13 Other Practical Considerations in the Pursuit of Warehouse Cost Savings
- Communicate effectively and often; clearly communicating to workers your organizational goals, key performance indicators, (KPIs), and the processes to achieve them is one key to effective warehousing operations. When managers fail to create an environment of open and clear communication, employee productivity suffers, resulting in high turnover and wasted resources.
- Standardize your processes by reducing potential variation in areas such as unloading, accounts payable, shift scheduling, and facilities management. Standardization saves time and money and reduces errors. Remember: There is always a better way to do anything.
- Measure what matters for [removed] in your processes. If an outcome is not important to customers and shareholders, don’t waste time measuring it. One 3PL-managed distribution center for a major U.S. manufacturer adopted a work measurement program to gauge and report warehouse performance at the employee level. The facility increased productivity by 10 percent and reduced labor costs by 11.3 percent.
- Determine what drives processes to ensure the proper causal connection between outcomes and enablers. [removed] reflect the past; standardization and error-proofing are the answer to productivity now.
- Use the five-step approach to understanding the “why” of your operations, not just the “how.” This approach: Define, Measure, Analyze, Improve, and Control reduces costly process variations. The backbone of Lean Six Sigma methodology, DMAIC ensures sustained, defect-free performance, and highly competitive costs.
- Involve, align and empower your associates. Listen to the Voice of the Employee (VoE): The people who do the work every day are process experts who know how to reduce or eliminate waste. Aligning your managers and staff to a company culture committed to inquiry, responsibility, partnership, and customer satisfaction can significantly impact warehouse productivity.
- Educate your leadership to ask the right questions, gather necessary information, make decisions, and take appropriate corrective action. This is vital to improving processes, products, and services. Leadership should visit the shop floor often, and work together with their people to improve processes and solve problems.
- Create a strong training program that incorporates cross-training. Break a job down and present the operation to new associates. Allow them to test their performance before releasing them to the process. Try having your employees “shadow” tenured employees to gain valuable hands-on experience.
- Incorporate the use of work output analysis to achieve a steady fulfillment flow with standardized work instructions. By specifying the maximum cycle time allowed to produce a product to meet demand.
- Look at variation to increase productivity. This is the heart of [removed] : reducing variation to make a process more stable and predictable. Find a significant measure that reflects your process, then reduce the variability of that process as much as possible.
- Have occasional team meetings to review these goals and objectives. Let your employees speak freely. Successful organizations take team building seriously. Take your organization to a new level and improve productivity.
- There is nothing wrong with setting up internal competitive warehouse teams. Get everyone involved in warehouse cost savings. Award the team that has the best idea: improved process or problem-solving. Meet monthly or quarterly to review these ideas, and award the winning team.
- Finding the right level of automation and systems; ROI analysis could put automation into your planning for cost improvement. The wrong material handling equipment can be creating hidden lost time and inefficient product flow, impacting cost and customer service
Warehouse costs are a large percentage of overall logistics costs. Warehouse cost savings, like transportation costs savings, go straight to the bottom line. We know there is a lot to focus on for better supply chain and logistics management and I hope this list empowers you to pursue the aggressive goals yourself and the organization has laid out.