Maximizing your warehouse profitability is an ongoing process. It’s one that requires proactiveness and creativity. Plugging money leaks and finding ways to better utilize your resources can add up to savings over time, which can support the longevity of your business.
The alternative, of course, is doing nothing to grow your profits. But this also means the risk of inefficiency slowly but surely eroding your bottom line. At some point, warehouses have no choice but to seek ways to improve processes and bolster their profits, even if revenue growth has stagnated.
Here are our top 4 ways to maximize warehouse profitability that you can start working on today:
1. Align the workload with labor resources.
Every successful warehouse depends on dedicated labor resources. You have a commitment to your team in terms of gainful employment. But you also have a commitment to your business to be as profitable as possible.
Payroll is often the biggest expense of any business, accounting for as much as 70% of operating costs. That’s why the best practice is to match your labor to the current workload. This is an evolving practice that needs careful attention.
The reason for this is because employees generally work to the size of the heap. They’ll stretch the time you’ve given them to complete tasks that would otherwise take a fraction of the time.
Understand how much your employees are feasibly able to accomplish on a consistent basis. Then, plan the workload accordingly. Ensuring that your warehouse is adequately staffed given the current demands can help you avoid overpaying in the labor department.
2. Improve accuracy with technology.
Your warehouse is a small slice of a much bigger pie: the supply chain. But despite the many other moving parts, the warehouse is often seen as the most critical player in fulfillment.
This is because warehouses shape consumer perceptions of a business. Once a consumer places an order, it’s up to the warehouse to pull, pack, and ship the order. They must do so in a timely and accurate manner. The warehouse’s actions reflect directly on the companies they represent.
As the pressure mounts for companies to ship goods to their customers quickly and at the lowest possible cost, accuracy becomes an even bigger concern in terms of warehouse profitability.
It’s not that accuracy directly grows profits, but rather a lack of accuracy that substantially increases operating costs.
It’s expensive to ship the wrong item or quantities to a customer. Not only are you likely spending more on shipping, but are also paying your labor resources to handle the same order twice. These mistakes come directly out of your bottom line.
To reduce profit loss due to errors in accuracy, technology can help to create fluid processes and minimize mistakes. For example, mobile computers and devices that offer scannable picking processes can ensure that the right item and quantity are picked and packed with every order.
3. Automate manual tasks for warehouse profitability.
Today’s warehouse processes fall into one of two buckets: manual or automated.
As a general rule, automation is used to address inefficiencies that drive up costs, both in the short term and over time. Advancements in technology have grown the potential size of the automated bucket. It includes everything from automatic picking to importing orders to allocating stock and more.
But what should you automate?
We recommend starting with the processes that create bottlenecks. Explore whether technology would help to streamline those processes. Every minute your team spends trying to overcome a challenge is a minute not working on revenue-generating activities.
Another place to look is your collection of repetitive tasks. Could a robot, tool, or machine perform these same tasks in a more efficient way? Could tools also be less prone to error?
You can calculate this by looking at the number of units a person could do in an hour vs the number of units that could be completed by automation. Compare the costs to see if it makes sense to your bottom line to automate these tasks.
Using all-inclusive tools like Zenventory can help to keep technology costs low while maximizing warehouse profitability with automation. What’s more, automation can help you achieve a better balance between labor resources and workload without cutting corners to your customers.
4. Choose scalable processes and technologies.
One more word on automation: flexibility should be a big part of the conversation.
Technology evolves over time, and this is usually a good thing. As better tools become available, they’re able to help their end users do more.
But on a slight downside, this constant evolution also means that warehouses may find themselves investing in brand new tools every year as a way to keep up in the industry or when business needs change. Doing so can negate any cost savings you expected from technology, which does little to maximize your warehouse profitability.
We suggest embracing the concept of flexible automation to mitigate any negative side effects. Scalable solutions like Zenventory are updated from our end and continue to integrate seamlessly with your warehouse operations no matter how much you grow over time.
As a result, our platform helps you increase productivity as you grow without saddling you with higher overhead and other costs.
Increasing Warehouse Profitability with Zenventory
At a time when supply chains are still fragile and warehouses are facing mounting pressures to perform their best, there’s never been more incentive to improve efficiency.
Increasing warehouse profitability can be as simple as reducing shipping errors and labor costs, or as complex as redesigning your processes to capitalize on the advantages of automation and new technology.
To find out how Zenventory can help you accomplish all of the above, reach out to our team for a consultation.