23 March 2023 If we asked you, director, what are the amounts invested in your warehouse, would it be possible to say today where and how financial resources are being used? Could you also identify improvement points to reduce costs? We know how important warehouse management is for a company’s logistics chain: poor management can cause a series of negative impacts and compromise the overall functioning of the supply chain, from receiving goods, to storage, to order picking and shipping. A fundamental element that deserves attention for the entire structural mechanism of logistics to function is the reduction of warehouse costs. The reduction of expenses in a distribution center directly affects a company’s profitability, meaning there are a series of practices capable of optimizing warehouse operations which, in turn, allows for savings in operational and financial resources, resulting in increased revenues for the company. The search for processes and methodologies capable of optimizing time and money is the fuel for the logistics manager, which will translate into productivity and increased profitability. Next, we will understand in more detail the warehouse costs and how to execute the best management strategies, making your operations increasingly faster, efficient, productive, and technological. Reduce Warehouse Costs: A Permanent Necessity We live in a time of great competition among companies to offer the best service to their customers, in order to differentiate themselves from competitors. Major players, like Amazon and Mercado Libre, for example, launch new strategies and investments in logistics every day, with the aim of delivering in record times and also offering a unique experience to their buyers. But they would not be able to revolutionize their supply chain without ensuring that their resources are used in the best way, without errors, without waste, without excessive expenses. After all, if these companies spent much more than expected to ensure market differentiation, profitability would not come. What does this tell you? It is clear that reducing warehouse costs should not be one of the secondary goals of your management, but one of the main ones. If you do not contain excessive expenses, your company will not have additional resources to invest in improvements and new strategies. It is therefore a permanent necessity for anyone who wants to grow and stand out in the market. We are talking about a complex scenario, involving various processes, from the moment goods arrive at the warehouse, through inbound controls, storage, inventory rotation, picking, replenishment, to shipping. In each of these, it is necessary to look closely, identifying inefficiencies that could generate additional expenses. Moreover, it is necessary to manage three central resources well: people, equipment, and territory. It is important to remember that maintaining a supply chain generates expenses of various kinds that vary depending on installation, infrastructure, location, storage, process execution, and maintenance: these costs, summed up and placed at the tip of a pencil, can make your company lose a lot of money! With this in mind, we have put together some tips that will help you review strategies within the warehouse and put them into practice to reduce costs as much as possible and increase profits. Take a look below. How to Reduce Warehouse Costs? By identifying opportunities within the supply chain, applying efficient strategies, and improving process organization, you will achieve profit maximization. Since you can manage inventory, space, people, and equipment quickly and efficiently, you will have a more economical operation and increasingly satisfied customers. On the other hand, failures in technological or operational systems within the supply chain result in low productivity, thus, in lower brand security and consumer dissatisfaction. So, are we evaluating whether you are following practices that help reduce costs in the warehouse? Check below and find out how to implement improvements that boost your business: Organize and Plan the Warehouse Utilize All Warehouse Spaces Reduce Inventory with Cross Docking Optimize Task Management Once the warehouse infrastructure is organized, another fundamental point for reducing storage costs is the optimization of management and execution times of activities within the warehouse. Time is money, and this is an indisputable fact; therefore, having disorganized employees within your supply chain, who are constantly looking for orders, making mistakes, and correcting their mistakes, can generate unnecessary costs. To ensure maximum efficiency, rely on tools capable of managing your warehouse in an automated way, which will allow you to integrate the entire operating system in one place and share information in real-time with your entire team. A WMS, for example, indicates to the employee closest to the demand where the product is located, the quantity to pick, the shortest time to perform the task, and will eliminate idle and poorly used times. Keep an Eye on Inventory The products in your warehouse together form the pillar that keeps your business standing; after all, they are the resources that generate return on investment and ensure the growth of your company. It is common to find warehouses that do not pay due attention to stored goods, and this translates into a common consequence for some business models, namely inventory loss. Always Keep Your Warehouse Clean and Organized Promote Employee Training Invest in Technology for Complete Goods Tracking Perform Inventory Reviews How is your inventory controlled today? Daily, weekly, or monthly? These questions are decisive for identifying a common error in warehouses, namely inactive inventory. Inventory review is useful for those who want to reduce storage costs, monitor products that are no longer shipped, understand the seasonality of items, and create opportunities for inventory removal such as promotions and discounts, for example. Control Product Replenishment We understand that inactive inventory causes a high waste of money. On the other hand, the lack of products in stock also does; after all, thinking strategically, you pay for a space devoid of items that fuel your profits. Monitoring inventory with the entire active flow requires a lot of attention; after all, human errors can occur and can lead to overstocking when placing a warehouse replenishment order. Automate Picking The picking phase, also known as the order dispatch area to customers, represents 60% of a warehouse’s total investment. It is in this process that orders are picked, packed, and shipped. In some companies, this process is still performed manually, which can generate a series of failures due to human errors. Today it is possible to integrate picking with the WMS system, which allows for greater safety for employees during product control and dispatch, through mobile devices, which indicate the step-by-step that the employee will have to execute during an activity. WMS: Why Do You Need It in Your Warehouse? Reducing warehouse costs is a challenging task and can take a lot of time; however, it is extremely important for managers who aim to increase business profitability, besides seeking development and leadership in the market. To make all this possible in a short period, you can invest in technologies capable of increasing the productivity and efficiency index of your warehouse. The WMS (Warehouse Management System) was created to make life easier for logistics managers who work daily with the stocks of industries, wholesalers, retailers, logistics operators, and even e-commerce. No matter the business model. With WMS you can: – Delegate functions to reduce redundant, obsolete, and unnecessary steps within the operational flow. – Organize and utilize every space in the warehouse, as the system can calculate exactly the number of orders, sizes, and dimensions, creating a map that respects the ABC curve of the stock. – Direct activities for employees, from receiving goods and dock control to order fulfillment to the customer. – Monitor stock rotation in real-time, as well as employee activities, allowing for a general visibility of the flow and enabling the identification of failures during the process. – Control results through reports and dashboards, in order to identify the best opportunities within the supply chain, increasing profitability and productivity. Warehouse Costs: Put an End to Excessive Expenses and Increase Logistical Efficiency Deagor WMS per ecommerce può aiutarti!