7 tips to reduce warehouse costs…..

Cutting your warehouse labor costs can improve the organization’s overall efficiency and increase earnings. The key is to devise ways that produce an impressive return on investment instead of simply reducing staff. Warehouses generally claim a large amount of real estate on the premises. Therefore, reducing labor costs could make a big difference in overall expenses.

Step 1

Train your current staff how to work smarter using forklifts, devices for communicating across warehouse space, order-picking processes and cost control related to damages and breakage. Provide opportunities for employees to exchange tips for more efficient warehouse processes, and offer cross-functional training for warehouse, purchasing and shipping department employees so they understand their interdepartmental responsibilities and work flow.

Step 2

Award employees incentives for completing training, such as recognition, certification and, if feasible, cash bonuses. Also, provide cash bonuses for warehouse employees who work diligently to prevent on-the-job injuries. This ensures that a larger percentage of your workforce participates in efficiency-enhancing activities.

Step 3

Review your warehouse scheduling and employee hours. Unless your company’s shipping and receiving occurs on a 24/7 schedule, you may be able to create compressed schedules that accommodate your business needs as well as warehouse employees’ needs to achieve work-life balance. Reducing the number of shifts you run will significantly cut labor costs. Maximizing your employees’ work times can improve job satisfaction and, consequently, reduce turnover. Reducing turnover will save a considerable amount on labor costs — the cost to recruit, hire and train new employees can eat up a chunk of your warehouse budget.

Step 4

Select experienced employees to train new warehouse employees. Employees who actually perform warehouse duties are better able to provide on-the-job training for workers who may not have worked in a warehouse environment. For example, use current staff to train on inventory and supply chain management, managing inventory, industry practices for inventory audit, packaging, shipping and receiving.

Step 5

Install technology solutions for supply chain management to improve work flow and employee efficiency. This might result in lower labor costs through reducing staff; however, the training that warehouse employees receive may help them advance in other areas of the company. Supply chain management technology can be customized to meet your company’s specifications, as can warehouse management system solutions.

Step 6

Implement warehouse safety measures. Mitigating company risk associated with warehouse injuries automatically cuts your labor costs because you aren’t paying for workers' compensation expenses and potentially reassigning workers for areas with which they might not be familiar. According to the U.S. Bureau of Labor Statistics, in 2010, for every 100 warehouse employees, there were 4.1 work-related injuries that incurred additional labor costs such as absences or moving employees to other departments.

Step 7

Obtain employee input on warehouse and inventory best practices they believe will make their tasks and duties easier. Asking your employees for their opinions conveys the message that you value their opinion and, in turn, makes them happier employees.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net