Jul 09, 2021 6 Min READ

Top 8 Warehouse Costs In 2022 (& Ways To Reduce Them)

6 Min READ
Top 8 Warehouse Costs In 2022 (& Ways To Reduce Them)


Are you wasting money on expensive warehouse costs?

By having more efficiency and organization in your warehouse, you can have more customer retention. When the efficiency and organization of your warehouse are poor, it will be reflected in the actions of the customers. Customers will want to shop or work with a warehouse that is going to get them the right product fast.

Not having efficient systems can lead to customers waiting for longer than normal periods, having items that are out-of-stock, and many other issues. With all the wasted motion within warehouses, you lose weeks of labor that could have benefitted you but instead are now hurting your business.

Here’s what you could do differently to minimize your warehouse costs.

1. Optimize Warehouse Storage

With the number of consumers shopping online, there is a high demand and increased need for suppliers to expand on inventory. There has been an increase in consumers looking for more personalization to the products they are purchasing.

When you have an increase in a variety of products, it means that there are more stock-keeping units added to your warehouse. This can cause issues because it is not always easy (or cheap) to expand and really depends on the location you choose.

Eliminate Unnecessary Steps

Every time an employee touches an item, it decreases your bottom line. A good warehouse management system will help you cut down on unneeded touches. Look at your processes with a critical eye to spot where you may be duplicating or retracing steps.

warehouse worker holding a clipboard and scanning an item

Use the Right Sized Storage Configuration

Inefficient use of space can increase costs and waste money on additional warehouse space that you don’t need. Your WMS can help you efficiently store your inventory that will reduce the time spent, and increase the accuracy of your picking process.

Before you decide to go and purchase more space, you should optimize the space that you already have. Try looking around your space and check to see if you have space to build your storage upward, or check to see if you can decrease the amount of space between isles. This can be done by making one-way isles instead of two-way traffic isles. This can also help your warehouse be more efficient with other areas of your space by allowing equipment handlers to access both sides of the isles, minimizing collisions, and improving safety.

Reduce Inventory with Cross-Docking

Cross-docking bypasses the put-away process and sends the product almost directly to outgoing carriers. It eliminates steps and doesn’t take unnecessary floor space to store the product. This is one of the best ways to move inventory without having large stores throughout your warehouse.

When you optimize your warehouse, you will see a significant increase in storage space along with higher productivity. You can plan all this out with a pen and some paper and see your warehouse and warehouse costs in an improved way.

white truck bringing in inventory into warehouse with cross dock

2. Protect your inventory.

There is surprisingly an incredible amount of money that is lost every year in warehouses due to employees mishandling, breaking items, or items that have been misplaced, and people stealing. By implementing the proper packaging and storage procedures, you are able to reduce these types of damages from taking place.

Keep Your Warehouse Clean and Organized

Organization and cleanliness mean a lot to your overall productivity. Keep workplaces free of debris and dispose of outdated items or store them in an out-of-the-way location. That makes picking easier and more efficient and increases accuracy.

warehouse organized and stacked with inventory

Better Manage Your Workforce

Make sure every employee is trained well and can handle multiple tasks. Create a work environment with incentives and keep morale high at all times.

Extensiv Warehouse Manager google display ad 640x200

Theft can occur both internally and externally, so having a guard or two around to keep an eye on the outside and keep an eye on employees and visitors entering and exiting the warehouse should help.

By controlling the access points of your warehouse and keeping certain doors locked, you can have more control over who enters and maybe consider having a keycard access system.

You could also get security cameras and security systems if you do not have a warehouse that is running all hours of the day and night. Just find the practice that makes the most sense for your company and put them into place.

3. Improve Pick and Stow Routes in Your Warehouse

One of the most expensive warehouse costs is the amount of time that is spent by pickers locating products to be picked and shifting between orders and can take up a majority of your operating budget.

RF Tracking and/or Bar Coding

Barcodes help you track your inventory from door to door and ensure efficient fulfillment. Track orders and verify their accuracy. Real-time visibility will speed processes and eliminate the need for paperwork.

By implementing a warehouse management system, you are able to reduce a good amount of those warehouse costs. When you have the system implemented and running, you will be able to track your records, product data, and its location in the warehouse.

Have Enough Inventory Available to Ensure Pickers are Productive

Your pickers waste time and money walking around, looking for inventory or waiting for restocking. Keep in mind product velocity and cube size when assigning picking slots. Keep enough inventory in stock and keep tabs on fast moving products. Staying on top of your inventory will make all the difference when it comes to keeping your pickers busy.

warehouse picking: wave picking

4. Upgrade Mobile Technology In Your Warehouse

Technology is something that can help your business improve efficiency, and the speed of handling orders. When people think of warehouse mobile devices, barcode scanners are typically something that comes to mind. There is, however, a newer technology that lets employees use smartphones and tablets with the right software to pick orders and optimize their picking routes.

By implementing these systems, there is a significant reduction in picking error, which will bring you a significant saving in warehouse costs.

An inventory software system like Extensiv Warehouse Manager will help you to improve your business. You will have all the information you need at a glance that will help you to be more efficient and save you time, money, and energy.

With topShelf, you have the ability to access the software from anywhere, anytime if you have an internet connection. And, you can manage all warehouse locations from your mobile device or web browser at all times. It also brings you real-time updates and alerts of potential problems, like low inventory, before it occurs.

scanners and tablets with mobile inventory management systems

5. Create an Inventory Review Process

Today, we get products out to customers more efficiently than ever before, but this hasn’t reduced the time a product spends in the warehouse.

This is where reviewing your inventory data is helpful because all that dead inventory taking up space in your warehouse is costing you money. When you audit your inventory and find the items that are not moving, you should look at a few key metrics like average days to sell inventory, turnover rate, your return on investment, and gross profit of products.

When you hold on to inventory for too long, it costs you money and eats away at your profit margin. That is why it is important for you to find ways to improve your processes and eliminate these products from your inventory.

African female warehouse manager holding clipboard and using walkie-talkie while checking inventory.

6. Review Product Replenishment Practices

When warehouses develop and grow, it is common for the company to hire a full-time controller of inventory who is in charge of tracking the levels of product and maintaining the stock of products.

Make error reduction a priority

Keep supervisors on the floor and task them with optimizing the workflow. Your supervisors are your front line and can spot errors and correct them before they become a habit.

However, human error is something that is always going to be there and can affect these replenishment practices and can cause you to overstock inventory that doesn’t sell, or understock inventory and risk going out-of-stock and losing customers.

Manage returns

You can save big money with managing returns properly. Your WMS should enable you to receive, inspect and repackage returns before sending them back into your warehouse.

By having systems to manage and help automate these processes, you can receive updates and get live data on your product inventory. This helps you to be sure that you are not holding products for too long and what you need to order when you are running low on products, in turn reducing warehouse costs.

7. Use equipment wisely.

When it comes to equipment, there is no way of getting around the fact that they cost money, but there are different ways to cut some costs without having to lose your valuable machines.

If you are able to use a machine for more than one task, you should do it. It is much more cost-effective to use the same machine for multiple jobs than using more machines for the same amount of work.

Take care of your machines by handling any maintenance that needs to be done and ensure that everything is working correctly, and take preventative measures to reduce unexpected malfunctions.

Maybe even think about renting equipment that you need to use on an occasional basis instead of purchasing it and having it sit around after putting in a big chunk of money.

warehouse worker driver in uniform loading cardboxes by forklift stacker loader

8. Temperature Control

Another area that can raise warehouse costs is temperature control. Just by shifting the temperature in the warehouse one degree, you can save tons of money.

One way you can help save money with temperature control is by having the correct insulation with your doors, windows, walls, and ceilings. When you have a door that is open, it leaves an opening to the environment outside and will instantly create a change in temperature and either cool or heat your space. Minimize this effect by implementing high-speed doors that only stay open for a minimal amount of time. An air curtain can also help minimize energy loss through the doorway, if it needs to stay open.

Having the walls insulated is also important for keeping the temperature consistent. It will trap the air inside and block the external environment from affecting it.

temperature controlled warehouse

These recommendations are just a few options for improving efficiency around your warehouse costs and improving your warehouse management systems. Just by looking at your current systems and critiquing them, you can find ways where you can improve and save money. But remember that one look won’t show you everything so it is important to keep up with this.

Each change that you make will help to bring down your warehouse costs and save you more money.

Hopefully, you were able to take something away from this post, and if you are interested in Extensiv Warehouse Manager as an inventory management software, learn more about it here.

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