Storage costs are an unavoidable (and usually costly) component of warehouses and logistics companies.
While there are many overhead expenses that contribute to overall storage costs, stock related processes and the layout of stock can also affect this cost – in both additional dollars spent and your business’s level of efficiency.
Strategically placing stock and maintaining correct stock processes can make a big difference when looking for ways to streamline your storage costs.
Choose the right location
Warehouses and other types of storage facilities are usually characterised by high levels of movement by foot or machine. Receiving, picking and replenishing stock are just a few of the tasks that require “travel time”. This could be travelling a short metre to pick items or travelling the entire length of a warehouse.
While movement is an expected part of these environments, reducing “travelling time” is key to improving efficiency, potentially minimising the risk of injury and the associated costs as there are fewer moving parts, and streamlining of resources. For example, fewer staff may be required to put away stock, as stock is picked faster when items are strategically stored or grouped where possible.
When choosing your storage locations, consider the below:
- Keep heavy loads and pallets on the bottom of your racking — This is important for safety, maintaining a balanced rack and improving overall picking time. Each level of racking adds additional seconds.
- Keep all frequently used items close to your dispatch area to minimise “travelling time” — This includes your customers’ regularly purchased items and the packaging supplies required to pack and ship them, such as pallet wrap, cardboard boxes and packaging tape.
- Keep replenishment stock directly above picking stock.
- Invest in equipment to keep your staff safe when stock may need to be stored above shoulder height — Staff should always be working between their shoulders and knees. If they are reaching for higher placed items, the chance of injury from items falling or individuals losing their balance increases. Order pickers are an essential piece of safety equipment to minimise those risks.
Maintain efficient stock processes
While carrying costs are a critical factor to look at when assessing overall storage costs, there are other processes that can create additional expenses.
Not implementing a one stock holding policy
While not suitable for every business, using a one stock holding policy is a simple way to reduce storage costs. Two storage facilities means double the rent, double the electricity consumption and more resources to run each facility.
One stock holding ensures that all stock is kept in one location and one individual does the reordering. This could also stop unnecessary purchasing of multiple types of the same packaging supply, such as packaging tape — especially where there is a significant price difference.
Having too much…or too little
While not having enough stock can create additional expenses, such as express deliveries or finding alternate suppliers, overstocking can create other challenges.
One way to avoid overstocking is to know your lead times and general customer purchasing patterns to determine the right amount of safety stock. Having the right amount of safety stock to cover additional orders that may come in while you are waiting for new stock to arrive is key and can change from month to month.
Buying in large quantities to receive a discount is another way that warehouses can become overstocked. Signet’s new RedLine Savers help businesses to overcome this issue by giving them the flexibility to order in quantities which suit their own needs at one low price, across a wide range of products.
While there are a number of ways to reduce your storage costs, reassessing your stock layout and maintaining efficient processes, such as purchasing the right amount of stock for your needs through Signet’s new RedLine Savers initiative, are simple starting points to begin saving today.