Warehouse costs are climbing to new heights. What’s your plan to lower them?
Over the past two years, warehouse prices have skyrocketed. Warehouse space is in high demand, and there seems to be no end in sight for 2022.
The pandemic had a lot to do with the current situation. Bottlenecks at the major seaports and inland transfer centers have led to a range of companies looking for more space.
Also contributing to the lack of space is the rise in eCommerce. Distribution centers have expanded dramatically during the pandemic, primarily due to people shifting their buying habits.
Stocking Up, Just In Case
Retailers are also stocking up on popular items, so they don’t run out and have to wait six months for another shipment, if at all. Fortunately, more warehouses are being built to meet demand, but that doesn’t guarantee lower rents.
One of the best ways to minimize carrying costs was to maintain lower stock levels. With that no longer being feasible, there are some ways retailers can control costs in the warehouse to maximize profits.
- Increased Visibility Across the Entire Supply Chain
Knowing exactly how much product is available from the manufacturer to the showroom leads to more accurate forecasting, better resource allocation, and increased efficiency. Planning for logistical logjams allows you to focus on other products or entire categories.
Your warehouse is a fixed, physical structure, so it’s essential to use every square foot of space available. For larger structures, you can employ a design partner that will build a fully optimized layout of your space. Streamlining inventory by getting rid of deadstock and better shelving should already be part of your best practices. Training employees to maximize space is another excellent way to optimize your warehouse.
- Reexamine Inventory Shrink
You can never eliminate theft or damaged goods. But, you can reduce the number of occurrences through employee screening, security devices, and improved warehouse layouts. The key here is focusing on your employees to be honest and fully trained to operate heavy equipment, such as forklifts and pallet jacks. They can also provide valuable feedback on how the warehouse layout works for them or rumors about theft.
Many businesses fail to create benchmarks. Instead, they focus on financial goals to dictate the flow of goods and services. Identifying and adopting best practices improves performance leads to strategic and operational advantages. By defining and aligning your goals around best practices, you’ll create higher standards for employees to follow. Also, when benchmarks are in place, you have better insight into how to adjust workflows to improve performance.
Defining and Refining Processes
If you already have a range of best practices in place, it’s probably a good time to examine them in more granular detail. Some large operations count warehouse employee footsteps to account for time spent. Knowing these details does give them an advantage over the competition. Investigating, defining, and refining the details of your best practices will lead to lower carrying costs.