Friday, August 25, 2017
When most warehouse managers hear the term “overhead”, their first instinct is to imagine the space they have between the top of their storage and their roof, but it has another, slightly more business-centric meaning. “Overhead”, in the ever-present world of finance, refers to the costs incurred by running business above and beyond your gross income. As you can imagine, most business owners look for ways to minimize these expenses without hampering business operations or losing valuable staff, and the balance can be a tricky one to strike. There’s always a few places to look when trying to reduce overhead in your warehouse, including some common places you might not have even considered yet. Here’s a few proven tips for reducing overhead in warehouses, and what they can do for you: The Overhead: Decreased ProductivityA lot of warehouse overhead and expense can be brought in by declining productivity levels in operations. This isn’t to say you have unproductive workers by any means; instead, you may have a bottleneck in processes or a complicated warehouse layout that prevents work from getting done as effectively as possible. The Overhead: Unexpected Product DemandEspecially as the holiday shopping season inches ever-closer, the risk of sudden unexpected spikes in product demand can leave unprepared warehouses scrambling for a solution and short on inventory. This can be a twofold expense: the rush demand for more product means higher shipping costs and the risk of having to source from a vendor you may not have a strong relationship with, as well as the risk of sitting on unsold inventory in the event of the new product arriving too slowly to meet demand. The Overhead: Product CostThat said, in-demand products aren’t the only ones your warehouse is going to need to stock. General product cost can really start to add up if it isn’t carefully monitored, and opportunities need to be sought to reduce the cost of these products at any given opportunity. The Overhead: Shipping ExpensesWhatever your warehouse stores, it has to move those products somewhere. Whether you sell direct-to-consumer or distribute products to other retail outlets, the cost of shipping can add up pretty quickly and begin to severely impact your overhead. By implementing these four strategies in any warehouse you operate, you should begin to see a pretty substantial reduction in overhead and increase in gross income overall if implemented correctly. |