warehouse works performing maintenance

Optimization of warehouses and supply chains is a crucial aspect of any given supply chain strategy. By refining and optimizing your practices, you can achieve significant gains in productivity, efficiency, and overall workflow, and your warehouse or facility can start seeing an improvement nearly immediately.

 

In supply chain optimization, there tends to be two schools of thought: optimizing for time and optimizing for cost. Each of them can offer different methods and advantages, and deciding which to focus on really depends on your business, your methods of operation, and your goals overall. If you’re considering an optimization of your processes and want to know more about your potential methods and what they can offer you, here’s a breakdown of each approach:

 

Optimizing for Time: As the name implies, supply chain time optimization focuses on the idea of saving time and increasing productivity to increase business performance overall, even with an increased upfront cost.

 

Let’s take this for an example: you’ve got a huge delivery of goods coming up that needs to get to their destination very quickly, but you still have to perform inventory checks and make sure the products are handled and indexed properly before the order goes off to its final destination. By optimizing for time, you would focus on getting your items sent out as quickly as possible without regards for saving a ton of money during the process. Optimizing for time would likely involve hiring extra workers to handle the shipments, outfitting your shipping and receiving areas with extra industrial storage or rivet shelving to handle the shipments, and paying for the fastest possible outbound delivery to get these products to your customers on time, whether you’re working as a distribution center or selling directly to customers.

 

Many warehouse managers who optimize for time do so because time is a more finite resource, and in many cases the effects on your finances can be mitigated by working more effectively and maintaining your customer base. Think of it more as a long-term investment for the overall effectiveness of your business, instead of any kind of cost-saving measure.

 

Optimizing for Cost: Cost optimizations, on the other hand, focus more on saving money than time. By keeping costs down you can improve your profit margin and afford yourself more finances for things like warehouse expansion, worker payroll, and costs for things like maintenance and repair.

 

This approach doesn’t exactly work for all businesses; many businesses will suffer by cutting costs too far and hampering productivity. But if your warehouse operations are in a place where you feel like you can work productively, take some time to review your processes and see where you can begin cutting overhead. Do you have cheaper vendors you can work with? Are sloppy processes keeping your utility costs too high? Are you still paying for services or tools you no longer need? Cost optimization can have a near-immediate effect on your bottom line when done properly, and may be a good fit for businesses of certain sizes or industries.

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