Strategies for Increasing Warehouse Profitability

Warehouses now more than ever have a unique opportunity to capitalize on growing consumer demand and industrial technology. But with that opportunity comes a primary challenge for warehouse operators — how can distributors get more products shipped faster to meet consumer expectations and remain profitable?

If you’re a warehouse owner or operator, you know that inefficient processes gradually erode the bottom line. To maintain and even grow warehouse profits, it’s essential to approach inventory management and operations from a mindset of continuous improvement. By arming yourself with strategies for improved warehouse performance, you’re sure to see your efforts reflected in the balance sheet.

Cherry’s Industrial Equipment is an expert in warehouse management and operations. That’s why we’re excited to share our top ways to increase warehouse profitability, many of which you can start implementing today.

Jump To Sections:

• 1. Improve Inventory Management
• 2. Leverage Warehouse Technology
• 3. Use the Right Equipment
• 4. Streamline Processes
• 5. Take Advantage of Automation
• 6. Perform Regular Sales Audits
• 7. Raise Safety Standards
• 8. Improve Workstation Ergonomics
• 9. Revise Your Staffing Strategy

1. Improve Inventory Management

The first place to look when wanting to improve warehouse profitability and performance is how you manage your inventory. Your products are valuable assets, and how well you manage them determines how profitable you’ll be. While there are countless ways to improve inventory management, the three main ideas are to improve accessibility, organization and space utilization.

• Accessibility: Make sure you’ve got your highest selling stock in the most accessible place where these items can be easily picked. Then, they should be brought to nearby workstations to be packed and shipped, all within the most central warehouse location. Centralizing your high-selling goods minimizes worker travel time throughout the warehouse, effectively increasing productivity and getting more out of your labor costs.
• Organization: How stock is organized is a crucial aspect of inventory management because it’s what ensures that the warehouse operates intuitively and fluidly. Every warehouse is different, but generally, the stock should be categorized and neatly stored and clearly labeled. By making it as easy as possible for workers to locate items, you’ll improve efficiency, reduce labor costs and preserve your warehouse profitability.
• Space utilization: Next, look at how you’re using your current space. Warehouse space is chronically underutilized, meaning many businesses pay for square footage they simply don’t use. By improving how you organize your products in your warehouse, you can free up space for other business opportunities or to bring in new products for fulfilling other consumer demands and reaching new markets. Chances are, you’ll be able to maximize your current space by adding additional racking and taking your stock vertical.

2. Leverage Warehouse Technology

Thankfully, technology exists to help you tackle the previous tip. Warehouse management systems are comprehensive software tools designed to help you track and locate stock. These tools also provide insight into your overall performance. A warehouse management system improves profitability in a few ways. The first is through loss prevention, as the software makes sure all items are accounted for. Through a system of barcodes and handheld scanners, inventory can be tracked and processed, ensuring there’s a record of all goods you receive, pick, pack and ship. This software ensures all product received at the warehouse is on the record and also allows you to look up any package at any time and see where it is in the supply chain process. This helps improve sales efforts by allowing you to give meaningful information to your customers about their order status.

The second way that technology helps improve your warehouse bottom line is by tracking key performance indicators. A warehouse management system is a data-rich program that can give you insight into day-to-day operations. Most importantly, it will tell you the sell-through rates of specific products so that you can implement a replenishment plan. You’ll know how many items sold and how quickly, allowing you to determine when to place a re-order and for how much. Pulling data from your warehouse management system also informs your warehouse layout decisions. Products that increased or decreased in sales can now be rearranged throughout the facility to ensure better access to the top-performing goods.

3. Use the Right Equipment

An efficient warehouse operation needs the right equipment for the job. Warehouse machinery and equipment help make workers’ jobs easier and improve efficiency and existing processes. For example, packing, unpacking and moving pallets is hard work, and without mechanical help, it would require multiple workers to perform the task safely. Equipment like pallet tippers and upenders safely move, tilt and lift pallets efficiently and effortlessly.

Pallet dispensers and changers also help automate the pallet retrieval process, making it much more streamlined and effective. It also contributes to better warehouse organization and space management. When workers can quickly and efficiently retrieve and stack pallets, it reduces the risk of product damage and worker injury, protecting your warehouse bottom line.

With the right equipment, you can partially or fully automate many of your existing warehouse tasks, ensuring that your workers can get more done in less time. Stretch wrapping machines remove the need to hand-wrap pallets, and they also make the load much more secure, further reducing the potential of product loss. Automatic pallet washers also help speed up the pallet cleaning process, and they do a much more effective job than hand washing. Both of these benefits maximize worker productivity and improve efficiency in the warehouse so you can focus on fulfilling more orders faster.

When you invest in industrial equipment, you can be sure that you’ll earn greater warehouse ROI thanks to the time you save with these solutions. The right warehouse equipment streamlines your processes, reduces manual labor, maximizes productivity and contributes to an overall more efficient operation.

4. Streamline Processes

A warehouse is a complex system with many components that must work together to ultimately lead to customer satisfaction. It’s essential to look at each process in the warehouse and determine whether it’s running smoothly. In many cases, warehouse managers know that their processes could be more streamlined, but they’re unsure of where in the chain the bottlenecks originate.

It’s vital to create an environment that encourages feedback from workers. Employees are a valuable asset and can help managers clearly identify areas where processes could be more efficient, and therefore, more profitable. If you’re wondering how to streamline your processes and make the entire warehouse run more smoothly, here are some ideas for improving efficiency:

• Plan ahead for shipments: One of the biggest bottlenecks warehouses face is getting swamped with shipments, which creates a backlog for the receiving team. Managers should always know well in advance what shipments are expected and when so that the team can plan accordingly.
• Receive inventory promptly: When you’re receiving high volumes of product at your warehouse, you need a quick and efficient receiving process. Delays in receiving and putting away product create congestion and prevent you from being able to fulfill orders quickly. When you miss orders or cannot fulfill them on time, you risk losing customers to your competition.
• Maximize picking routes: When workers go to retrieve and pick items, it makes sense to have them pick as much product as possible along their route. By planning picking in “waves,” you maximize each worker’s run so that they can fulfill more orders in a shorter amount of time.

Each process, whether it’s receiving, picking, packing or shipping, should have a well-defined standard process. Sticking to the process is what ensures a smooth operation. However, it’s also important to go back and revisit the standard process regularly to make adjustments and streamline it even further. When it comes to warehouse profitability, there’s never an end to the opportunities to improve performance.

5. Take Advantage of Automation

Warehouse processes have changed dramatically in just a few short years due to automation technology. Warehouses around the world are taking steps to upgrade their processes and find solutions to make them more automatic. Automation varies in complexity, from automating a few manual tasks to implementing a full-scale automation practice. On the less complex end of the automation spectrum, you commonly see warehouses operating on a barcode-and-scanner system that’s linked to warehouse management software. However, even though barcodes and scanners remove the obstacle of maintaining physical inventory records, this system still requires workers to travel to the item location within the warehouse, which is known as the “man-to-goods” approach.

On the other end of the automation spectrum, warehouses can implement technology that allows for the “goods-to-man” approach, which is where the items are picked automatically and brought to the worker to be packed, labeled and shipped. In this approach, the warehouse uses a combination of material-handling vehicles and machines, conveyors, modular shelving and, in some cases, robots. For example, Amazon warehouses use robots, which retrieve modular pods or bins based on their barcode, The robots then ferry the pods over to the worker, eliminating the person’s need to walk through the warehouse to retrieve the goods themselves.

However, switching over to an automated warehouse is a major investment and has a long pay-back period. According to Eureka Magazine, fully automating warehouse processes is an investment that can take four to five years before seeing significant warehouse ROI. That’s why gradually automating your operations is often a smart, sustainable way to achieve improved warehouse performance. If your ultimate vision is to increase the level of automation in your warehouse, it’s crucial to have a long-term plan that introduces automated technology over time to allow for flexibility and changes along the way.

6. Perform Regular Sales Audits

To maintain a warehouse’s profitability, it’s critical that the warehouse managers work with the sales and marketing departments to understand their customers and the market in general. It’s expensive to keep inventory stocked in a warehouse if it isn’t moving. Not only is it taking up valuable warehouse space, but the longer it sits without selling, the more at risk it is of becoming obsolete, and therefore, non-salable. By working inter-departmentally, managers can help inform each other of the sell-through rates of specific products and make tough decisions about slow-moving or dead inventory.

An efficient and profitable warehouse knows when to cut its losses and get rid of underperforming products. By conducting a thorough sales audit, you’ll determine which products are worth replenishing and which ones aren’t. Warehouse managers can use this information to design more efficient warehouses and place higher-selling stock in more accessible locations while freeing up space for other categories of inventory.

In addition to helping plan warehouse stock placement, sales projections can also help warehouse managers plan for seasonal products. The holidays, especially, present a huge opportunity for warehouse profitability. By staying abreast of seasonal sales forecasts, a warehouse manager can ensure the warehouse is prepared to receive fast-selling seasonal goods efficiently to make this lucrative retail season even more profitable.

7. Raise Safety Standards

A commitment to safety is one of the most fundamental principles of maintaining a profitable warehouse. According to the Occupational Safety and Health Administration (OSHA), workplace incidents cost U.S. employers $1 billion per week in workers’ compensation costs alone. In addition, employers incur other direct costs like medical and legal expenses. Indirectly, employers rack up other expenses like the cost of hiring and training replacement staff, incident investigation, damage repair, updates to standard operating procedures and loss of productivity due to downtime and lowered employee morale.

Not prioritizing safety is a costly venture. Raising a warehouse’s safety standards is one of the surest ways to protect the business’s bottom line. While it’s the law to follow OSHA’s safety requirements, in many cases, simply being compliant isn’t enough to prevent incidents. Whether you’ve had workplace accidents in the past or you’re just looking to tighten up your existing safety measures, there’s always room for improvement.

OSHA provides employer resources for how to improve safety in every sector, including warehouses. Employers can also partner with third-party consultancies who can perform safety audits and make recommendations for improvement. They may also help you to roll out and implement new safety measures, including the development of the training plans and standard operating procedures.

It’s also important not to overlook the role that leadership and morale play in safety and productivity. The more workers take pride in their jobs, the more committed they’ll be to creating a safe and productive work environment. A sense of teamwork and dedication among your employees can help your operation become more profitable.

8. Improve Workstation Ergonomics

Not only do workers need a safe environment in which to carry out their jobs, but they also need a comfortable one that’s conducive to enhanced productivity. The nature of warehouse work is that it’s repetitious and, at times, laborious. The repetitive tasks can take their toll on workers, especially the continuous lifting, carrying and moving of goods. These movements put workers at risk of musculoskeletal disorders and the inevitable downtime that may come with recovery. If workers continuously experience chronic MSDs, your warehouse productivity will suffer, and it will affect the bottom line.

That’s why all warehouse managers who want to ensure profitability must implement the philosophy of ergonomics — fitting the work to the person. In a warehouse, you can improve workplace ergonomics by setting up more comfortable and functional workstations. One of the ways to do that is with lift tables, which prevent straining and repeatedly bending down and lifting.

Different lift tables support different activities like lifting a pallet from the ground-level so workers can easily load or unload it with a pallet jack. Other types of lift tables can be adjusted to the worker’s desired height to prevent them from having to strain, reach or bend while performing tasks like packing. This allows them to maintain a neutral posture, which is critical to alleviating pressure on the spine and joints.

Other ergonomic equipment like assists, hoists and carts help workers easily reach items high up or access items at ground-level without having to bend down. If you want to improve your workplace ergonomics, reduce labor downtime and increase worker productivity, it’s worth reviewing options for workplace ergonomics and implementing solutions at workstations throughout your warehouse.

9. Revise Your Staffing Strategy

Since productivity is the major contributing factor to a warehouse’s ability to remain profitable, it’s important to assess your staffing strategy regularly. Hiring the right people for the right positions is critical, including the people who will lead teams and be able to contribute meaningful feedback about operations.

After hiring the right people, the next important step is to schedule workloads appropriately. There’s a fine balance between overloading your workers and not giving them enough work. Managers should continuously review what the right workload is for the average worker and work to maximize shifts. Using this benchmark, managers can then hire an appropriate number of workers. This way, your warehouse will benefit from higher daily production rates and prevent the risk of running into costly overtime.

Finally, managers should also review their approach to scheduling. In some cases, it might make sense to have a flexible workforce, whereby you can increase your staffing levels during certain peak times that demand more labor. The holiday season is a particularly active time, and staffing should be addressed well before the influx of inventory occurs. Managers should work with their HR departments to develop a flexible staffing strategy that allows your operation to always be appropriately staffed.

Increase Warehouse Profitability With Cherry’s Industrial Equipment

When you manage a warehouse, there are always opportunities to improve and ways to make your operation more profitable. But no lucrative operation ever achieved success on their own. Bringing in the right experts and forming long-term partnerships is crucial to maintaining and increasing profitability in the warehouse.

Cherry’s Industrial Equipment has been partnering with warehouse managers and operators for over 30 years. We provide our customers with warehouse machinery and equipment that seamlessly integrates into your warehouse’s existing processes to improve efficiency and enhance bottom-line profitability. Our warehouse solutions make all aspects of your operation more efficient.

Our pallet management machines, like inverters, changers, dispensers, tippers and upenders, make it easier to move, load, unload and change out pallets. They reduce the risk of workplace injuries, minimize labor downtime and increase productivity rates. Since safety and ergonomics are such important factors in maintaining a profitable workplace, you might also consider other ergonomic solutions from Cherry’s Industrial. Lift tables improve worker comfort and prevent straining, stretching and reaching, which can cause injuries and accidents. You can protect your product and your employees with high-level, floor-level and level loader lift tables.

For further automation and ease, Cherry’s can also supply you with stretch wrapping machines and pallet washing equipment to remove the effort of time-consuming hand-wrapping and washing. You can also outfit your warehouse with Cherry’s plastic pallets and pallet spacers and retrievers to make handling heavy loads safer and more efficient.

For more details regarding the right equipment solutions for improving your warehouse profitability, contact a Cherry’s Industrial Equipment representative today. Call us at 1-800-350-0011 or contact us online.