Strategies To Reduce Cost

July 8th, 2012

Some of the strategies to reduce cost and improve service level for warehouse.

1. Benchmarking

A program to set up internal benchmarks will reduce your cost per order or hold the cost in line as volumes increase. Translate these down to department and individual work standards.

2. Manage the labor force

Labor is the largest controllable expense item in your distribution center. Successful practices to improve performance can lower your labor cost.

3. Hiring, retention and attrition (turnover)

Labor is your first or second largest expense after outbound freight in the fulfillment center. Review the reasons attrition is so high and work to close the gap. Review your hiring, retention and training practices. If possible, make use of a reliable inventory software program for the warehouse thus reducing labor and manpower cost.

4. Reduce handling and touches

The fewer touches of product, the less cost of shipping an order. An effective warehouse cost reduction strategy is to streamline the operation and apply industry best practices in order to reduce the handling and cost of fulfilling an order.

5. Slotting

Effective slotting practices can lower your costs for picking, replenishment, and put away warehouse cost.

6. Team building

Successful organizations take team building seriously. Take your organization to a new level and improve productivity.

7. Picking options

How can you use best practices to improve picking productivity? By using an inventory software with a Picking List optional is the best strategies as time and cost can be reduced instantly.

8. Use what you have more productively

This is a mantra in fulfillment today. Our operational assessments will help you get more productivity from your layout, space/product storage utilization and staff. By not caring for the basics of fulfillment, you are adding costs to the warehouse operation. Increasing current capacity and utilizing that capacity more effectively are key objectives. We believe that getting as much productivity as possible out of the existing layout, processes and systems will help you reduce warehouse costs.

9. Performance reporting

The saying of, “You can’t improve what you don’t measure” is definitely true. An effective measurement and reporting process can improve performance and lower costs.

10. Packing options

How can industry best practices help you improve performance and reduce costs of one of the most labor intensive functions in the warehouse?

11. Freight management

Controlling incoming and outgoing freight can make the difference between a profit or loss for your business.

12. Use proper levels of QA

Are you “over inspecting” activities to the point of reduce returns and increase cost that does not result in a return on the investment?

13. Receiving practices and cross docking

Cross docking is an effective practice to reduce handling costs while improving customer service.

14. Process returns more efficiently

Returns cost more than orders to process. Untimely processing of customer credits, refunds and exchanges can damage customer service. Our assessments look at use of staff, people, space and systems to improve productivity.

15. Workforce software

Many companies are still using Excel for monitoring their inventory. Excel cannot monitor and track your inventory easily. It is a tedious and time consuming tasks. Look for an inventory software which would perform this task easily.

16. Outsourcing option

There are practical and cost effective reasons to outsource part or all of your business. It may be to deal with a peak, new product categories or when fulfillment is not a company core competency.

17. Finding the right level of automation and systems

ROI analysis could put automation into your planning for cost improvement. The wrong material handling equipment can be creating hidden lost time and inefficient product flow, impacting cost and customer service.

18. Warehouse management/bar code systems

This should include reviewing how bar coding throughout the warehouse, conveyance, material handling and warehouse management systems can improve productivity, increase service levels and reduce costs..

19. Inventory management in the warehouse

Effective inventory management is the single most important tool to improve customer service and reduce cost of operation.

20. Replenishment practices

Effective replenishment is the basis of successful order fulfillment. Inefficient replenishment will cost huge dollars and negatively impact customer service.