July 12, 2022

5 Tips to Reduce Your Warehouse Operating Costs

In recent years, improved capabilities to enable faster, more efficient warehouses and distribution centers (DCs) have accelerated the transition to a heavily consumer-centric supply chain. And with 80% of consumers maintaining the shopping behaviors they adopted during the Covid pandemic, this "customer experience" trend has seen e-commerce and micro-fulfillment operations at the forefront. This puts more emphasis than ever on operational efficiency.

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We all know the customer experience has dramatically changed, with the "Amazon effect" (more choice and more availability than ever before, delivered faster than ever before) bleeding into customer behaviors across almost all industries. But simply having an easy to use e-commerce store or online ordering portal isn't enough to meet ever increasing customer expectations. Customer experience isn't just a concern for commerical teams any longer, but also a top priority for operations as well - poor customer experiences related to order fulfillment, delivery, and returns can make or break a customer relationship in this new era.

This has seen many companies increasingly look to warehouse automation in order to be deliver processes that can match or exceed customer expectations. But with new investments in streamlining supply chains, this has placed more emphasis than ever on business leaders to deliver operation ROI. We've put put together this simple list of five ways you can make significant savings to your operating cost.

1. Expand your storage capacity without increasing your floor space

Sixty-six percent of facilities are looking to improve their warehouse capacity right now. If you're running out of space to keep up with demand, you probably assume you will have to move to a larger facility, or expand your current footprint. But leveraging the concept of warehouse density means you don’t have to do either of those things. Expanding your facility, moving to a larger building, or adding space is expensive and disruptive to operations.

Most traditional warehouses are laid out in a way that doesn't maximize space utilization. They contain mostly air, above and around the floor plan, making the storage density low. When you consider the open aisle space, empty area above products on shelving, and overhead spaces above shelving (due to human and equipment reach limitations) you find most of the "available" potential space is largely going unused.

Automated storage systems help with higher storage density, helping you to store significantly higher volumes of products in the same space. Cube storage offers an innovative, next-generation version type of technology called automated storage and retrieval system (AS/RS) pioneered by AutoStore™. By utilizing previously unused "dead air" space, cube storage is able to offer the highest density storage capacity of any warehouse automation technology on the market.

Many facilities implement a cube storage system in stages over time to minimize disruptions to operations. In the long term, many facilities see a reduction in their storage footprint by 75% or more. And in customer experience, this doesn't just mean the potential for better availability with more stock depth, but opening the opportunity for more SKUs as well.

2. Maximize labor utilization - bring the product to your team, not the other way around

In some warehouses and distribution centers, workers can walk up to 15 miles a day (24.14 km) searching and retrieving items. Even with efficient path planning and ride-ons, you are still paying your workers to travel between item picks, and you are missing out on far faster methods.

As a "goods-to-person" solution, cube storage and other technologies can facilitate an automated workflow that allows your team members to stay stationary at a workstation. Product items are fetched and delivered to the worker in the correct sequence for the current order, maintaining a much higher retrieval speed than human workers could manage.

At the touch of a button, the next bin of goods needed is instantly presented. This order fulfillment method can be over 430% faster than manual picking. Orders once taking several minutes to fulfill can now take several seconds. Labor utlization is boosted significantly as their time is spent almost entirely on order fulfillment or other quality checks, instead of wasting time on simply locating items.

With 73% of warehouses and DCs looking to improve throughput and 71% needing to improve picking efficiency, for many operations this may be the single most impactful cost-saving measure on day-to-day operations they could make right now

3. Use automation to expand your hiring pool, improve retention, and reduce processing incorrect order returns

One of these things may not seem like the other, but it boils down to simply providing your workforce with the right tools – appropriate automation with ergonomic interfacing that takes human behavior into account… simple, right?

Automated warehouse systems can have ergonomic access ports, interfaces, or conveyor systems making job duties easier and more accessible. This allows many people a wider array of job opportunities and expands the available hiring pool.

Creating an ergonomic workstation makes the process of picking and order fulfillment more natural for all people and makes the job more comfortable. Your workforce also won’t need to spend their day running around a facility exhausting themselves. This benefit may not be provided elsewhere helping to create an environment many workers will want to stay in.

Appropriate interfacing can also reduce the natural elements of human error. By presenting products to fulfill an order in the same way, each time, workers do not need to deal with the frustration of searching shelves if a product has been bumped out of place and risk an incorrect pick. Workers know with each bin presentation the correct item for the order is shown. For smaller items in divided bins, the system can indicate the desired item's location in the bin. This removes the risk of incorrect judgment in a fast environment.

Fifty-two percent of warehouses and DCs are looking to improve order accuracy and 55% are looking to reduce labor likely due to cost, inefficiencies, and insecurities around hiring and retention. Automated material handling technology allows companies to reduce their need for manual labor while expanding the hiring pool, creating a more ideal work environment, and significantly improving processes to better ensure accurate order fulfillment.

4. Rethink storage methods to shrink loss and accidental damage rates

Asking workers to be careful and lock doors probably isn't going to cut it. Storing inventory on racking allows a lot of room for expensive errors. Products are commonly damaged when they fall while being retrieved from shelving; goods are typically left unsecured allowing for easy, discreet theft; and inventory can be bumped out of location or scattered, making it difficult to keep count of or identify for an order.

Automated storage systems such as AS/RS solutions mean items are securely located in totes or bins, and stacked tightly inside a storage grid. Human workers don't have access to the grid and are unaware of the locations of specific items. Goods cannot be separated, bumped, or misplaced once they are put inside the bin. Goods can only then be accessed with a recorded robotic interaction to help keep highly accurate inventory counts. When the bin arrives at a workstation for order fulfillment, only the appropriate items for the order are removed while the rest of the goods remain safely secured in the bin.

5. Look at the history to avoid single points of failure and reduce operational risk

Typical wear and tear will eventually cause any piece of equipment to need upkeep. Unanticipated shutdowns can be costly if they bring your entire operation to a halt. Look for solutions that will keep your operations moving efficiently even if part of the system goes off-line for maintenance. To ensure system resilience when considering a new solution, ask questions about how the system continues to operate if some equipment is pulled off-line and how fast it typically takes to get back on-line.

Look at a customer’s history with the solution to determine how the durability of equipment, longevity of the material handling solution, and flexibility of the system lasts in real-world applications. Request to visit older customer sites to see the longevity of solutions and how it grew and adapted with the business over time. With many automation solutions to evaluate, these questions can help reduce risk when selecting a long-term solution for your facility.

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