10 Steps to Improve Warehouse Profitability

Improving warehouse profitability should be a goal for all 3PL warehouses. You should continuously look for ways to improve efficiency, optimize storage space, and reduce costs to make the most of your revenue stream. Here we look at 10 steps to improve warehouse profitability. 

1. Improve Inventory Visibility 

Warehouse fulfillment software is the easiest way to achieve inventory visibility. In hand with scanning technology, you can remain accountable for inventory counts, providing transparency to customers who can view inventory levels in real-time. You can also track movement, improve count accuracy, and reduce or even eliminate redundancies. From receiving to put aways and from pick and pack to shipping, you will always have control over the inventory in your warehouse fulfillment center. 

2. Remove Excess Inventory 

All warehouse distribution centers, whether they are third-party logistics warehouses, distributors, manufacturers or sellers, need to manage excessive inventory to optimize storage space. Excess inventory wastes space and limits profitability. To reduce excess inventory, you can try to arrange for larger deliveries but in smaller batches. Another solution is to assess your warehouse layout and look for space you can utilize, such as increasing vertical shelving. 

3. Measure Warehouse Labor Costs to Find Efficiency Opportunities 

Labor is most likely eating up a lot of your operating costs. Real-time tracking of labor costs provides an accurate overview so you can spot opportunities to improve efficiency. A warehouse management system provides reports broken down with logical metrics such as cases unloaded or inventory handled per hour, cost per order, and even a breakdown of tasks by client.  

You can maximize profitability by ensuring your team works smarter, not harder. You can also look for opportunities to monetize certain tasks with charges to specific clients whose orders are more time-consuming, often come in as rush jobs, or are simply poorly organized. 

4. Improve Onboarding and Technology Training 

Employee turnover in third-party logistics warehouses can be quite high. Whether it is because you require seasonal help, have trouble retaining full-time talent, or see varying levels of order volume which call for temps, your onboarding and training impact performance and eat into profitability. Also, 3PL technology only improves efficiency when your team knows how to use it. Ensuring you have a strong onboarding and team training process improves efficiency on the floor. When each team member is trained properly, they can leverage tech such as scanners and apps used on mobile devices. Solid knowledge increases expertise, improves the quality of work, and increases speed and accuracy. 

5. Having Obsolete Inventory 

Obsolete inventory in warehousing is a drag on productivity. Velocity reports provide the data you need to make smart decisions to manage dead inventory, whether it is returning products to customers, introducing competitive discounts, disposing of the products, or donating inventory to charities. 

6. Adopt the Lean Warehousing Method 

Lean warehousing allows you to continuously find new efficiencies and limit the resources needed without losing sight of customer service. You improve productivity while maintaining the highest possible quality of service, with a focus on doing less to streamline workflows. 

7. Introduce Real-time Labor Management 

Real-time labor management uses technology to empower DC managers to become better at labor planning and forecasting. Tools are designed to provide complete visibility in real-time with easy-to-digest analytics. As a result, managers become more strategic with their labor-related decisions while also spotting opportunities to coach team members, improve productivity, and minimize labor costs. 

8. Embrace Intelligent Automation 

Advanced 3PL software uses intelligent automation, applying data analysis and demand forecasting to help warehouse teams become more productive. Leveraging the power of intelligent automation, the software captures and processes real-time data. The software then improves workflows by eliminating manual tasks in the back office that slow down productivity in the warehouse. Some of the main benefits include: 

• Reduced administrative hours 
• Streamlined invoicing 

• Quicker new client onboarding 
• Reduced process costs  
• Fewer disconnects between warehouse management and administration 
• Improved customer service 

9. Expanding Delivery Options to Repackaging/Kitting 

Choosing packaging that supports industry trends from e-Commerce to automation and sustainability to real-time labor management ensures you make smarter choices to reduce costs. You also avoid disruptions by considering how packaging impacts productivity, storage, and customer experience. Your choices should align with automated systems to avoid the costs of unnecessary retrofits and overall operational costs.  

Third-party logistics partners offering kitting, reduce waste and minimize space requirements to accommodate more clients. Repackaging and kitting should help maximize the number of units per truckload, minimize freight costs and increase available warehouse space.   

Profitability boils down to smarter warehouse management, using technology solutions to streamline workflows, reduce waste, and improve efficiency at all touchpoints.