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How to reduce warehouse costs?

Soren Moller | 18. Mar 2020
4 minutes read

When was the last time you looked at some of the fundamental activities in your warehouse operations and asked: Is there a better way?

Warehouse operations are a huge cost to any supply chain. The performance of your warehouse can make or break the deliveries. Efficient warehouse operations can increase your delivery performance substantially and lower your costs while at the same time increasing customer satisfaction. So, how to excel in warehouse performance?

Warehouse status has changed

The rapid change in demands from B2C and B2B customers, the focus on lower carbon emissions, and now lately, the Coronavirus, have made it clear that global supply chains are fragile. Many supply chains do not have a plan for how to handle these situations. The days where warehouses (or DC’s) were only seen as fixed storage places for finished products waiting to be sold and shipped, are over. 

Future warehouses will rather be seen as short stopovers and a central part of networks for an ever-increasing speed in a global delivery chain.

 

How to reduce costs and be the customer's hero?

The key points are speed, innovation and having a digital overview from A-Z. In addition, you need a close integration with your customer. 3PLs must strive to become an indispensable partner that their customers need. With a few changes and implementations, you will be able to suggest how both of you can save money.

What does it take?

In todays competitive environment, 3PLs needs to be in the forefront, offering their customers advice on what technologies to use, what processes to implement and workflows for cost optimasation.

Transport units needs to be labelled at the origin (customers facility/factory) with an easy to read universal label (GS1) that includes the necessary information (incl. dimensions and weight/destination etc.). Then, your inbound transport, WMS processes and outbound transport (TMS) will know every detail necessary to perform a second to none speed through your facility. Cross docking will become cheap and easy task.

How about the pick and pack process?

Reducing costs related to the pick and pack process is not easy. This process is traditionally done per customer order, which involves a picking route through many rows in the warehouse. Then, the goods are brought forward to the loading area and wrapped in plastic. The pallets that are ready to be shipped have to wait for the right trucks to arrive.

This is a costly and time-consuming process. But can that be changed?

 

reconstruction-mixmove

Efficient cross-docking

 

Pick by product and not by customer order

In order for the process to become more efficient, we need to pick by product, not customer order. This can be done through utilising big data from the customer's transport units and having the right sales statistics. These numbers show which products that are  best-sellers and therefore needs to be closer to the consumer. By combining data from multiple sources and innovating the supply chain to pick by product, you can save up to 50% in warehouse space in your loading area. This also means you can double the load going through your facilities- with the existing resources in labor. 

3PL customers are looking for warehouses that go above and beyond to help them achieve the success they are seeking. If you want to sustain your position in the future, you need to be a vital partner to your customers’ success. You will then be able to secure your position, no matter the what the circumstances are.

Be a trusted innovative partner for your customers.

 

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