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A Guide for Reducing Warehouse Costs


You certainly know that warehouse management is vital in your supply chain. It assists with the optimisation of your processes while providing inventory profitability. To secure any kind of success, it’s important to reduce warehouse costs while keeping the same productivity and quality. So, how to do it?

Even without the budget to fully automate your warehouse, there are things you can do in order to improve effectiveness and reduce some of the costs.

We have listed 5 ways to help you do that. Check them out and increase capacity without expansion, trim your cost per order and more!

Here are the Top 5 ways to reduce warehouse costs:

  • Manage the labor force
  • Embrace new technology
  • Use equipment wisely
  • Manage all inventory flows
  • Reduce space by optimising storage

Manage the labor force

A major part of warehouse spending goes to labor costs. Sometimes, it can even be up to 50% of a warehouse’s total costs. That’s why good management should start right here.

What can you do to improve performance and lower your labor costs?

  • Implement retention plans
  • Provide safety training for employees
  • Invest in training/re-certification
  • Monitor individual productivity
  • Reward employees
  • Use temporary/contract labor help where applicable
  • Edit labor scheduling strategy
  • Cross-train all employees
  • Use flextime
  • Implement a pay-for-performance program
  • Listen to your employee’s suggestions.

Embrace new technology

If you want to satisfy the need for customer-demand products, your management strategy should also include the use of modern technology. By embracing new technology and connecting it to the warehouse management system (WMS), you can reduce warehouse costs by up to 30% and there are many ways to do that. One of them is to implement a dedicated warehouse management system if you don’t have it. It will save time and make it simple to find whatever is required.

  • Consider a new, advanced Warehouse Management System (WMS)
  • Use Electronic Data Interface (EDI) to communicate with your customers/suppliers
  • Upgrade Mobile Technology In Your Warehouse
  • Implement voice-directed picking and light picking systems
  • Reduce dwell time.

Use equipment wisely

Sure, you need money to run equipment, but there are several ways to make cuts without affecting your quality standards.

As an example, you can consider renting the equipment you only use on an occasional basis, or you can use each piece of equipment for more than one task when possible.

  • Standardise your batteries
  • Make equipment do double-duty
  • Manage equipment service vendors
  • Consider short-term rental
  • Evaluate leasing rather than buying
  • Use preventive maintenance (PM) to avoid equipment failure during a process
  • Manage equipment service vendors
  • Reduce space by using Hanel Vertical Lift Systems and other systems Headland offers
  • Maintain better inventory control with our industrial storage solutions.

Manage all inventory flows

As part of the warehouse management strategy, you should manage all of your inventory flows as well. This is not only helpful when it comes to reducing operation costs, but is also the most important tool for improving customer service.

  • Eliminate unintentional damage through proper packaging and storage procedures
  • Use proper control systems
  • Organise extensive training for employees
  • Implement a key card system if necessary.
  • Install state-of-the-art security systems
  • Use a rotational guard system during off-hours.

Reduce space by optimising storage

Of course, smaller spaces are the most cost-effective, but through changing storage procedures, you will be able to store more in less space.

Warehouse storage optimisation should include physical structure, warehouse flow, product placement, storage and retrieval methods.

The Warehouse racking system is an ideal option for good inventory storage and space optimisation. Thanks to this practice, your allowable square footage for pallets will increase. But to use it properly, you must consider all safety factors. Other options that you can explore are:

  • Mezzanine installation
  • Use of wooden pallet collars
  • Use of underutilised space
  • Analysing the depth of storage and departmental space
  • Use of vertical storage
  • Organising offsite or supplier storage
  • Use of cross-docking
  • Use automated storage systems
  • Creation of extra storage space.

More ways to help you cut your costs:

  • Involve and empower your associates
  • Look at variation to increase productivity
  • Use what you have more productively
  • Give customers more pickup and delivery options
  • Make error reduction a priority
  • Implement workforce software
  • Reduce handling and touches
  • Get rid of excess inventory
  • Use the bar-code systems.

Ready to implement a warehouse cost-saving plan at your company?

Headland Australia will help you find the best storage strategies for your warehouse efficiency issues.

We provide a range of specialist warehouse storage solutions and storage management environments through advanced Hänel microprocessor controller units, offering complete warehouse management systems, high-speed batch picking, tool management processing and more.

Call us at 1300 592 061 to talk to one of our professionals today or reach us through this contact form.

Click to find out more about the Hanel Vertical Lift, Hanel Lean Lift or Hanel Rotomat.