COST REDUCTION STRATEGIES FOR WAREHOUSES

 

When operating a Warehouse, like any other business, the mail objective is to reduce costs and increase the profits. It is very difficult to implement this as the warehouse has lot of sections to it and the everchanging business climate making it difficult to achieve the cost reduction strategy.

Some of the constraints in running a warehouse or distribution centre is listed below:

• In the operation budget of a warehouse, labour consumer about 50-70% of budget.
• Difficulty in ensuring that the workers are doing productive work and not just busy.
• Warehouses must study about the latest technologies in the market. After considering the trade-offs of both whether to implement a technology or cost of not implementing it, a decision must be made.
• In order to stay ahead amongst the competitors, the warehouse must upgrade on the level of automation.
• By analysing the energy consumption of the different areas , effective alternatives should be implemented in order to save unnecessary energy costs.

Some of the cost-effective strategies to address some of these issues are mentioned below:

• Cost saving strategy to implement more labour management practises: Collecting data on the work done by all employees, their productivity levels, their targets is essential. Labour management software or even spreadsheets can be used to track the activity of all employees. There should be the right amount coordination between the HR manager and the Operation manager to find the right mix of employees , i.e part time and full time. The work culture in the warehouse to should practised so that employees feel free to approach their managers in case of any dissatisfaction. Provide accurate and timely feedback to employees is essential for management to improve the effectiveness of the employees.
• Increasing the dependency on technology to reduce the manual processes: Studying all the latest technological advancements and correctly implementing the right choice that helps to save time and money.  When new technology is enforced, accordingly the apt set of skilled workforces should be introduced.
• Implementation of Lean six sigma for continuous improvement: The lean six sigma is basically a data-driven system that tries to achieve continuous improvement. The working environment in these warehouses should be such that it fosters the efficiency of the employees. Standardising procedures  for handling the various processes  can help in improving the consistency. Objective data must be tracked to get an idea of the current performance and adjustments should be made accordingly.