November 29, 2022

8 Good Ways to Bring Down the Cost of Running a Warehouse

Company A is in the business of warehousing. At the moment, operating costs keep going up, which makes business owners feel dizzy. He wants his business to make money. He put together a group to cut the costs of running their warehouse.

To keep making money, it’s important to cut warehouse costs. No matter what you do.

You need a plan to improve warehouse efficiency so that you can cut costs.

You can’t afford to waste money right now.

Cutting costs doesn’t mean cutting back on how well things work.

Getting warehouse costs down is not easy, but it is possible.

That is the challenge, and it needs to be fixed right away.

You can’t be happy with what you’ve done so far. There is always a way to cut costs.

How to cut it down?

Before I answer, make sure you’ve also joined the scmguide telegram channel, where I’ll give you many more tips.

The main reason why warehouses exist

In short, a warehouse is a place where things can be stored.

But it still has to be worth something.

There are things about a warehouse that add value: real-time and accurate data, goods that are ready to ship anytime, anywhere, and goods that are safe and easy to get to.

How to make it happen? There are six rules to follow.

  • Goods stored safely
  • Goods that are easy to get to
  • Equipment
  • Space
  • Warehouse workers
  • Accurate information

You can use the six points above as a guide for where to save money.

8 ways to cut costs in a warehouse

Maximize storage area utilization

The most expensive part of a warehouse is its storage space.

The cost goes down as the size of the area goes down.

How to cut down on space?

Change how you put things away. Not on the floor, but on shelves.

how to reduce warehouse operational costs

Also think about how the operations hallway is made. Should make things easier to do instead of harder.

A good aisle makes it easy to find and get to goods, so they can be shipped faster.

For a good layout, group things by size and how quickly or slowly they move.

As much as possible, the aisle is kept as narrow as possible. It can be done by putting up shelves that make the most of the warehouse’s height as well as its area, so you can store more in the same space.

Just make sure to keep the safety factor.

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Look after the things you own

Warehouse losses happen when goods are lost, stolen, misplaced, go out of date, or get broken.

You can reduce damage to goods by giving training on how to handle them.

Using the right control system, you can cut down on the number of wrong placements. Think about using RF, RFID, or VDP to make things easier.

Set up guards at the entrance and exit to the warehouse.

People from inside or outside the organization can steal. Careful. Even more so if your things are easy to sell.

If you need to, use a gate pass.


Costs will be reduced if products are sent directly from suppliers to customers.

Costs can be reduced by using cross-docking.

When goods come in, they are unloaded and then handed to the shipping department right away. Just make sure it’s done on the timetable that you and the buyer agreed on.

Cross-docking saves time and money when goods are being stored or shipped. Also labor-saving.

Buy used containers

If you buy used shipping containers and warehouse storage containers, you can save money.

how to reduce warehouse operational costs

You can use drums, IBC bags, Gaylord boxes, wire baskets, food trays, pallet containers, and more.

Don’t worry about buying. The seller will promise that their products have been checked and cleaned, especially if they are food grade containers.

Cut down on energy costs

Getting energy costs down can do a lot for a business.

There are many ways to do this, such as making sure the building is well insulated, using natural light, or automating the lights.

It may cost money to fix up, but the money you save will pay for it.

Put windows in the right places to let in light from outside.

You should also save water.

Don’t waste water because you forgot to turn the faucet off. Put in an automatic faucet to stop that from happening.

Reduce labor costs

The biggest cost in a warehouse is the cost of labor.

When you need to, hire people. Not less, not more. Make sure they work well and effectively.

Don’t leave employees idle. That doesn’t make any sense.

Don’t forget to keep your employees. It costs less to pay people with experience than to hire and train new people.

Offer training on a regular basis, especially if there are new ways to improve productivity.

Also, think about automating your warehouse if you really need to.

There will be a pretty high cost to buy the machine, and it will run effectively and efficiently.

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Use the technology to your advantage

Technology can be used in many different ways.

Install a Warehouse Management System (WMS) in your warehouse. The right time is now.

Information from WMS will save you a lot of time and make your work in the warehouse easier.

If you need to, you can also use “voice picking.”

Put-to-light and pick-to-light systems are also widely used today as an alternative for you.

You can put in several RFID portals in your warehouse area to make it easier to find things.

Use equipment for moving things well

It costs money to run material handling equipment.

You need to find a way to lower the cost of running the equipment without making it less useful.

What to do?

Set up the equipment so that it can be used for more than one kind of job.

If one piece of equipment can do two jobs, but you don’t use it for both, it’s a waste.

Plan regular maintenance to keep these things running at their best. You can do it yourself or hire someone else to do it for you.

Make sure that all of the equipment is working well by checking it often to avoid damage that comes as a surprise.

Check to see how often your equipment is used. If you only need something once, renting is better than buying.

It’s a waste of money to buy equipment that will just sit there.

Also, think about renting instead of buying if that will make you more money.


Look at how your warehouse works to see where you can save money on space.

If you can save more money in the end, it’s okay to spend a little more money at the start.

Write down every change you make. It could help you find even more chances. And be sure to do it all the time.

Each warehouse will be different in what it has. You can’t use all of the ideas above. Find the one that suits you best.

Continue to look at how well your warehouse works. Long-term, it will be good for you.

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Dicky Saputra

16+ years of experience in supply chain management. I help companies improve their end to end supply chain performance.

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