7 Ways to Improve Warehouse Efficiency and Reduce Costs


7 Ways to Improve

Warehouse Efficiency and Reduce Costs

Everyone thinks that when you manage a multichannel warehouse or a distribution center, it just understands a few processes and manages the whole thing. No, it is not that simple. Though many of the clients and other employees think it is just to put together the labor-management, freight, and the inventory there are more than a hundred other factors that can attack you at any moment.

From the distribution centers, the shipping has to be done and it is one of the most significant things that require a constant review. It is because there is a need to minimize the costs and keep the costs in line. In addition to this, there is also increasing labor cost which makes the entrepreneur or the decision-maker to increase the labor wage per hour or day. This can act as being a production incentive and increase the productivity levels but that is not the only measure you can take. That is because it may help in the short run but it can prove to be heavy in the long run.

Apart from this, it is the inventory that is the number one priority for the balance sheet which is required to keep the slotting control. Here are the 7 ways to improve warehouse efficiency and reduce costs:

  •   Pay for the labor

Incentive pays are made for those who are performing and the incentive is properly structured. But, half of the labor working in the warehouse just picks and pack. They need to make sure that you are paying for productivity. The incentive pay that is solely for the performance and it could bring the most essential improvement in labor productivity.

  •   Taking control of inbound and outbound freight

Virtual libraries are filled with articles on how to reduce costs. It should be the number one focus for you to prevent profit erosion. The carrier agreements can help to identify the areas but there are hundreds of sources on how to slow down. Follow it by taking the help of the consultants who are in this area of expertise. Apart from that, they are the ones who can understand the areas so that they can negotiate all the shortcomings without any hindrances to the services.

  •   Warehouse Storage Optimization

Now that there are a lot of people who are shopping online, it means that unless you are utilizing the storage of the warehouse in an optimized way, you cannot cater to their demands. There is an increasing demand for the expansion of inventory and also the demand for more suppliers. Also, now customers want customized services and more customization options in whichever products they want to purchase. Thus, instead of expanding and opening new warehouses, optimize the present space in the warehouse that you have. See if you can add any kind of extra storage aisles by minimizing the walking distance between the aisles. Optimize, however, you want to but do it at a greater level.

  •   Switch to smarter options for your warehouse

With the businesses going hi-tech, there is a need to switch to smarter options for your warehouse too. You can improve the order handling speed and the efficiency if you are using the right automation tools to help you. Now in the future, there may be 60-70 percent of the warehouses that might switch to mobile technologies and voice recognition for better delivery. When you are increasing efficiency, you are cost-cutting. But if you consider the investment, it is pretty smart. You can pick up the ergonomic handheld devices that can help you receive and pick orders. You will be saving loads of cash if you are looking for significant cost savings.

  •   Standardizing the whole workflows

You need to audit your workflow. From the time products arrive in the distribution centers until you send them off for delivery, there is a particular workflow. So to make the whole process efficient, you need to keep auditing and standardizing the workflow. When you follow this process, you somehow to make sure that the benchmarks for every performance are established. With this, you can also monitor how every person is working in the warehouse.

  •   Improve the pick and stow routes in the warehouse

One of the biggest resources in warehouses is the amount of time spent by the pickers to locate the product. So, that is almost 60 percent of the warehouse labor work. Reduce the overhead cost and by implementing a management system. This will help you record all the data and the location in the warehouse. The system will directly place the products where they are supposed to be.

  •   Technology and Appropriate Pick Locations

If you want to waste your picker’s work hours by walking, you can consider the picking slots sized and location. Once the stock is over, you can replenish it always. Set up one system where you do not need to move for the products that go on delivery every day. Something like a hot pick area would do. Employ bar codes to your warehouses and distribution centers so that you can verify the accurate things and speed up the process. Also, develop the return of investment study to think where all the savings can be gained.


Thus the above are the 7 easy and most obvious ways of reducing costs in the warehouses and distribution centers. Try to improve the efficiency by minimizing the travel time from one storage aisle to another or minimizing the one-way traffic. You can also improve efficiency by eliminating the need for the exiting equipment. Warehousing efficiency is just another crucial part of any wholesale distribution business. It is one of the biggest areas to focus on improvements. When you look deeply, there is always room for improvement and without the proper understanding of an effective warehouse strategy; you shouldn’t step into optimizing it. Of course, there are visible threats and risks for you like dead stock, losing money in the stocked inventory but that doesn’t mean it is a bad idea.

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