How To Keep Your Distribution Center Costs in Check in 2014

Companies continue to eye supply chain cost savings through shoring up their warehousing and distribution center operations. But while this may seem like simple low hanging fruit, keeping costs in check while simultaneously improving service levels is something that keeps many a supply chain executive up at night.

A recent study conducted by Supply Chain Brain that surveyed 250 supply chain, warehouse and distribution center managers stated:

“Over an 8-hour shift, each worker loses an average of 15 minutes of productivity in an inefficient process. For a small to medium-sized warehouse with 50 workers, this quickly adds up to nearly 3,000 hours a year, and could be a significantly higher number in larger organizations.”

The key to keeping costs in check while ensuring the same level of service within your warehouse is recognizing opportunities for change — whether it be efficiencies in the systems and processes that drive the operation or simple tweaks to the warehouse layout itself. Here are a few helpful tips to help develop a culture that embraces and drives change:

Take Inventory

Taking inventory—literally and figuratively, allows you to take a step back and get a baseline of your distribution center operation. Taking the time to understand the various components that make your warehouse and distribution center run will further uncover potential cost savings. And we’re not just talking about taking inventory of the products in your warehouse; consider taking count of all of your equipment, employees and processes, too.

Segment

Now that you’ve taken inventory of your distribution center operations, segmenting your findings into key focus areas will allow you to strategically implement change. In 45 Ways to Cut Warehouse Costs, the author divides up areas by: labor, operations, equipment, technology and facilities management.

Identify

Identifying areas of improvement within your warehouse can be a challenging exercise, because it involves targeting a process that may have been working for years. But now that you’ve taken inventory and segmented your operation, the opportunities for efficiency and cost savings should be clear. Identifying opportunities for consolidation or integration may be among the most obvious ways to achieve efficiencies, but so can simple tweaks to every day operations. Furthermore, you should engage the entire team in this process. Who better to identify process improvement initiatives than the people on the floor doing the work?

Engaged employees can be the single most critical element of a well-performing supply chain.
Learn more in our Whitepaper: Company Culture Counts

Execute and Analyze

Once you’ve identified opportunities for change, it’s important to follow through with improvements. Clear action plans and process improvement decks, along with designated change agents drive the process. Analyzing results is critical—after all, if you don’t measure and analyze it, you can’t manage it.

By developing a disciplined approach to identifying and executing change- you’ll realize improvements in performance that result in supply chain cost savings.

At LEGACY Supply Chain Services, we specialize in providing dedicated logistics solutions that are flexible and customizable, designed to adapt quickly to the demands of your business and an ever-changing economic landscape. To learn more about improving warehouse performance, download our whitepaper, “Rapidly Improve the Performance of Your Warehouse.”