15 Ways to Reduce Warehouse Expenses
At the recent National Conference on Operations & Fulfillment in Las Vegas, Curt Barry, president of the Richmond, Va.-based multichannel operations and fulfillment consultancy F. Curtis Barry & Co., presented 15 tips on how to reduce expenses in the warehouse. Here's a rundown of his presentation:
1. Efficient receiving. Inventory accuracy and product flow through the warehouse all start with receiving. Often the biggest improvement companies can make is to develop and implement vendor compliance policies, Barry said.
2. Reduce inbound and outbound freight. Outbound freight now exceeds direct labor in many distribution centers. Don’t be too proud to ask consultants to help negotiate new contracts, even if it’s on a gain share basis. Too many dollars are at stake.
3. Dock to stock put away of product. Reduce warehouse back orders and “can-not-finds,” Barry noted during his presentation. This may cost anywhere from 20 minutes to 60 minutes to resolve.
4. Slotting. Efficiency techniques include “hot-pick areas” for fast-selling products. The old 80/20 rule holds for product sales.
5. Order picking. Reduce the picking time — 70 percent of which is spent walking in the warehouse — by using the proper approach to fit your business (e.g., singles, cart/bin, batch pick and sort, zone pick, etc.), Barry pointed out. In many businesses, singles account for more than 50 percent of the pick volume.
6. Reduce the number of replenishments. Hold the equivalent of a week’s unit volume in the forward pick.
7. Packing. Picking and packing amount to more than 50 percent of direct labor costs in the warehouse. Put packing supplies adjacent to the stations, and ensure you have the proper number of insert compartments, sufficient tabletop square footage and adjustable length stations, Barry said.
8. Returns processing. Returns cost more than orders. Eliminate the controllable reasons for returns — picking errors, copy and art errors, among others. Streamline the receiving process to get returns processed efficiently and refunds back to customers quickly.