Warehouse Efficiency to Lower Costs and Meet Customer Needs

E-commerce sales continue to grow, with a significant bump during the pandemic as everyone sought out purchase options that didn’t expose them to the virus. However, the pandemic also strained supply chains, putting increased pressure on brands to increase warehouse efficiency to meet the needs of customers grown to expect overnight or faster delivery and to keep retail stores stocked with the things consumers wanted. While some might not appreciate the role of logistics, including warehouse management, plays in marketing, it’s one of the core four aspects of marketing — the place aspect. Today, we’ll delve into ways to improve warehouse efficiency to both lower costs and to meet customers’ demands for fast shipping.

e-commerce sales
Image courtesy of eMarketer

Warehouse efficiency

If you aren’t experienced with efficient warehouse management, you might not appreciate that logistics adds a growing percentage to the cost of every product sold. McKinsey recently estimated these growing costs add up to 15% to the cost of everything we buy (or you sell). Yet, simply cutting costs without careful consideration of how those cuts might impact delivery times (and hence customer satisfaction) is the exact wrong way to control your growing logistics costs. Instead, consider using technologies that make for warehouse efficiencies, but don’t forget the simplicity of other tactics that can help lower costs without impacting your ability to meet customer needs.

Equipment downtime

Warehouses typically rely on machinery such as forklifts, conveyor belts, and even compressors. When these machines don’t operate at peak efficiency or suffer downtime, your costs go up, delivery times increase, and you can even find your business floundering as these problems spread like a cancer through your warehouse.

boost customer satisfaction
Image courtesy of Oracle

Thus, reducing or eliminating downtime is a key element in warehouse efficiency. Routine maintenance is one way to eliminate unexpected downtime. By scheduling maintenance according to the manufacturer’s recommendation, equipment is not only less likely to fail but will last longer, reducing costs. Specialized software can help maintain maintenance records to ensure you schedule service at the optimal time.

Another tactic you should employ to reduce downtime is to monitor sensitive equipment to ensure it’s operating at efficient levels. Using IoT (Internet of Things) devices, you can monitor the temperature and other metrics to indicate a problem before it damages the equipment or reduces its efficiency. Shutting down a piece of equipment before these levels go outside of tolerances saves you the cost of expensive repairs or the need to replace the equipment.

Employees are your most valuable tool

Employees are more than a means to an end, even though operating in a warehouse doesn’t take specialized skills. Your staff needs to know you value their work. In most developed countries, they also should expect safe, reasonable working conditions that are sometimes challenging in a warehouse environment.

Have you ever worked in a hot and stuffy environment? It’s not a pleasant experience and it’s common for people to lose focus, experience productivity drops, and even be distracted more often when they’re hot. Nobody enjoys working in the heat, which is why it’s vital that you try to keep your employees as comfortable as possible by installing adequate warehouse cooling solutions in your workplace. A warehouse isn’t an office so you might also want to vent the building to remove noxious fumes given off by the products stored in the warehouse.

warehouse efficiency
Photo by Alexander Isreb: on Pexels

There are many different types of warehouse fans that you can purchase for these situations. Some are designed to blast air to cool large areas, while others are large overhead fans to move the air. These are excellent cooling solutions not just for your staff but for the entire warehouse in general. They help keep your staff comfortable during hot days and maintain the productivity of your entire team.

You must also protect workers from unsafe conditions. That’s why government regulations, such as OSHA in the US, create standards, including marking safe areas so workers don’t face the danger of products falling on them or walking into the path of a piece of machinery that might cause injury.

Protect products

Your products are the lifeblood of your business. If they’re damaged or stolen, you incur costs and reduce warehouse efficiency. In this aspect, cooling the warehouse not only helps workers to perform at peak efficiency but protects perishable products that can’t take the heat any more than your workers can.

You also want to store products until they move to the next level in the supply chain with racks to ensure the products don’t get crushed or otherwise damaged by products placed above or adjacent to them. Conveyer systems must also handle products in ways that protect them. For instance, tomatoes are easily damaged if not protected from pressure.

Protecting products from being stolen is a concern for everyone throughout the supply chain. According to CargoNet, a US database and information-sharing system, an estimated $223 million in cargo was stolen in the US and Canada in 2022. This was a 15% increase from 2021, and the average value of cargo theft events was over $200,000. In the second quarter of 2023, thieves stole over $44 million in shipments, and the average shipment value per event increased to $260,703. In the fourth quarter of 2023, cargo theft incidents increased by 68% year-to-year, with approximately $130 million in goods stolen. However, CargoNet notes that the actual amount of loss is likely higher because reporting is not mandatory.

More products are stolen from warehouses and trucks. In only the second quarter of 2023, $44 million of goods were stolen.

Picking in warehouse efficiency

One of the most expensive and time-consuming aspects of warehouse management is picking products to meet orders. In a well-run warehouse operation, employees can quickly and efficiently locate the items for each customer’s order. That means organizing the picking chart so that employees make a single pass through the warehouse to pick items to fulfill the orders of several customers at one time. If you’ve been to the grocery store lately, you’ve seen this in action as workers move through the aisles with a cart containing baskets for several customers until they’ve picked everything needed by those customers.

Unlike your local grocery store, however, warehouses can’t waste shelf space on items that they don’t have in inventory. That means using tools like RFID (radio frequency identification) and computers to monitor the placement of every item in inventory. That way, workers never have to hunt down the current location for an item needed for a customer’s order.

Conclusion

At the end of the day, warehouse efficiency is a complex dance between machines, computers, software, and people. The goal of warehouse management is to keep this dance at peak operation, which considers things like keeping employees working efficiently in safe, comfortable conditions, ensuring equipment is properly maintained, protecting products from theft and damage, and efficiently picking products for individual customer orders.

Need marketing help to support business growth?

We welcome the opportunity to show you how we can make your marketing SIZZLE with our data-driven, results-oriented marketing strategies.  Sign up for our FREE newsletter, get our FREE guide to creating an awesome website, or contact us for more information on hiring us.

Hausman and Associates, the publisher of MKT Maven, is a full-service marketing agency operating at the intersection of marketing and digital media. Check out our full range of services.