Assessing the cost of your warehouse operation

In today’s challenging market, your success can be based on whether your warehouse operation is productive and effective enough to meet your expectations and those of your customers. We are regularly asked to benchmark the cost of a prospective customer’s warehouse so that they can compare this data against outsourcing their operation. These costs can come as a surprise, especially when we analyse each and every related cost (including the hidden ones), and compare with a simple like for like.


Key areas that should be evaluated in any warehouse and are critical aspects of any fulfilment operation are the labour, the warehouse and site, procedures and processes and systems.


In the first steps of assessing a customer’s warehouse operation, we would be able to form initial opinions as to the level of productivity and service.


We look at the warehouse layout, where we see pinch points. We would take into account general cleanliness of the warehouse, attitude and morale of staff, the pace at which people work and automation opportunities.


We review your performance reports, service levels, shipping accuracy and order turnaround time. We would analyse the receiving of stock, quality assurance, stock putaway, returns, inventory control, replenishment and picking, packing and shipping. Examining these reports can help reveal which departments are reaching specific levels and which ones need attention.


The site should be examined to determine whether you have enough space and whether you are using the space you have efficiently.


We look to see that packaging materials are in continuous unbroken supply, and consistently on hand to perform tasks efficiently.


IT systems should provide the functionality and flexibility you need to work effectively, we know that barcoding will not only significantly improve the accuracy of inventory transactions but also will help you track productivity.


When we have analysed the above – and more – it may be that we feel that no changes are necessary and your operation is working as effectively and efficiently as it can. Otherwise, we might ask you: where can you get the biggest improvements from the smallest number of changes? And would this operation work better, be more productive, be more efficient and cost less if it were outsourced? We can then demonstrate, with accurate data, that this could indeed be the case.