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Top Tips To Improve Warehouse Profitability

Workers in a warehouse packaging boxes

August 14, 2023

Work inefficiencies can cost warehouse and distribution centres to lose literally thousands of hours every year. Strategy and planning are key to maintaining maximum efficiency in your warehouse, leading to bottom-line gains for your business. Through a combination of cutting-edge technology and general best practices, you can make your operation a well-oiled machine that drives results all day, every day.

Things You Can Do to Improve Warehouse Profitability

The profitability of your warehouse is all about efficient use of the space available and the time of your operatives. With that in mind, here are some top tips to help you along the way.

Rid Yourself of Excessive Inventory

When you have excessive inventory in your warehouse, it can be a profitability drain. This is a common problem for wholesalers as they seek bulk quantity discounts and end up with large purchases of individual products. But having an excess of inventory is a common warehousing mistake, tying up money in stock that you may struggle to sell.

Instead, get deliveries in smaller batches and take the opportunity to optimise the utilisation of space in your warehouse.

Update Standardised Processes

The supply chain industry has come on in leaps and bounds in recent years. If you haven’t reviewed your standardised processes lately, now is the time to do it. Test and modify your standardised processes as, chances are, they are not as efficient as they were a few years ago.

Standard processes are key to a safe and secure warehouse. They also provide a baseline to measure improvements against, as well as simplifying onboarding and training in a high-turnover environment.

Find the Right Solution for WMS Connectivity

Manually tracking inbound products, outbound orders and invoicing is inefficient and error-prone. Warehouse management systems can automate these processes by equipping operatives with hardware to keep real-time records of stock movements and everything relating to it. This enables a live visual of the state of your warehouse, opening the door to efficiency improvements across the board.

ERP solutions like NetSuite have Warehouse Management Solution (WMS) modules built in. By integrating those solutions with other supply chain and business applications, you have a unified solution that enables decision-makers to view the entire operation as a singular entity. This can help drive real change to improve productivity and profitability throughout the organisation.

Implement Automation Wherever Possible

Profitability can be greatly improved when staff are able to focus on their core responsibilities. But when they are bogged down with tedious, repetitive manual tasks throughout the workflow, it takes up time and energy and creates the potential for errors.

Your investment in human resources is significant, so you need to get the best you can out of your employees. Use automation for those manual tasks by identifying opportunities to do so and using reliable software solutions to get it done. This will free up your staff to be more motivated and productive in their activities.

Make Sure Your Automation Solutions are Flexible

Change is just about the only guarantee in supply chains, so you need your automation processes to be adaptable. Avoid locking into processes that cannot be updated. Rapid growth may mean your operations outgrow the system you had implemented. Look for scalable solutions like cloud-based ERP subscriptions that enable you to add users, access more applications and implement customisations as needed.

Train Your Warehouse Workers in the Technology They Will be Using

Having powerful tools in the hands of your warehouse operatives is useless if they do not understand how to use them. Barcode readers and other handheld devices require training to be used properly, and different people will have different comfort levels with these types of devices.

Many hardware and software vendors offer training for your personnel to help with implementation. This will help inspire confidence and willingness to use these solutions effectively, enabling the wider systems to work as intended and facilitate the seamless flow of valuable data. Consider different types of training for different needs so that everyone is accommodated.

Always Plan and Forecast

Supply and Demand Planning is one of the foundations of a more efficient warehouse. Your strategies should take into account market forecasts and contingency plans so that you are prepared for whatever the future may bring. Make estimates of the number, size and type of orders your warehouse must receive for a predetermined time period so that you can plan the utilisation of space in your warehouse.

Also consider the labour and equipment resources needed to meet demand. Order volume should be the basis of this planning. You could even develop a mathematical equation to tell you how much equipment you need for maximum productivity from your employees.

Think About the Cost and Optimise for Maximum Profitability

Your warehouse operations are likely to incur costs in three main categories:

  • Labour: Consider costs relating to warehouse operatives as well as staff in customer service, accounting and sales.
  • Facilities/Equipment: This revolves around the physical aspects of your warehouse, including insurance, taxes, energy costs and more.
  • Automation: Your ERP solution with WMS software will cost money, so make sure you optimise your subscription or licence appropriately.

Managing these costs effectively could bring about the greatest gains in warehouse profitability. As such, you should regularly evaluate your costs and look for areas for improvement.

Optimise the Use of Warehouse Space

Slow-moving inventory is a burden to your revenue. It takes up valuable space that could otherwise be used for more profitable items. Moreover, when you have items that are selling fast, they should be positioned close to packing stations to facilitate faster picking and packing from your operatives.

The warehouse floor should be laid out in a way that facilitates a seamless flow of efficient movement. Implement maximum storage whilst maintaining a safe amount of space for movement. And place items the appropriate distance from packing stations for an efficient flow of order fulfilment. Your WMS and ERP systems can collect the data you need to use space effectively, and you should be constantly reviewing to optimise as times change.

Final Thoughts

The biggest takeaways from this are that you need to be using the optimal technology solutions for your operation and frequently reviewing everything. Planning is key, and you need actionable data to strategize effectively. ERP solutions are the best way to do this, because they include WMS technology and integrate that with other key business data for a holistic perspective of the business.

Supply chains are fluid and change is happening faster than ever. Don’t allow yourself to fall behind and lose your competitive edge. Stay on top by paying attention and using the most agile and comprehensive technology solutions to stay neck-and-neck with your competition. 

Why choose Eventura as your ERP implementation partner?

Eventura has been providing robust business solutions to countless organisations for over two decades. We are ERP experts and can identify all of your business needs, and deliver a comprehensive ERP solution that works for you.

As Sage 200 Partners and NetSuite Solution Providers, we can help you identify which solution will fit your business needs the best. Our expert team of business analysts, developers, consultants, technicians and support staff can guide you through your entire project, from initial scoping through to implementation and on-going support.

We’re also managed IT service providers meaning we can help you identify your entire IT infrastructure requirements from day one. If you would like to speak to one of our ERP experts to discuss your options or request a free demo, you can request a free call back here.

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