Complete List of Warehouse Cost Savings Initiatives

Editor's Note: Take a look at our featured best practice, Lean - Value Stream Mapping (VSM) (157-slide PowerPoint presentation). Value Stream Mapping (VSM) is a lean management technique used to analyze the flow of materials and information currently required to bring a product or service to a Customer. The goal of value stream mapping is to reduce the end-to-end lead time of a process by highlighting and eliminating [read more]

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Here is a comprehensive list of warehouse cost  savings ideas, categorized by 6 core areas: Labor, Operations, Equipment Usage Optimization, Technology, and Facilities Management.

Labor

• Invest in training/re-certification
• Cross-train all employees
• Focus on retention/implement retention plans
• Use temporary/contract labor help where applicable
• Use flextime
• Revise your labor scheduling strategy
• Observe starting and quitting times
• Move your time clocks
• Monitor individual productivity
• Implement a pay-for-performance program
• Reward employees who arrive early/stay later
• Provide Safety/OSHA Training, at least quarterly
• Implement Vendor Management System (VMI)
• Start a suggestion box: listen to your employees ideas.

Operations

• Identify your best, trustworthy and productive employees
• Use cross-functional teams to solve problems
• Have teams compete with each other to meet overall warehouse goals and objectives/KPIs: The old saying of, “You can’t improve what you don’t measure” is certainly true. An effective measurement and reporting process can improve performance and lower costs.
• Implement a reward system for major victories
• Reduce inventory with cross-docking or use Kanban pull systems
• Target inventory accuracy: goal: 98-100% accuracy daily
• Improve processes daily
• Get rid of excess inventory: create a Material Review Board (MRB) to review: obsolete, excess, slow moving inventory monthly
• 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.
• Optimize space: Land cost is one of the largest contributors to costs in warehousing. Cost per pallet stored should be questioned to ensure space is optimised. The type of racking within your warehouse should utilise the height of your warehouse. Aisle space is also a consumer of space and having the right equipment to optimise this space can contribute to cost savings for the future.
• Slot and Re-slot regularly based on demand/sales trends
• Reconfigure rack configuration
• Optimize staging areas to improve through put to the customer
• Replace checking with auditing
• Minimize packaging
• Keep supervisors on the warehouse floor
• Focus on error reduction: goal: no errors
• Make housekeeping a high priority
• Control theft through improved security
• Improve receiving process operations
• Damage reduction: damage to goods/SKUs is expensive. Take good care of handling packages.
• Improve SKU tracking: RFID, bar coding

Equipment Usage Optimization

• Standardize your batteries
• Make equipment do double-duty
• Manage equipment service vendors
• Consider short-term rental
• Evaluate leasing rather than buying
• Use preventive maintenance (PM) to avoid equipment failure during a process

Technology

• Consider a new, advanced Warehouse Management System (WMS)
• Use Electronic Data Interface (EDI) to communicate with your customers/suppliers
• Implement voice-directed picking and/or light picking systems
• Reduce dwell time

Facilities Management

• Convert to high-efficiency lighting
• Investigate efficient fans
• Buy energy in bulk
• Reduce storm water runoff and fees
• Turn off the outdoor sprinklers
• Warm up with dock blankets

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Process Improvement involves analyzing and improving existing business processes in the pursuit of optimized performance. The goals are typically to continuously reduce costs, minimize errors, eliminate waste, improve productivity, and streamline activities.

As we continue to deal with COVID-19 and its economic aftermath, most organizations will prioritize Business Process Improvement initiatives. This is true for a few reasons. First, Process Improvement is one of the most common and effective ways of reducing costs. As the global economy slows down, Cost Management will jump to the forefront of most corporate agendas.

Secondly, a downturn typically unveils ineffective and broken business processes. Organizations that once seemed agile and focused during periods of growth may become sluggish and inefficient when demand drops off.

Lastly, COVID-19 has expedited Digital Transformation for most organizations. One of the quickest and most impactful forms of Digital Transformation is Robotic Process Automation (RPA). Thus, we have included numerous RPA frameworks within this Stream.

Learn about our Process Improvement Best Practice Frameworks here.

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