Whether you’re looking to cut costs at an existing warehouse or planning to construct a new one, these strategies will help you save money and stay ahead of the competition.
Interior of a pharmaceutical warehouse in Nairobi, Kenya. PHOTO: Courtesy
By EB Content Studio
Warehouses are at the core of many commercial operations in Kenya and Africa in general, helping businesses to manage inventory levels and efficient delivery schedules.
Your distribution centre is the backbone of your supply chain, and reducing costs within it can significantly impact your overall efficiency and profitability. You can streamline your operations and increase profitability by identifying and eliminating unnecessary waste.
To secure any measurable success in the current economic climate of minimal stability and maximum competition in Kenya, it is essential that your warehouse productivity is increased and your operational costs are decreased.
To help in these unprecedented times as many companies embrace a digital revolution to ensure their business thrives (and not just survives), Ethical Business has curated several practices to put your warehouse on track to spending less and making more. We tell you how:
1. Utilise floor space effectively
You could use floor space effectively by employing vertical storage solutions. These solutions include multi-level shelving, mezzanine floors, and vertical carousels. They can increase the storage space available in a warehouse without the need to expand the physical footprint of the facility.
One of the main benefits of vertical storage solutions is that they can maximise the use of available space. This can be particularly important in warehouses operating at capacity or struggling to accommodate growing inventory levels. By using vertical space, businesses can store more items in the same footprint, reducing the need for additional storage facilities.
2. Optimise warehouse labour
In manufacturing and fulfillment, time is money—the more efficient the process, the lower the cost. Standard operating procedures help to eliminate waste and improve efficiency.
By establishing clear protocols for each task, businesses can minimise errors and wasted time, leading to cost savings.
Clear protocols for each task will minimize errors and time spent, while standard work instructions, continuous improvement processes, and implementing KPIs will provide a framework for measuring performance and identifying areas of improvement.
3. Use the relevant tech
A great way to lower warehousing costs is to make the technology work for you by streamlining warehouse processes. Due to new technological development, modern distribution tactics are utilised worldwide, with more on the way.
A warehouse management system, for instance, assists individual businesses in finding specific solutions to major challenges that many face today. It is your trump card for streamlining operations and boosting efficiency. It’s a software system that increases efficiency by automating the management of warehouse activities such as receiving, putaway, picking, packing, and shipping.
With real-time visibility into inventory and activity, manual tracking errors and misaligned inventory are eliminated, saving time and money from stockouts and overstocking. That means your warehouse personnel can work faster and smarter, resulting in faster turnaround times, better reorder decisions, lower stockout costs, and fewer errors.
You could also utilise barcode scanners and RFID technology to improve accuracy and reduce errors to eliminate manual data entry, reducing errors.
Similarly, RFID tags placed on each item in the warehouse are scanned by RFID readers and transmitted to the WMS for real-time inventory tracking and improved accuracy. RFID also confirms that the correct items have been picked, reducing human error in order fulfillment.
To further streamline the process, upgrading to print and apply, in-motion labelling, and slotting automation can remove repetitive tasks and save on labour costs. These technologies automate the printing and placement of labels, as well as the movement and organisation of inventory within the warehouse, leading to even greater accuracy and efficiency.
Additionally, by automating repetitive and time-consuming tasks, implementation of warehouse automation technology can significantly reduce the need for manual labour and improve overall warehouse efficiency. This technology is a highly effective solution in reducing labour costs because it can replace repetitive and time-consuming tasks, such as picking and packing, the movement of materials, and data entry.
4. Implement Just-In-Time Inventory Management
Just-in-time (JIT) inventory management is a powerful tool for cutting costs and aligning production and delivery with actual demand. The goal of JIT is to minimise the amount of inventory on hand while ensuring that the necessary materials and products are always available when you need them.
This approach is ideal for companies that operate in fast-paced, highly competitive markets where customer demand can be challenging to predict. With JIT, you’ll reduce excess inventory and storage costs and stay nimble to meet customer needs.
5. Reduce Travel Time
One key aspect of optimizing picking processes is reducing the travel time between picks, which can be achieved through various strategies. Reducing travel time between picks can significantly impact warehouse efficiency, but it is not the only consideration when optimizing picking processes. Some other factors that should also be considered include the number of picks per hour, the accuracy of the picking process, and the overall cost of the system.
6. Revamp cross-docking
Cross docking is a logistics technique in which goods are transferred directly from incoming trailers to outgoing trailers with minimal or no storage in between.
Because the items are going directly from a truck to another supply chain link, there is no need for storage space. By eliminating the need for long-term storage, businesses can free up valuable warehouse space for other uses, such as production or distribution. This can reduce the costs associated with leasing or maintaining warehouse space.
Cross-docking also allows for the rapid movement of goods through the warehouse, reducing the time and labor required to access inventory. This can improve productivity and reduce labor costs.
7. Limit equipment downtime and repair costs
Preventive maintenance refers to regularly inspecting and servicing equipment to identify and fix potential issues before they become significant problems.
A business can improve productivity and save money by implementing a preventive maintenance programme that reduces equipment downtime.
8. Lower the cost of energy
Energy costs may raise a lot of concerns while calculating profits for your organisations. Some warehouses, especially those storing perishables, may incur incalculable energy costs. To realise a few savings on how you use your energy, you can opt for automatic lighting used only when necessary or use natural light as much as possible. You should also use other resources like water sparingly to avoid wastage which could add up to the overall cost of warehouse management.
9. Employee retention/minimising labour costs
Did you know that replacing an employee can cost up to twice their annual salary? That is why having a solid strategy for retaining top-performing employees and repositioning some of your underperforming employees is crucial.
You can keep employees engaged and motivated by offering competitive pay and benefits, opportunities for growth, and fostering a positive work-life balance. Regular feedback and open communication also help to address any issues, keeping employee turnover low.
Inversely, you can reduce employee labour costs in several ways. A few of them include reducing their work hours, investing in relevant machinery to improve employee productivity, training and holding employee seminars to boost their performance, and so forth.
10. Maximum utilisation of equipment
To reduce warehouse costs, you must ensure that the machinery you buy is effective in the daily operations of the warehouse. You can ensure maximum use of gear by using one piece of equipment to carry out more than one task. Purchasing multiple task pieces of equipment helps in reducing warehouse costs.
You can also regularly service your machines to ensure that they are in good condition and there are no instants of unexpected breakdowns. You can also consider buying equipment for use in the warehouse rather than renting to lower warehouse costs.
11. Benchmarking
The best way to reduce warehouse costs is by benchmarking. You can benchmark warehouse best practices from other companies or competitors and implement them in your warehouse. Borrowing ideas from more successful companies can help lower your warehouse costs.
You can also set up internal benchmarks to help reduce warehouse costs per order. You can strategize on how to identify the best department and adapt some of their best practices. Benchmarking helps improve individual working standards to help lower the overall cost of running the warehouse.
12. Protection of inventory
Theft is a widespread issue that is depleting supplies. This issue is always tough to avoid since the number of items going through the process may be many, and your employees may have access to them at each point of interaction. It can be difficult to tell if vanished stock results from theft, misplaced goods, or even where it happened, making it challenging to identify and stop offenders. So what are the red signs indicating warehouse theft? Warehouses can lose billions of shillings when there are cases of theft or fire in the warehouses. Therefore, to prevent huge losses and skyrocketing inventory costs, companies must ensure that their inventory has a high level of protection.
You can also use inventory control systems to track how items move in the warehouse to minimise wastage and theft. Installing robust security systems may also help with inventory protection. You can set up heavy-duty doors, alarms, night patrols, e.t.c. to ensure that your merchandise is secure.
13. Reduce product damage
Damage caused by warehouse workers might result in large cost increases. Not only are goods and products harmed, but service is also delayed. Any damage that causes your activities to cease costs you money. You can use bollards, guardrails, and lanes to prevent damage and delays in your warehouse.
These safeguards protect not just your goods and facilities but also your employees. Modern technology, such as self-repairing or high-speed doors, decreases downtime and losses, enabling you to resume warehouse activities faster. You might also use options like a truck with Moffett to save time and money delivering anywhere in the facilities and eliminating damages from manual handling.
