No matter what your position in the hierarchy, one thing that remains true about warehouses is just how expensive they can be to operate.

Staffing costs, inventory costs, building/utility costs…even compared to other small businesses, these financial burdens can start to pile up after a while. Worse yet, there always seem to be a number of more…unexpected costs that can crop up and throw your entire budget into disarray.

If this has been happening to your warehouse lately, or if you just want a better idea of what you may be up against financially, here’s five of the most common hidden warehouse expenses we’ve seen in our time:

 

Out-of-control shipping costs

Obviously everyone, from the consumer to your staff, wants to find the most cost-efficient shipping methods possible, but there’s a lot of X-factors that can begin to impact your bottom line when it comes to both receiving and shipping your inventory. For example, a lot of warehouses try breaking up large orders into multiple shipments to send out, and while that might be a good call for productivity you can start to find these costs piling up. Minimize your number of outgoing packages and make sure to partner with a shipping provider that has a proven track record of timeliness and safety to prevent further issues like truck accidents, mishandled goods, or lengthy delivery times that can cost you repeat business.

 

Overly-large warehouses

This one may take a little introspection and review, but it’s a question well worth asking yourself. Do you have a lot of unused space in your warehouse? Even if you got a great deal on the property when you signed up for it, unused space is the warehouse equivalent of wasted money—if your business doesn’t have the capacity to fill your entire current facility even during the peak seasons, it may be time to look into a smaller (and cheaper) building.

 

Misused storage

In most warehouses, when your warehouse shelves start filling up, your instinctive response is to try and get more shelves that you can keep inventory on. However, in many cases it may be more beneficial to simply make your current shelves work smarter, not harder. Take a look at things like pallet racks and bulk storage racks and review the inventory on them currently—are there a lot of items that haven’t been sold or even touched in a while? Do you have a lot of product that has slowed down in sales? This could be a perfect opportunity to clearance out (or otherwise dispose of) slow-moving products to free up space for the stuff you actually need.

 

Wasted work time

Even the most productive, diligent staff can get bogged down with needless tasks, endless repetition, and lengthy processes. If your workers find themselves logging too much time on certain tasks due to redundant processes or inefficiently-organized shelves, see what you can do to lessen their burden. Move your shelves closer together where able to reduce travel time, try to find a better sorting method that targets the items they need to access most frequently (and keep in mind this may not always be the old FIFO standard), and source your workers for frequent feedback in the event of a process that can be done a faster way.

 

Invoice processing and item re-ordering

If your warehouse deals more in business-to-business sales and less consumer-facing sales, the inevitable piling up of unpaid invoices can affect your bottom line more than you expect. Additional invoices can lead to more time, money, and worker energy spent processing them (not to simplify their role, but someone has to send all those emails, right?) as well as an inability to get the money you need to reorder further goods down the line. Keep up on invoices and streamline a process for getting ahold of your unpaid accounts to make sure nobody is spending too much time on any one thing.

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