Three Ways to Reduce Warehouse Expenses

Apr 01, 2009 7:49 PM  By

If you’re looking to reduce expenses in your warehouse, and who isn’t, Curt Barry says the top three areas of opportunity are slotting, replenishing and labor management.

Barry, president of operations consultancy F. Curtis Barry & Co., pointed out in his session at the NCOF show in Las Vegas last week that the objective of slotting is pretty simple: to have enough product available and located for efficient picking. “You need to put the right product in the right place,” which means designating locations for hot-pick or fast-moving items.

Replenishment frequency is a measure of slotting effectiveness, Barry said. You should have a week’s worth of inventory in your forward-pick locations. If you don’t, “you’re constantly replenishing stock” and it’s not effective. You may need adjustable slots as your inventory needs fluctuate, he added.

Labor management (excluding shipping costs) is more than 50% of your costs, Barry said. And picking/packing is more than 50% of labor expenses.

How do you lower costs here? Barry noted that 75% of picking is the travel time, so you need to reduce that with effective slotting.

Make sure you have the proper size pick slot, control the replenishment process, and do everything you can to minimize walk time. That means locating hot-pick items at the ends of aisles so pickers can get in and out quickly “You don’t want to have your pickers expending a lot of energy,” Barry said.

While you want to save money by reducing the time spent picking orders, don’t forget about accuracy, Barry said. A problem order costs about an hour. So depending on your operation, “an error costs you $25 to$40—literally,” he noted.