Key Factors For Lowering Warehouse Costs

Preventative, Predictive and Proactive: Key Factors for Lowering Your Warehouse Operating Costs

A tell-tale sign of a well-managed operations department is having the ability to reduce costs without creating a negative impact on day-to-day operations, customer satisfaction levels, or workplace safety. In order to achieve the desired results, it’s crucial to understand what areas to focus on in order to keep maintenance costs under control and maximize cost savings.

Here are some things to consider that could help lower warehouse operating costs:

Preventative Maintenance

It’s common for many operations managers to delay regularly scheduled maintenance for as long as possible. They seem to believe that conducting maintenance less frequently should help to reduce costs. In reality, delaying or skipping scheduled maintenance could result in increased costs overall.

Machinery and equipment that isn’t well-maintained may operate below its intended performance levels, potentially reducing productivity and increasing the risk of causing worker injury.

Poorly maintained machinery can also become damaged beyond repair, which could require replacement with new assets sooner than anticipated, causing unnecessary strain on operating cash flow. Use a good computerized maintenance management system (CMMS) to help keep on top of scheduled maintenance issues. Specialists like can help you choose the right software to manage your inventory needs.

Training and Procedures

Expecting employees to operate effectively without adequate training could be costing operations more than expected. A primary factor in keeping operating costs under control is to ensure that all employees are properly trained to complete their assigned tasks effectively.

Likewise, it’s crucial that all workers are trained in safety procedures, which will help to minimize the risk of injury in the workplace. The result is a reduction in wasted man-hours, fewer injuries in the workplace, and an increase in productivity.

Inventory Control

Start viewing inventory as cash instead of stock. Holding too much stock can increase storage costs and ties up cash flow. Conversely, holding insufficient stock can mean placing rush orders from suppliers that could end up costing more than expected.

Conduct a thorough check of all inventories in the warehouse, including stock, materials, office supplies, and equipment or machinery parts and tighten up where necessary. Review the current minimum and maximum inventory levels and re-order points so that you’re carrying enough stock to meet with customer demand, but not overstocking. Managing inventory control properly can lead to dramatic cost reductions overall.

Workflow Management

Productivity costs are often overlooked by many operations, yet labor costs are the largest controllable expenses in any warehouse. The time spent for employees to search for inventory reduces productivity and wastes huge numbers of man-hours.

Consider any areas in current workflow practices that are inefficient or processes that could be streamlined to save time. Apply industry best practices in order to reduce the handling and cost associated with fulfilling an order.

Clearly define specific workflow processes that can help to make it easier for employees to complete tasks more efficiently. You’ll help to reduce the risk of injury and increase productivity at the same time.

Data Management

You can’t improve what you can’t measure. Invest in ways to track and manage all operations materials and reporting processes in effective ways. Of course, collecting data is pointless unless you have the means to analyze the data gathered and use it to your advantage.

The integrity of the data you have collated is also crucial. After all, there’s no point assuming the inventory numbers showing on your computer systems are accurate just because your workers say they are.

Conduct a full inventory count and match the numbers you have listed in your computer systems and check that they match. If there are massive variations you could be costing operations more than necessary and will need to find the root cause of the problem.

After reconciling any variations, take inventory on a daily basis to reduce any further discrepancies. The daily practice of ensuring inventory figures are accurate will reduce operating costs overall.

Reviewing your warehouse operations on a regular basis can help to reduce operating costs considerably. The key is to understand what areas could be putting unnecessary strain on cash flow and which ones can be streamlined to improve overall efficiency.

Eric Lituchy is the CMO at BizSlate, a cloud-based Inventory Management software for SMBs. A results-driven marketing executive with a record of accomplishments across ecommerce, cloud services and the subscription businesses. Focused on generating revenue through expert digital marketing, conversion optimization and management of high performing teams. Eric is a digital pioneer and serial entrepreneur.


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