How To Reduce Warehouse Operating Costs

How To Reduce Warehouse Operating Costs

After studying thousands of warehouse operations in its Max the Cube approach and analysing the impact of racking solutions, Thistle Systems has uncovered one of the biggest warehouse operating costs – and it’s not the racking.

And it doesn’t matter whether you are spending a few hundred pounds or hundreds of thousands of pounds on your racking, the biggest cost is always the same – TIME.

The time associated with handling products as they are loaded onto the racking and then retrieved is just one of 7 hidden costs in your warehouse, but one which can result in massive inefficiencies and therefore impact your profitability.

But before we look at how it impacts cost, let me ask you a few questions.

  • When was the last time you measured the average number of pallets per day which are loaded and retrieved from the racking?
  • Do you measure how long it takes to load and unload a wagon?
  • Are you being charged for standing time by haulage companies? If so, how much is it costing you?
  • How many forklift trucks and operators do you have dedicated to loading and unloading pallets?

The answer to these questions will help you begin to identify whether you have an opportunity to reduce costs such as labour costs as well as the leasing and fuel costs associated with forklift trucks.

Some racking solutions such as drive in racking, which can achieve a high number of pallet positions in a warehouse, can be extremely time consuming to load and unload and often only achieve 65% utilisation.

Mobile racking can have the similar challenges when it comes to loading and unloading, however the utilisation tends to be much higher than drive in racking and it is more suited to large numbers of SKUs.

On the flip side, standard pallet racking offers excellent accessibility and therefore picking speed but requires a large proportion of the floor space to be dedicated to aisles. This not only reduces capacity but can also increase travel times for forklifts.

Dynamic solutions such as radio shuttle racking and push back racking can achieve dramatic savings in picking times AND maximise capacity in the minimum floor space. By using the dynamic or semi-automated nature of these solution, you can dramatically reduce picking times whilst achieving high density storage.

However, before you drop everything and move your entire warehouse over to push back racking and radio shuttle racking, careful consideration must be given to the number of SKUs in the warehouse and the speed of goods moving through the warehouse.

Clearly a balance needs to be struck between capacity, accessibility and picking speed. That’s where our Max the Cube approach comes in.

It enables you to identify the true potential capacity of your warehouse as well as the key issues which may be preventing you from improving your operations.

If time isn’t an issue in your warehouse, the biggest opportunity could be in reducing the hidden cost associated with floor space dedicated to your storage.

To find out more about and to discover the other 5 Hidden Costs, download the whitepaper now.