Strategies to Reduce Warehousing Costs
Here are some ideas to help reduce costs for your warehouse operation:
1. Reduce square footage and optimize space
Land cost is by far one of the largest cost contributors in warehousing. By looking at the amount of square footage you use per pallet stored, you can drastically reduce storage costs.
What is your cost per pallet stored? Take the total number of pallets in your current inventory and divide it into the square footage of your warehouse. Can you store more by better using the 3rd dimension of your warehouse more efficiently?
To increase the number of a pallets stored in your square footage, judicious use of racking will increase storage density. Some common uses of racking is to build high and narrow. Here are some different types of racking you can use:
- Single selective racking
- Deep-lane racking
When considering racking, be sure to perform an 80-20 evaluation on the pallets stored. This will help you identify the correct racking systems for your mix of products. Then be sure to follow the rule of 4. This will help you increase rack utilization. To evaluate the pros and cons of different types of racking and storage media, speak with a pallet rack professional, not just a vendor. He or she will have imaginative warehouse storage ideas.
Another space consumer in warehouses in aisle spacing. Aisles are necessary to allow a lift truck to store and retrieve pallets in racking. However, not all lift trucks work in the same aisle. Here are some rough rules of thumb around aisle spacing. (Before you set or move your racking, be sure to consult with the lift truck manufacturer.)
Aisle Spacing for Different Types of Lift Trucks
Knowing forklift truck dimensions is less important than knowing aisle dimensions.
- Sit-down counterbalanced forklifts – 12′ to 14′ aisles
- A simple rule to determine aisle requirements for a counterbalanced forklift is take the length of the forklift truck from the face of the load back rest to the rear of the chasis, add the length of the load, then add 12 inches.
- Example: head length 96″ + load length 48″ + maneuverability 12″ = 156″ (13′)
- Stand-up counterbalanced forklifts – 10.5′ to 11′ aisle
- Reach trucks – 8.5′ to 9.5′ aisle
- Deep Reach = 9.5′ to 10.5′ aisle
- Swing Reach / Turret Truck – 72″ aisle (66″ clear aisle)
- Depends on guidance to some extent. 66″ clear aisle is used for a wire-guided turret truck.
- Orderpicker / Stock picker
- Non-guided 12″ to 18″ of clearance per side
- Order picker width (40″) + 12″-18″ x 2 sides = 64″ to 76″ clear non-guided aisle
- Guided 6″ of clearance per side
- Order picker width (40″) + 6″ x 2 sides = 52″ clear in guided aisles
- Non-guided 12″ to 18″ of clearance per side
A guide to the different types of lift trucks can be found here: https://www.warehouseiq.com/what-is-a-forklift/
2. Reduce labor
Labor is a huge contributor to the costs of running a warehouse. By reducing travel between picks and the number of hands that touch product, you will reduce warehousing costs. Remember, every time to touch a product, you add cost not value. By integrating automation into your warehouse operation, you will be able to reduce labor. Here are some ideas around reducing labor.
Speed up travel between picks by introducing order picking equipment like:
- rider pallet jacks
- high level orderpickers
Batch pick orders by
- combining orders and picking 4 or 8 orders at once
- using double or triple jacks
- using orderpicking pick carts
Reduce travel between picks by bringing the pick to you using
- carton flow rack
- vertical lift modules
Reduce reading and checking orders by using
- RF scanners
- Pick to voice
Reduce transporting by introducing
Reduce Repetitive Tasks in Warehousing
Look at some of the repetitive task in elemental detail and determine if there is a better way to do it. When was the last time you looked at some of the specific tasks that are fundamental to your operation and asked, is there a better way? Some areas to look might be:
- What is the task? Can it be eliminated or improved?
- Is there a best practice for the task? Can it be trained?
- Focused on motivation in your operation? Often focusing on method over motivation has a greater impact.
- Looking for large impact improvements in process? Re-focus on smaller improvements that collectively add up to large savings. Multiple 2%-3% labor savings can add up to a large impact on your operation.
- Simply the operation. Ask the team for suggestions.
The myth that working harder is required is not sustainable as a practice. Focus on working smarter.
This is where the warehouse manager comes in. S/he so often is doing so many other jobs that he or she is unable to perform the crucial task observing and optimizing the operation.
Reduce repetitive tasks with
- Auto-case formers
- Auto-label applicators
3. Reduce Vendor Costs
One of the areas in warehousing that is not often examined is vendor costs. Regularly challenging your vendors to work with you to reduce your costs has a real impact. Many times, a vendor will actually be very willing to look at your cost drivers and come up with suggestions to reduce the overall cost structure for your operation. The opportunity to the vendor is sometimes expanding their total offering by providing a discount. More business for a lower cost.
Here are some warehouse cost cutting areas to look at:
- Forklift maintenance
- If annual costs exceed 8% of purchase cost of the lift truck for the maintenance and repair (parts and labor), consider replacing the lift truck with a newer model
- Look at more energy efficient forklift charger technologies
- Look at energy efficient lighting (can save 50% or more of your lighting energy bill).
- Forklift Fuel
- Propane is tied the cost of a barrel of oil and is at least 10 times more expensive compared to electricity
- Consider switching propane (LP) forklifts to electric forklifts.
Have we missed anything?