Maximize Warehouse Efficiency During a Recession [10 Tips]

By:

Jeremy Barth

Wednesday, October 19, 2022

What if I told you that you could save $40,000 to $60,000 thousand per year while packing and shipping more products than ever before? More importantly, what could you do for your business with those types of savings every year?

As a leader in the warehousing industry, Hoj Innovations has a reputation for delivering top-quality solutions that help businesses achieve greater efficiency. Over the past 30 years, they have completed countless jobs ranging from small-scale storage upgrades to multi-million dollar warehouse expansions. Thanks to our keen attention to detail and innovative problem-solving techniques, we have successfully managed projects worth over $1 billion in total. Whether it's finding ways to optimize staffing levels or streamlining warehouse operations, we focus on helping our clients build more efficient and cost-effective warehouses.

When it comes to logistics, the devil is in the details. A single small change can have a huge impact on efficiency and profitability. That's why it's so crucial to conduct an in-depth study of all aspects of your supply chain before making any major alterations. At Hoj Innovations, our average logistics study finds hundreds of ways to improve your warehouse. Whether we're analyzing your process for order picking or studying pallet spacing, our specialists are committed to seeing every opportunity for optimization. And because we understand that every action has unintended consequences, we always exercise careful judgment in deciding which improvements should be implemented first. Ultimately, our goal is to help you improve the efficiency of your supply chain so that you can achieve greater profitability and better serve your customers' needs.

You may be fine when the economy is strong, but how will your business manage if a recession hits? Seeing how we are on the cusp of a potential recession, it might be time to start thinking about optimizing your warehouse by making your system more efficient.

The 2008 Great Recession

During the great recession between December 2008 and December 2010, roughly 1.8 million businesses went under. A disproportionate amount of those businesses were considered small businesses. 

It is only natural that in times of financial hardship, companies need to cut costs to stay competitive. Many companies, during times such as recessions, adopt a leaner business model, which helps them be more flexible and cut costs. Because of the decrease in sales, owners and managers have more time on their hands to focus on optimizing workflows, technology, storage techniques, and other aspects of their business. 

What many companies do - which is probably the most straightforward answer - during an economic downturn is to fire non-essential employees, decrease in sales means less personnel is needed to fulfill orders. But this can only get you so far. Having an inefficient warehouse can cost you thousands, if not hundreds of thousands of dollars per year. 

That is why it is vital to double down on optimizing your storage space just in case another recession hits. Who knows, those extra savings may be why your business stays afloat. 

How Lack of Innovation & Flexibility Can Hurt Your Business

Some of the top reasons that businesses fail are because of a lack of flexibility and lack of innovation. 

These two reasons go hand in hand. Constant innovation keeps you flexible. But what can you do to innovate when you are low on time? You very likely can’t just focus your whole day on finding inefficiencies in your operation. 

The most effective solution would be to hire an expert to find your problems. They can give 100% of their attention to optimizing your space, taking measurements, optimizing inventory storage, changing systems, recommending software, and giving you money-saving techniques to launch your business beyond the competition. 

With how much you will retain in savings, it will literally pay for the cost of hiring an expert on the matter. 

Letting another company help you learn about innovative strategies is one of the best ways to keep your company operating at full steam even during a recession. 

But let's focus on the two main benefits of optimizing how you process your inventory. The two are you save time, and you save money.  

Save Time - Your employees will stop wasting time on redundant time-consuming tasks. Hoj Innovations recently did a study on a medium-sized business and found that over the course of a year, one of the warehouse managers spent about three months' worth of time per year watching paper print. This was a necessity in their old operation, but after implementing the specialist's recommendations, they can now devote their attention to other, more critical tasks. 

With optimized picking paths, workers work faster. With inventory software, they pick faster, with streamlined packaging systems in place, and orders ship in less time. All these areas come together to save you hundreds of cumulative hours annually. 

As a natural result of saving time in your day-to-day operations, you will also save money.

Save Money - As we said at the beginning of the article, you can save $40,000-$60,000 per year depending on the size of your business and the recommendations that you accept from our specialists. 

In order to start you on your savings journey, we have compiled a list of the top ten ways a business can optimize before a recession hits. 

Common Areas to Optimize Before Recession Hits

What are the most common problems that businesses have that cost them money? There are hundreds of problems that the average company faces. Obviously, this article doesn’t have time to discuss every single one of them, so we will go through the top 10 that cause the most issues. 

  1. No Inventory Tracking Software. Paper pick sheets are a thing of the past. They are quite literally holding you back from picking & packing faster. Many companies that change over to optimized warehouse picking software see their cost per package shipped reduced by half. 

In addition to reduced package costs, many have seen a single employee pick over 400 picks per hour. Allowing you to do more with fewer people.

Cloud-based software comes with many key features that help your employees implement top-picking strategies without a second thought due to guided picking routes. 

In addition, this powerful software will provide KPI-driven reports w, allowing you to see who is productive and who is not. Allowing you to solve issues at their source. Know exactly where your money is going every day. 

There are many options of software on the market today that you can choose from. But if you want to implement one as fast as possible in the most cost-effective manner, we highly recommend selecting a cloud-based inventory software. These are incredibly flexible and cost-effective to implement, and you don’t have to lift a finger to maintain them, as the company that sells the service will release regular updates to keep it running at full speed. 

If you would like to learn more about the benefits of one of the top cloud-based warehouse management software on the market, we suggest checking out this article “Powerful Warehouse Picking Software At Your Fingertips.”  

  1. Poor Pallet Rack Beam Spacing. Often overlooked, the spacing between pallet levels is very important. It should be optimized according to what you need. This will allow you to take full advantage of your pallet rack's verticality and help you keep your storage density to the max. 

  1. Poor Aisle Spacing. This is similar to beam spacing but is concerned with the aisle spacing between your pallet rack rows. Keeping your aisles as narrow as possible allows you to take full advantage of your warehouse space. Double-checking your aisle width could potentially help you add another row or two of pallet racks to your warehouse. 

  1. Not Utilizing Your Verticle Space To The Fullest. We can not tell you how many companies do not fully utilize the total vertical space of their warehouse. Many companies see 2-5 more beam levels on their pallet rack when they start taking advantage of the extra vertical space. 

Now, this may involve purchasing taller and more sturdy vertical uprights so that you can fill that extra space above. Always double-check with licensed professionals that your pallet racks can hold the extra weight if you do plan to grow vertically. 

  1. Not Organized By Low To High Inventory Velocity. Typically a problem with small, rapidly growing businesses. But not organizing products by their order velocity is a big mistake that costs you time and money every time an order comes in. 

Usually, a study of your current order velocities must be done to sort inventory by popularity. The orders that are most popular should be readily accessible, while the orders that are only ordered occasionally should be stationed in the back or deep storage. 

This can have a dramatic effect on improving the workflow for order pickers, helping them find items faster. 

  1. Not Utilizing Speed Cells. Speed Cells are an incredible addition to pair with your velocity inventory organizational efforts. This technique takes it a step further. 

You have a small single-person area around one picker in a “U” shape. The racking around this individual is about as tall as one person and contains high-density flow racks.  These racks are packed full of your top-selling SKUs. 

This technique allows your picker to fulfill orders at an incredibly rapid pace. This picking speed will increase even more when paired with guided cloud-based picking software. 

  1. Employee Time Wasted on Mundane Tasks. Optimizing employee work routes and processes is necessary when reducing costs before a recession. If you are a manager, it is a good idea to shadow employees or do the job yourself to see any inefficiencies in the process. 

  1. Warehouse isn’t Optimized for Batch Picking. Batch Picking allows a single worker to pick up to 100 orders simultaneously. Allowing you to save time and money with every order picked. 

  1. Not Using Optimized Picking Carts. To help with batch picking is optimizing the picking cart that you use. Depending on the product that you are selling, you can fulfill up to 48 orders on one picking cart. Bins placed on each cart give a home to each order while it is being fulfilled. If you utilize a barcode system and inventory software, the computer will automatically log where the product is on the cart.

Essentially, it helps you pick more orders at the same time, allowing you to pick faster and reduce costs. 

  1. Not Utilizing Electric Pallet Jacks. These are pricier than standard manual pallet jacks, but you will definitely want to consider purchasing electric pallet jacks as you grow. These are easier for your employees, allowing them to move pallets and inventory astoundingly fast. 

These are great options to help you work smarter, not harder. 

Conclusion

Potential economic slowdowns are no joke and can be seriously detrimental to the overall health of your business. The best way to ensure the continued good health of your company is to fix the problems before any type of recession may arise. 

The ten areas listed above are perfect to start the long optimization process. As always, if you would like assistance in that journey, feel free to reach out and talk to a warehouse logistics specialist for a more in-depth analysis of your space.

WRITTEN BY:

Jeremy Barth
TRUSTED BY LEADING BRANDS

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