Ways to Improve Warehouse Finances
Warehouse owners or managers have to manage, facilitate, and govern several obstacles on a given day. From business efficiency solutions to employee morale, there is seemingly no end to the number of issues they juggle and pursuit to keep the most successful facility possible. Finances are one part of that equation, and it affects the entire operation. If you want to help your company thrive, here are a few ways to improve warehouse finances.
Create a Plan
Before jumping into cutting costs and improving efficiency in your operation, it’s essential to evaluate where your facility is in terms of financial stability and then to create a plan. Take time to examine your current profit margins, worker efficiency, and your inventory. Invite financial advisers in on this, especially ones who can offer an outside eye on these things. Looking at the big picture before you go in to amend small details will help you consider how the different parts of the operation affect each other to make well-informed decisions. From there, you may begin to address the specifics we discuss below.
An Effective Warehouse
To improve your warehouse’s finances, you must start with the warehouse itself. Improving your warehouse will allow both employees and machinery to operate efficiently and ensure that inventory will be well taken care of to reduce cost and maximize profit.
Regularly Review Inventory
Most warehouses are aware of some amount of “dead” inventory on their shelves. Some estimate that as much as 20-30 percent of the stock in many warehouses is obsolete. Dead inventory quietly eats away at your finances by taking up warehouse space and running up handling and insurance costs. Avoid the expenses by regularly reviewing inventory, placing older stock in a visible location to be counted, and finding profitable ways of getting rid of it. Consider remarketing old items, creating sales events, or, if you have several low-cost items, offering them as free incentives to customers.
Creating Effective Organization Systems
Having an effective organization system goes beyond making sure that a warehouse looks nice and tidy. Having an effective organization system is the difference between inventory being lost and being sold. It also allows employees to spend less time searching for the stock, which lessens “down-time” and reduces the likelihood of “dead” inventory on your shelves.
Clean, organize and sort your products consistently. Keeping your warehouse tidy not only keeps your work in good standing but also decreases the chances of accidents for both your workers and property. Facilities where inventory is haphazardly stored, are more prone to accidents both for workers and machines. That means potential harm to employees, machinery, and products, all of which eat away at your company’s finances.
Labor is one of the most necessary and costly parts of a warehouse operation. No warehouse can run without a competent workforce, but labor is also the most significant portion of a warehouse’s budget. So taking time to invest in labor is crucial to cutting costs and increasing potential.
Standards-Based Employee Training
On any team, everyone must be on the same page, and this is true of employees in a warehouse. When you are training employees, every employee needs to be versed in performing tasks in the same way. This isn’t to say that your facility shouldn’t value the individual or be open to doing things differently. Setting employee expectations standards will improve efficiency and won’t waste time debating how to do a task.
Beyond standards in efficiency, employee training should also emphasize OSHA standards. Not having solid safety training can be too costly to your warehouse. Employee injuries cost employers billions of dollars every year in compensations. Beyond that, OSHA can fine you for not following recommended safety guidelines up to $10,000 and can jail those responsible for up to six months.
High employee turnover rates can also be very costly to employers between advertising the position and the lowered efficiency of lost labor. Finding ways to improve employee retention will reduce this cost and boost employee morale in the process. Having a safe, well-run warehouse and emphasizing open communication between staff and managers will go a long way toward that.
Efficient Machinery Practices
Forklifts and other machinery are a substantial financial investment for warehouses. When treated well, these machines can boost your efficiency to the highest possible rates. Treated poorly, they can be a constant drain on your company’s finances.
Proper Machinery Maintenance
Machinery that is not well maintained can have a detrimental effect on an entire operation. It leads to a rise in accidents and increases machine downtime, which takes away from your warehouse’s efficiency and hurts your employees’ morale. In other words, maintaining a consistent machinery maintenance schedule is one of the best investments you can make to cut machinery ownership costs.
Know When to Repair and When to Replace
Even well-maintained machines will require some repairs during their time in your warehouse. Having access to the most cost-effective forklift repair services available keeps the cost of these repairs as low as possible. At a certain point, though, your forklift will reach a stage where the amount of downtime and the cost of the repairs become too high to be profitable, after around 10,000 hours or seven years of use. Keep careful records of your forklifts, including how often machines are down and how much they cost in repairs, so you know when to replace the forklift.
Fleet Management Systems
Maintaining a consistent maintenance schedule for every forklift in your facility and keeping track of how often a machine breaks down and what these breakdowns cost a facility can be a challenging and time-consuming task. That’s why many facilities have begun using digital fleet management systems. These systems, like Toyota’s T-Matics, log forklift usage, location, and any information about when a forklift needs maintenance or repairs. It even gives insight into forklift accidents. These will help you make strategic, cost-conscious decisions when it comes to forklift usage.