32 Easy Ways to Increase Warehouse Efficiency and Cut Costs

The warehouse is a crucial part of any business. It's how companies store their goods and how they get those goods to customers. But oftentimes`, warehouses are not as efficient or productive as they could be, which means lost revenue for businesses. This blog post will go over 31 easy ways that you can improve your warehouse efficiency and increase the productivity of your company!

There is a positive relationship between customer retention and warehouse efficiency. When your warehouse efficiency deteriorates, your customer retention will reflect that. When your customers choose to go with your competitor who delivers products faster, your profit will be a hit.

Inefficient warehouse operations can lead to long waiting times and inconveniences, which are the main reasons why customers stop buying from you. Inefficient operations also lead to wasted labour. Wasted movement in a US warehouse average about 6.9 weeks per year. How much better would your warehouse perform if you had almost 7 weeks extra working time?

While you may not have the budget to fully automate your warehouse, there are several things you can do to improve efficiency and reduce operating costs.

Most warehouses have an ongoing mission to maximize the productivity process by optimizing workflows, automating processes, and reducing waste (both time and resources). Warehouses are complex operations, with many moving parts and functions occurring simultaneously, so while there are many areas for improving productivity, it's not always easy to determine where the results will work.

Advances in logistics technology, such as automated robots, have a major impact on warehouse productivity, along with innovative artificial intelligence and machine learning solutions, advanced warehouse management software and other technological solutions. By reviewing your current processes and systems to identify bottlenecks and other issues, implement process improvements, and invest in smart technologies that meet key challenges, improving warehouse productivity is at your fingertips.

To help you evaluate your current systems and find opportunities for improvement, we've compiled 15 expert tips to improve your warehouse efficiency and productivity, from management and leadership tips to tips to improve your warehouse layout and workflows.

1. Enter the incentive payment.

“Well-designed performance incentive payments can deliver the greatest percentage improvement in labour productivity. Over 50% of the workforce in the warehouse is at work, so start there. You should always make sure you're not paying for productivity. you already get or can get it in other ways.

2. Invest in quality training processes.

"Hiring quality people is just the beginning. To keep them on track and help them grow, you need to emphasize training. Training sessions should be conducted regularly in short 45-60 minute increments. Where possible, they should be are greeted by direct supervisors and should adopt a more conversational tone than a conference tone.

3. Make safety a priority.

"Safety should be a priority in your warehouse because without smart safety practices you will face hazards and accidents that lead to inefficiencies and lost profits. Demolition safety can save you money upfront, but accidents are incredibly expensive."

4. Develop effective leadership on the front lines.

"The best managers are leaders who closely monitor, plan and manage all aspects of performance. They are constantly developing their skills to quickly recognize and address new problems. They will be more effective in improving warehouse efficiency.

5. Create a culture that fosters productivity.

“The culture you create determines all aspects of your company's performance, and you need to find a warehouse culture that is interesting, creative and fun. In addition to asking your employees for new ideas, create additional ways for them to be involved in your work. Monthly competitions, corporate events and other concepts that create a more interesting and enjoyable environment will only have a positive impact on your warehouse.

6. Listen to employees.

They have valuable insight into process flaws and other production delays. “You can use the advice of your employees to improve the efficiency of your warehouse”.

 Warehouse workers are the one who immediately knows the strengths and weaknesses of your warehouse management system. Therefore, you can save yourself time to listen to the advice of the warehouse personnel as they are the ones who identify and fix the problem directly from the warehouse.

7. Optimize warehouse storage

More consumers are shopping online, which means greater demand for suppliers and a growing need to expand inventory. Additionally, Studies shows that customers are demanding more personalization and customization options for the products they buy.

More product variants mean more inventory as more SKUs are added to your warehouse. While warehouse square footage is not as expensive as other commercial properties, it is not always easy to expand.

Setting up a second fulfilment location or expanding an existing one can be expensive. We found estimates in a wide range. Some as low as $ 10,000, and others over $ 300,000. Where you open your new location has a big impact on the price.

Instead, you need to optimize the space you have first. Build storage space upstairs and see if you can add additional storage aisles by minimizing the distance between the aisles. One way to do this is to create alternating one-way aisles instead of two-way aisles.

In addition to getting more storage space from your warehouse space, this can significantly improve stow and pick efficiency:

• Equipment handlers can access the aisle on either side of the aisle during picking or stowage

• Minimizes collisions with one-way equipment

• Minimize travel time from aisle to aisle

• Improves warehouse safety by eliminating the need for workers to leave equipment

By optimizing the design and flow of your warehouse, you can significantly improve storage, productivity and performance. Most small businesses don't have the capital to get into expensive warehouse planning systems. However, you can optimize your warehouse space and performance with a pen, some paper and some time to look at your warehouse in a new way. We've written a full guide on the process, which you can read by clicking here.

8. Give customers more collection and delivery options

You can reduce warehouse costs and shift inventory load by moving the product downstream to retailers.

Major retailers have started shifting the inventory load to outlets. For example, Target revealed that 15% of its online purchases are marked for in-store pickup. If you have retail locations that can handle fulfilment, allow your customers to pick up locally.

Consider Amazon for online retailers without physical locations. Amazon Fulfillment allows suppliers and retailers to sell their products in the market while the product is stored and fulfilled by Amazon's own warehouse facilities.

Amazon has also introduced its own version of buy online, pick up in-store. Customers can now purchase and collect products from an Amazon Locker. Once they have received a pick-up code, customers have three days to pick up their package.

Cards Against Humanity discussed many ways to ship its product, which became a viral sensation when Kickstarter exploded. They chose Amazon Fulfillment instead of their own warehouse bursting at the seams with the product. It was a smart choice as Amazon Fulfillment meant Amazon covered the shipping costs and handled all customer service issues related to shipping services.

Not only does this reduce warehouse costs, but it also increases product visibility as Cards Against Humanity goes up 120,000 units every month for sales above $ 1.5 million.

9. Improve the collection and storage routes in your warehouse

One of the most important uses of resources in warehouses is the amount of time that order pickers spend between orders and locating the product to be picked.

In fact, labour represents about 65% of the average warehouse's operating budget, and studies show that order picking accounts for about 60% of a warehouse's labour cost.

You can reduce much of those overhead by implementing a warehouse management system. After implementation, this system records all product data and its location in the warehouse. As your warehouse receives products, the system will tell you where those products will be placed.

Additionally, a good warehouse management system optimizes the gateway for collectors. Based on product variables and incoming orders, the system offers pickers an optimal route through the warehouse from one product to another. This reduces the time it takes to walk around and search for a product, reducing both budget and employee energy.

10. Upgrade mobile technology in your warehouse

Utilize technology!

There is a lot of warehouse productivity software that can help you run your business more efficiently, from inventory management systems like WMS and EPOS to picking solutions for optimizing how workers pick goods off shelves. But before you purchase any warehouse software, make sure it is something that will actually work for your company--some systems are designed to only optimize how goods come into the warehouse and not how they leave.

Most companies understand that technology can improve efficiency and speed order fulfilment. All of that adds up to cost savings, but only if you use the right equipment that is up to date. 67% of warehouses plan to use mobile devices to manage inventory in the future.

And that's a smart investment.

Most people think of barcode scanners when they envision mobile devices in a warehouse. However, your employees can also use smartphones and tablets loaded with WMS software, such as Logiwa, to receive pickup orders and optimal pickup routes. Thanks to WiFi, they can be anywhere in your warehouse and receive the order.

Ergonomically designed handheld devices can be ahead of other mobile devices. In addition to helping your employees avoid injury, they can perform many of the same functions. They are also equipped with RFID scanners, cameras and touch screens.

Upgrade technology, including mobile systems and the use of pick-to-light, RFID, and pick-to-voice technology, reduces pick-to-voice errors by 67% compared to legacy manual methods. That's a significant cost saving when you calculate costs associated with processing order returns, shipping costs, labour costs related to customer experience, customer credits, and more.

11. Create an inventory assessment process

We may be delivering products to customers more efficiently than ever, but that does not reduce the time the product stays in your warehouse. According to Supply Chain Digest, companies still have more inventory, probably related to the increase in the number of SKUs being stocked every day.

The amount of on-hand inventory based on an average day of sale has increased by 8.3% over the last 5 years.

This is where you should use the data to review your inventory, as the dead inventory that fills your warehouse will cost you money.

Optimize your stock by observing the statistics. Check your inventory and identify inventory that is not moving. Metrics to check include:

• Average number of days to sell inventory

• The turnover rate of the stock of products.

• Return on investment and how it decreases depending on how long you keep the product.

• Gross profit of the products (price fewer costs to manufacture, maintain and sell the product)

If you hold inventory for too long, it eats up your profit margins and costs you money. Find a way to move and/or remove those products from your inventory.

12. Review inventory replenishment practices.

As warehouse operations increase, it is common for a business to hire a full-time inventory manager. This person is responsible for monitoring inventory levels and handling backorders to maintain inventory levels.

Unfortunately, the human error affects manual replenishment. Inefficient inventory replenishment can cost you in two ways:

• Too many stocks not moving

• Too few stocks, which means stocks are out of stock and customers are lost.

Warehouse management systems can help automate part or all of the process. By setting periodic auto-replenishment levels on your inventory, you can create low inventory triggers to ensure more products are ordered. You can also set a maximum inventory limit to reduce the chances of having too many products on hand.

13. Audit product packaging and shipping.

There's a lot of waste in order fulfilment, and not just shipping supplies. For different products, many teams have to prepare the products for shipment. This process can involve specific packaging and even removal of the packaging.

Amazon saw multiple opportunities to make packaging more efficient and create a customer-friendly experience. The Frustration-Free Packaging Program requires that products using Amazon Fulfillment have certified packaging. This means that the package does not require additional shipping preparation or an outer box.

The company has already reduced waste for the past 10 years. This includes eliminating more than 500 million boxes and more than 240,000 tons of packaging.

Review your packaging operations and look for ways to reduce the number of boxes, box sizes, and materials used to package individual products for sale. See if you can work with suppliers in your supply chain to create a greener packaging process.

Reviewing the packaging process can cause teams to use too much material, increasing shipping and handling costs.

Similarly, you need to ensure that your teams do not use insufficient or insufficient packaging materials, which can lead to product damage, customer returns, and lost customers.

14. Standardize and monitor your workflows

From the moment a product arrives in your warehouse to the point where it leaves, every activity and process to move that product must have an established workflow. Without an existing workflow, employees work most efficiently or comfortably for them.

What is efficient or comfortable for the employee may not be the most efficient or profitable for the company.

With automated workflows, you can ensure that all employees work to the same standards. Most importantly, you can track the performance of individual employees against the benchmarks set for that segment of the workflow.

When execution issues arise that could affect operational costs, a quick audit can usually reveal the bottleneck in the workflow. If it is a performance issue, management can work with the employee to quickly correct the deviation and restore workflow.

A case shared by Inbound Logistics showed how an employee responsible for unloading trailers struggled to meet productivity goals within his area. When management personally evaluated the employee's performance, they found that the employee had added a step in the download process. Once the problem was identified and fixed, the employee easily reached the set performance goal and productivity was restored.

Before reviewing and changing workflows in your warehouse, keep in mind that your employees are at the heart of that process.

Workflows depend on people to complete the task and improve them and make your warehouse more efficient. Get your staff involved if you want to optimize workflow efficiency. Create a feedback loop and let your employees show you how they think each task can be improved.

Some measurements are required, but even seemingly simple improvements to the packaging and material handling process can reduce a significant amount of waste and lost revenue.

15. Consider automation in the order picking process.

As your business grows, you may need to rethink the picking process within your warehouse. Smaller operations can do well enough with hand pickers that deliver products to the package and shipment side of their facility. This approach is not scalable and will affect productivity.

For example, the average order picker can choose between 60 and 80 products per hour when the routes in their warehouse are optimized. This collection speed can be improved up to 300 pieces per hour by using classifiers and conveyors that can move products around the facility.

Of course, there are costs associated with upgrading and adding automation. By reducing travel time, you can dramatically increase your fulfilment centre's picking productivity and ultimately reduce costs.

Each upgrade offers the opportunity to reduce operating costs

 

16. Organized

Take the time to map out how your warehouse is organized. This will give you a better idea of how your goods flow and how much certain items take space up to about others. Mapping it out can also help find ways for employees to work more efficiently, leading us to our next trip!

17. Inventory

Do a warehouse inventory. This is how you know what items are coming in and out of your warehouse, how many of each item there are, how much to order for future orders, etc. It's also the best way to find discrepancies between how much an item should cost versus how much it actually costs when purchasing new stock. And finally, it will help you avoid those pesky warehouse mistakes that can cost a company thousands of dollars.

18. Necessary Equipment

Get the most out of your employees! Make sure they have all the necessary equipment to do their job efficiently and safely--this could mean providing them with new equipment or fixing broken items so they are safe for use. In addition, make sure your employees are trained in how to use the equipment properly and safely.

19. List Of the Tasks

Make a list of all your tasks before assigning them so you know what needs to be done when there's downtime or if workers need help. You can also create a list of how much time it should take to complete each task.

20. Clear Guidelines

Have an organizational system that makes sense for your warehouse and how you operate. This doesn't need to be complicated or require too many steps--you just want there to be clear guidelines so all employees know where they're supposed to go and how to get there.

21. Space Utilization

Utilize the space you have! You may not be able to expand your warehouse, but you can still make it work for how your company operates with a little creativity and ingenuity. For example, if one of your employees needs more storage area around their desk or workspace, think about creating a storage area for them on the other side of the warehouse.

22. Measurements of Delivery Timings:

Measure how long it takes from when a customer orders something until they receive it in their hands. This "lead time" is how much time your customers wait to get what they want once they order it--so make sure you're being as efficient and productive with how you package and ship your goods as possible.

23. Productivity

Store goods as close to how they'll be eventually used as possible, and pack them according to how the customer will use it-this means bubble wrap for fragile items or shrink wrapping for products that need to stay cold! Not only does this save you time on sorting through pallets of product at a later date, but it also saves you money on how much inventory storage costs.

24. Workers Efficiency

Log how many hours each employee has worked, and how long they take to do their tasks--this will help you determine who's the most efficient worker in your warehouse so that you can assign them different types of tasks accordingly. It'll also show you where there might be a need for more employees, how much they should cost you, and how many hours per week each employee needs to work.

25. Emergency Plan

Have an emergency plan in place so that all your workers know what their responsibilities are--and make sure everyone knows how to contact the police or fire department if there's ever an issue or emergency.

26. Temperature Management

Make sure the temperature in your warehouse is comfortable and doesn't vary too much--this can disrupt how you pack goods, how workers pick things off shelves or move them from one space to another, and how long items are stored before they're sold or shipped out.

26. Equipment and Tools

Make sure all of your equipment is in good working order, and that you're taking care of it. This means replacing any equipment or tools as soon as they start to show signs of wear, and not using them past how much their lifespan can be extended--your warehouse efficiency will thank you!

28. Check on Employee

Review how many hours each employee spends on break time during the day so that you're not paying for the time they don't work.

Have designated areas where employees can take a break or eat lunch--this will allow them to recharge and be more productive after their break, as well as reflect how important it is to your company that workers are able to have these breaks.

29. Cleanings

Keep the floors and your workspace as clean as possible--this will make it easier to find items, keep up with how much inventory you have left, identify any issues before they become a problem for how efficiently workers are able to operate.

30. Long-Lasting Products

Buy durable products that can last longer in high-volume warehouses like yours! This will save you money on how often you need to replace equipment and will keep your warehouse running as efficiently as possible.

Invest in the right types of materials--this could be anything from how much packing tape or shrink-wrap your company needs, to what kind of shelving solutions are best for how many items they're storing.

31. Goods and Shelf Labeling

In your warehouse, how easy is it for an employee to find the goods they need when they're fulfilling a customer's order? One of the first things you should do if your company has really high-efficiency needs is to make sure that everything in there can be found easily. Make good use of labelling and sorting systems so that each item has its own location. If there's a big difference between how much product is on the floor and how much is on shelves, then you're not running your warehouse as efficiently as possible.

32. Replacing Equipment and Tools

To make your warehouse more efficient is by making sure all equipment in there has been taken care of. This means replacing any equipment or tools as soon as they start to show signs of wear, and not using them past how much their lifespan can be extended--your warehouse efficiency will thank you!

Summary:

Each of the above recommendations can help improve your warehouse efficiency. An audit of your operations can help you identify bottlenecks and identify opportunities to improve your warehouse efficiency. Keep in mind that a single audit will likely reveal some, but not all, cost reduction measures.

The best approach is to implement a warehouse management system and continually monitor KPIs and performance. Any changes you make will continue to reduce costs over time and continue to innovate your warehouse operations.