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3 Tips to Save on Warehousing and Fulfillment Costs

Any business that deals with the distribution of products knows that warehousing costs take up a huge portion of their annual budget. Whether you outsource your distribution to a larger third-party fulfillment center or maintain your own warehouse, you know that cutting costs is a constant priority necessary to keep your business afloat. Here are some tips on how to optimize productivity and cut costs in your warehouse.

Advance your Technology
It is essential that your warehouse has an excellent warehouse management system (WMS) in place. When used properly, it will keep meticulous records of all your inventory, resulting in time and cost savings throughout the warehouse.  Knowing the exact location of each product will make order fulfillment faster and reduce errors significantly. It will also save your workers time and reduce wear and tear on equipment. Another benefit is that a good WMS will give you an accurate assessment of how much inventory you should be stocking for each product. This will greatly reduce overstock and save space.

Once you have a good WMS in place, you may want to consider introducing automation into your warehouse. The use of robotic machinery to move products around your warehouse can greatly increase speed and efficiency and further cut down on labor costs. However, these systems are expensive and may not be a worthwhile investment for every business. Before purchasing automated equipment, make sure it makes economic sense for your business and will provide a good ROI.

Optimize Space
With every inch of real estate costing your business money, saving space is a main objective in cutting warehouse costs. Look for anything that is taking up unnecessary space in your warehouse and find ways to reduce or eliminate it. Consider using vertical space, if feasible with the building construction and fire control systems. You can also reduce your aisle width and ensure that you are best utilizing the space available by matching the product size to the rack or container size.

Supplies and packaging materials can take up a lot of space in the fulfillment area. Consider introducing more space efficient packaging materials.

Protect your Products
Inventory loss and damage, also known as “shrinkage” is a major expense for businesses each year. A small percentage of inventory loss is caused by theft, both internal and external. To reduce theft in your warehouse, make sure you have a strong security system in place and consider using RFIDs to track all your products.

Keep in mind that the main cause of inventory loss is damaged goods.  Environmental factors such as water damage or unwanted pests can often be the culprits. Make sure your warehouse is properly protected from these kinds of damages by securing any open areas and implementing proper pest control.  More commonly, however, damage occurs when products are not packaged correctly, especially during shipment. Make sure you are using secure packaging materials that adequately protect each specific product, especially if you are dealing with fragile or electronic items.   

 

Over the past decade, with the explosion of e-commerce and online shopping, the warehousing and distribution industry has seen tremendous growth. The growing popularity of warehouses also means increased competition for anyone in the industry. In order to stay on top of the game, businesses must be constantly auditing their warehouses to ensure proper productivity and efficiency.

For a free consultation on how you can reduce space and costs in your warehouse while protecting your products, contact AirGuard. Airguard’s customized protective air cushions are delivered to the packaging area un-inflated, effectively reducing shipping volume and storage space. For example, an AirGuard customer in Florida saved $47K/year by reducing the volume required to transport and store an equivalent quantity of molded foam materials.

AirGuard’s tailored air cushions provide much better shock absorbance than foam, which translates into a significant reduction in product damage and dim weight, evidenced by the same Florida customer saving $643K in dim weight reduction. With Airguard’s automatic solution, the customer also saved $52K/year in labor costs, representing a total annual savings of $742K for the customer.

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