Improve Productivity and Cut Costs in the Modern Warehouse

This past fall, our very own Chase Sowden, supply chain architect and Six Sigma Black Belt, gave a presentation entitled, “Improve Efficiency And Minimize Costs In The Modern Warehouse” at our 7th Annual Executive Forum. Take a look at the key takeaways from his presentation so you can start being more efficient, accurate, and connected today!

Evaluating Warehouse Proficiency

First, compare the company’s productivity to market productivity. When productivity in a warehouse is good, the cost per order is four dollars, however, a highly efficient operation costs two dollars and twenty-five cents. The processing turn around times in an efficient warehouse are found packed and shipped the same day for more than half their orders.

Key to Efficiency

The difference in these two numbers is focus on stimulating employees, refining the process and finally adding technology, using all three to provide superior collaboration, business process, and decision-making results.

Measure Current Efficiency

First, it is important to understand critical productivity, baseline, error and return costs. Once costs are established, move to maintain and use these standards in all functional areas. Once this status quo of cost is maintained, identifying systemic bottlenecks such as aisle congestion and workflow problems will be easier.

Maintaining Stimulated Staff

Making sure employees and managers are all on the same page is crucial, when managers fail to create an environment of open and clear communication, productivity suffers and recourses are wasted. In order to invoke employee response and increase productivity, create both regular feedback by individual and department for performance, and use leverage incentive pay.

Tips for Refining Processes

Implementing lean warehouse operation practices, focus on reducing waste by reducing material handling time, truck loading time, and time spent checking and looking for inventory are a great way ensure faster output. This will also increase flexibility to adapt to changing market conditions and customer requests. The cross-docking technique where zero warehousing intervals are used therefore costing less money is also way to increase process efficiency.

To increase process efficiency, handling tasks efficiently and avoiding procrastination is crucial. Simple efforts, such as breaking down boxes and recycling them right away and stocking products correctly, will make a large difference in the long run.

Implementing an efficient returns process, and actively identifying whether too much or the wrong inventory is present, will make for a well-organized warehouse. For example, if dust is settling on a product, it may be obsolete. If there are significant discrepancies between book and physical inventory, the staff will have trouble locating that inventory therefore slowing the process down.
When running out of space, the most efficient use of the warehouse is to go up and not out. Pallet racking creates safer working conditions as well as efficiency. To create even more space, consider compressing shelf levels and narrowing isles.

Technology Can Help

The technology in warehouses is becoming so advanced that soon there will be more robots in a warehouse than workers! Trucks and cars will drive themselves and drones will deliver packages.

Advances in robotics are no longer distant—they are a reality and will soon be creating the most efficiency in warehouses yet. However, in the meantime, simple measures can be taken like establishing advanced shipping notifications (ASN). By using ASN, labor can be planned, and order fulfillment and transportation can be adjusted to ensure proper service times are met, and transport modes are optimized to keep costs down. Also, using a Warehouse Management Systems (WMS) to sequence orders and organize workflow keeps everything more efficient, accurate, and connected.


An operational audit is an ongoing initiative that can help continuously improve the company’s productivity. Once an audit is complete, process the results, correspond ideas, and recognize opportunities for change. Then, prioritize and schedule your anticipated changes in a manageable way. Finally, realize that making too many changes at once leads to confusion and may hinder any increase in productivity.

Want to learn more about increasing productivity in the warehouse? Join our free SupplyChainGeek Network and download the presentation or watch a live recording of our very own Chase Sowden, LSSBB, ASM, PMP, from the 7th Annual Executive Forum on this topic.

This blog post was based off of an article from Supply Chain Geek. View the original here.

join the supply chain geek network