Skip to main content
Submitted by Retail Insights on 9 December 2020

Stop Losing Money Through Your Warehouse! How Retailers Can Maximize Profits By Improving Their Warehouse Operations

For retailers, shipping and receiving processes are critical components to warehouse management, and they can significantly impact your bottom line. The numbers are shocking:

  • 65% of the average warehouse operating budget consists of labor
  • 60% of the labor costs involve the order picking process 
  • Nearly 7 weeks are wasted each year on unnecessary warehouse activities

One of the challenges is changing consumer behavior—not just in 2020, but overall, customer buying patterns have been shifting to online and reducing the need for physical store space. However, the rumor that in-store retail was dying is not quite true; these locations, called dark stores, are still being used to fulfill online order demands or replenish other stores. Also, curbside pickup and delivery have become much more popular. 

 

Another big challenge around consumers is that they want more customized products. They want products unique to them, and some retailers are already doing this by either making products on demand or trying to predict the unique demand. 

Consumer Behavior Affects Warehouse Management

Consumers behavior has and always will have an impact on how retailers manage their warehouses. The key to managing these challenges is understanding the target consumer with unified data. For example, knowing if orders were received on time, if they were damaged, and if they were correct can lead to assessment of warehouse operations: Are you trying to operate with too few people? Are the properly trained? Do they have the tools and equipment they need?

Inconsistencies in the warehouse not only impact customer satisfaction; they impact other areas of your business and increase your operational costs—which impacts your cost per item. That’s why it’s important to ensure your warehouse is running properly.

If you think about a common warehouse process, the natural place to start is with receiving. Most retailers have dedicated an area for this activity, and it’s important to keep that area clean, organized, and well-maintained at all times. It’s also advisable to rotate any current stock a couple of days before receiving a shipment, which also helps keep better track of inventory on hand. It also provides the opportunity to ensure you have enough storage for the shipment. 

Depending on your business and the time of year, you might need to bring on more staff for this activity; however, if your staff is efficient during downtimes, this might not be necessary. The same holds true for shipping, and you can even choose to task staff with both receiving and customer services—or any tasks that are logical to pair because they can be done together in the same area and nearly at the same time.

Moving on to put-away, the best approach for most companies is to take advantage of labels and barcodes to simplify and unify your processes. There are many questions around how to mark items to ensure proper tracking, but don’t forget the importance of determining where items are placed. For example, one-way aisles can increase picking capabilities while reducing staff interaction. For shelving, it typically depends on the item—expiration dates requiring rotation or seasonal items, for example. One piece of advice: Don’t forget to keep categorization in line with your current item group structure.

Don’t Miss Opportunities to Optimize Your Warehouse

There are many ways retailers can impact the bottom line with improvements to warehousing processes. To learn more, watch this ArcherPoint Tribe Talk video, How Retailers Can Maximize Profits Through Better Warehouse Operations. Then talk to the retail experts at ArcherPoint about how we can help with technology to support your process goals.