Warehouse Cost Reduction Ideas

There may be more ways to reduce your warehouse costs than you would think…

As competition rises amongst eCommerce businesses, it has never been more important to cut costs without hindering productivity. Warehouse operations are a huge stage of many companies processes and play a large part in defining a business’ success.  An inefficient warehouse can be a substantial drain on resources, with many warehouses wasting money in ways they didn’t even realise. Here are some simple but effective ways you can reduce warehouse costs.

Automated Shipping

Similar to security, spending money on automated shipping software can have an excellent return on investment. Automated shipping creates and prints labels for you for multiple couriers without any manual input. This saves considerable time when packing orders meaning you can process more orders and shift more stock with the same, or less, manpower. Software such as Shipster which has automatic address correction and courier selection also significantly reduces the frequency of mistakes due to human error. Shipster also has many customisable features so it can cater to each company’s unique shipping needs. For example, Shipster can be used to print custom shipping documents or marketing material, shaving the whole packing process down to mere minutes.

Many Shipster users have already felt the financial benefit of our software such as CHO, where Gareth O'Rourke described Shipster as one of the biggest cost savers in their tech overhaul. In his LinkedIn article “Why Software Can Make or Break a Business”, Gareth details how Shipster streamlined the pick and pack process in the warehouse, saving tens of thousands every year.

"The element that has saved the business the most is a bespoke development for postage with [Shipster] in Manchester. The system has literally saved tens of thousands and has been the perfect option for us instead of going down the costly Metapack or Scurri route. It has transformed how we pick, pack and dispatch parcels and with 10 minutes training anyone can use this. This is an example of selecting the right software package for your business." - Gareth O'Rourke, Former CHO Head of eCommerce.

If you would like to find out how Shipster can help you reduce your warehouse costs through automatic shipping, check out our Shipping Rules and Shipster Features content.

Anti-theft measures

As with many cost-cutting measures, you have to spend money to save money. Warehouses are prime targets both for external and internal stealing due to the concentration of high-value stock. Investing in security measures like CCTV cameras, alarm systems and key card locks can save you thousands every year. Stock management software teamed with RFID (Radio Frequency Identification) can also help keep track of all items to ensure none are taken or go missing.

Energy Efficiency 

A huge overhead for warehouses is energy costs. There are many ways you can lower your energy usage, making your operations kinder on the planet and the wallet. Reduce the cost of lighting by installing windows where possible, using energy efficient light bulbs and installing automatic/motion censored lights. Ensure your warehouse is properly insulated so money is not being wasted on excessive central heating. If your warehouse is not 24 hours, turning machinery off when it is not being used will also help reduce costs.

Nurture your Staff

It is always cheaper to retain current staff members than hire and train new ones, so make sure your team is happy as well as efficient. In addition to saving on the costs of recruitment, experienced employees are proven to work quicker and make less mistakes as they are more skilled and knowledgeable. They are also more likely to notice recurring problems or inefficiencies in your warehouse systems and, if nurtured and listened to, they can contribute to improving cost reduction. Keep training fresh and allow for upward mobility to form a slick and invested team. Ensuring the warehouse is never over or understaffed is also important. Overstaffing means unnecessary labour costs, whereas understaffing leads to a higher volume of mistakes and stress.  

Packaging

Having clear, standardised packing methods can save your warehouse money in many ways. If orders are packed in too large parcels, they take up unnecessary space that could be filled with more stock. As well as the added cost of excessive packaging materials, this may also drive up the cost of shipping from couriers who charge delivery based on parcel dimensions. On the other end of the spectrum, too small or insufficient packaging could lead to an item arriving damaged, creating refund costs. Using appropriately sized packaging and having clear packing systems can not only save money but also reduce your waste making your operations more eco-friendly. Amazon demonstrated this already with their ‘frustration free packaging’ which, over the last ten years, has reduced their waste by over 240,000 tons of packaging materials and more than 500 million boxes.

Measure and Evaluate

At the end of the day, you can’t improve if you don’t know what’s wrong. It is important to regularly assess the efficiency of your warehouse processes and get feedback from your staff about how their jobs could be made quicker and easier. Try rethinking how stock is stored and accessed. Unnecessary steps in the picking and packing process, or long walking times to find items, take up time that adds up to wasted time which inevitably wastes money. Often, cost reduction comes down to working smarter not harder. In addition, take the time to evaluate your software and tech solutions at least every few years. Technology moves on quickly and you may be using outdated, clunky systems that actually decrease productivity. Especially if you are an e-commerce business, there may be the perfect tech solution out there that will transform your warehouse into an efficient, cost-reducing machine.