient Storage
Optimising storage capacity is a process that needs careful consideration and understanding of the business. Aspects to be considered are the inventory flow and size and value of the merchandise. The sooner a product can be found in the warehouse, the sooner it can be delivered.

Grouping merchandise based on picking inclinations, contributes to increased production, and order accuracy. For example:
Store fast-moving goods closer to the delivery bay and heavier, and slower-moving merchandise in the back. Designing the aisles and using appropriate forklifts will not only improve your storage, and rate of delivery but also employee safety.

3. Reducing Pilferage
Theft or even misplaced merchandise is a significant and pervasive problem that that directly impacts the bottom line. It is often challenging to determine whether missing stock is due to theft or merely misplaced inventory. Some of the indicators of theft are:

  • Mismatch of inventory or stock levels
  • Disgruntled employees or rumours linked to theft
  • Stock discovered in the wrong place
Some of the ways in which the pilferage can be reduced is by having
  • Well-lit bays make it easy to spot any theft.
  • Security cameras installed in strategic locations.
  • Regular inventory audits.
  • Adopt a no tolerance policy to discourage theft.
  • Background verification prior to hiring. 

4. Efficient Labour Management
Work in the warehouse tends to be laborious and repetitive; It can be a physical and mental grind making the employees disengaged. Employees who aren’t engaged are likely to make mistakes, which can cost their companies lots of money in terms of lost efficiency. Keeping the team positive and motivated can not only improve their performance but also improve retention of trained manpower.

5. Optimized Picking
Once of the critical aspects of warehousing is efficient picking. The cost of a wrongly picked order includes the following: Price of the product, shipping cost, processing costs, and depleted customer satisfaction linked with returning the item. Regular benchmarking of the picking process and rewarding performance can help reduce picking errors, and improve customer satisfaction.

Bringing in operational efficiencies to the warehouse management needs expertise as each action implemented directly impacts both the operating cost and the profitability of the company. The needs and challenges of every company are unique, and it needs careful consideration.