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How To Reduce Warehouse Costs in 2024

Whether we face another global pandemic or a nationwide recession, reducing current warehouse costs can be crucial in making your business recession-proof, ensuring survival and growth in 2024 and beyond.

We'll delve into warehousing predictions for 2024, share actionable strategies for reducing warehouse costs through automation, and explain how our automated solutions at Modula can cut your operating expenses and position your warehouse for profitability.

Reduce your warehouse costs with automation.

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Factors That Affect Warehouse Cost

The cost of running a warehouse depends on several factors, such as location, size, and storage practices. Understanding these contributing factors can help you scrutinize your warehouse costs to identify overspending and find methods to reduce overhead.

Location

Location significantly impacts cost due to its direct correlation with transportation expenses, accessibility to suppliers and customers, and regional variations in taxes, land prices, and labor rates.

For example, warehouses closer to distribution channels can help reduce transportation costs, although they might have higher land or lease costs.

High-demand areas, like those near major transportation hubs, often have higher real estate prices due to competition for logistical advantages such as accessibility.

Size

The larger the warehouse, the higher the initial construction or lease costs.

Most larger warehouses require more extensive infrastructure, including complex electrical systems or plumbing, which drives up setup expenses. Furthermore, bigger warehouses incur greater ongoing operational expenses like electricity, personnel, and maintenance costs.

Storage and Handling

Specialized storage solutions can further impact operating costs as they often incorporate advanced technology.

For example, a warehouse with climate-controlled storage will necessitate heating and cooling features, leading to higher energy consumption.

Labor

Wages and salaries represent a significant portion of operational costs. States with higher minimum wages or high labor demands can drive up labor costs, with employee training contributing as well.

Equipment

While advanced solutions entail a higher upfront cost, they can offer a quicker return on investment by reducing costs in the long term.

Security

Implementing surveillance cameras, alarm systems, or hiring security personnel comes with various expenses.

These costs can vary based on the sophistication of the security technology and the expertise of the security personnel. For example, cameras with night vision or motion detection capabilities are more expensive than basic models.

Insurance

Insurance costs are influenced by factors such as inventory value and the warehouse's location.

For instance, warehouses storing high-value items or hazardous materials often have higher insurance rates due to the increased risk for the insurance company.

How To Reduce Warehouse Costs in 2024

Get a head start by implementing the following cost-saving tactics for 2024.

Analyze Your Warehouse Operations

Analyzing your warehouse operations helps you pinpoint inefficiencies, optimize resource allocation, and improve processes, leading to significant cost savings.

Regular audits, data-driven performance metrics, a warehouse management system (WMS), and employee feedback can help assess your operations.

Evaluate Your Transportation Costs

Reviewing your transportation practices can lead to cost reductions by enabling you to negotiate better rates with carriers or optimize routing and delivery schedules.

Analyze historical shipping data, current contracts with freight carriers, and track delivery frequency and accuracy to evaluate transportation costs.

Maximize Space

Optimizing your warehouse space can reduce costs by decreasing the need for a larger facility and minimizing energy expenses.

Implement efficient storage solutions, like vertical lift modules (VLMs), and integrate a WMS for strategic product placement to maximize space.

Practice Cross Docking

Cross docking involves moving products directly from manufacturer or supplier to retail chain or customer. Using inbound and outbound docks, products are received and immediately transferred to trucks for delivery.

It reduces warehouse costs by eliminating the need for extra storage space and minimizing the handling of goods.

Utilize logistics software to track real-time shipments, predict arrival schedules, and designate specific zones for inbound and outbound activities to optimize goods flow.

Buy Used Containers

Consider using used containers for shipping or storing inventory. This can be a straightforward cost-saving tip in the warehousing industry.

Utilize the Benchmarking Technique

Benchmarking involves comparing your key performance indicators (KPIs) against those of other warehouses in your industry to identify areas for improvement.

Identify relevant warehouse KPIs, collect industry data, and analyze differences and similarities to improve warehouse management.

Protect Your Inventory

Stock damage and theft, whether internal or external, are key factors in financial loss for inventory.

Actively protect your inventory to mitigate these risks. Employ security guards, install cameras, and restrict access to high-value inventory areas. Train employees to handle inventory correctly to reduce accidental damage.

Maximize Your Equipment

Ensure your equipment is running at 100% utilization to maximize its value.

Implement predictive maintenance, monitor equipment usage, and establish a maintenance schedule to minimize unnecessary wear and tear.

Cut Down on Energy Costs

Reduce energy costs by improving warehouse insulation, installing solar panels, and upgrading to energy-efficient equipment like VLMs.

Identify the most cost-effective methods for your warehouse and implement changes to reap long-term benefits.

Implement Warehouse Automation

Warehouse automation can significantly reduce costs by minimizing human error, increasing efficiency, and reducing costly product damage.

Incorporate automated conveyor belts, warehouse robotics, and automated storage and retrieval systems (AS/RS) to cut warehouse costs in 2024.

The Benefits of Reducing Warehouse Costs Through Automation

Automated solutions profoundly reduce warehouse costs. The benefits of automation include:

Optimized Space

Traditional storage systems like static shelving and pallet racks often occupy valuable warehouse space.

Automated storage solutions maximize storage density, improving operational efficiency and eliminating the footprint required by static shelving and pallet racks. As a result, you can store more items without moving to a bigger warehouse, saving money while leveraging your current facility.

Improved Inventory Visibility

Operations based on unclear forecasts can lead to significant waste like excessive inventory or unnecessary movements.

A WMS manages the inventory flow from receipt to shipment, offering reports on supply chain metrics including:

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• Stock on hand

• Stock outs

• Cost of goods sold

Reduced Labor Dependency

Picking is one of the most labor-intensive and costly processes in a manual warehouse.

Automate repetitive processes to reduce labor dependency and cut costs.

Automated picking solutions deliver items directly to warehouse pickers, significantly improving productivity and enabling more work with fewer personnel.

Minimized Workplace Accidents

Warehouse employees are at risk of potential accidents like falls and overexertion.

Protect employees to reduce injuries, downtime, and workers' compensation costs.

Automated systems like vertical lift modules and horizontal carousels create a safer working environment, reducing the occurrence of accidents.

Reduce Your Warehouse Costs with Modula’s Automated Solutions

As a leading provider of advanced storage solutions and inventory management systems, we offer state-of-the-art innovations to help you cut warehouse costs and ensure long-term business profitability.

Our automated solutions at Modula include:

1. Modula Vertical Lift Modules

Optimize your existing warehouse space by fully utilizing available ceiling height.

Modula vertical lift modules come in three models:

• Modula Lift: Boost efficiency, picking speeds, and accuracy by up to 90% with our most popular vertical lift module.
• Modula Slim: Enjoy the same innovation as the Modula Lift but in a more compact design, ideal for smaller warehouses.
• Modula OnePick: Fully automate your processes with the Modula OnePick, suitable for facilities requiring full automation like eCommerce warehouses.

Optimize your warehouse storage space.

Explore Modula VLMs

2. Modula Horizontal Carousel

Working with limited ceiling height? You can rely on our Modula horizontal carousels.

The Modula HC allows you to save space, boost throughput, reduce labor costs, and store and retrieve items as needed with minimal labor.

The horizontal carousel consists of carriers (bins) mounted on an oval track that rotates horizontally and delivers stored goods to the picker.

Each shelf can be divided into totes, bins, and partitions to create an efficient and well-organized storage space. Modula HCs are commonly used in warehouses and distribution centers for their capability to quickly handle large inventories.

During peak seasons, boost your picking accuracy by up to 99% with barcode readers and Put to Light Systems.

Check out our horizontal carousel in action in the video below!

MODULA HC: the New Horizontal Carousel for Efficient Picking

3. Modula Order Picking Solutions

Are your picking operations quick enough to meet demanding consumer needs? Save time and money with Modula order picking solutions.

Our automated warehouse picking solutions allow operators to simultaneously fulfill multiple orders, enhancing efficiency.

Our automated warehouse picking solutions allow your operators to simultaneously fulfill multiple orders.

Our Modula Warehouse Order Picking Solutions include:

4. Autonomous Mobile Robots

Need an extra hand with order fulfillment during peak demand? Look no further than Modula autonomous mobile robots (AMRs).

Check out our AMRs in action in the video below!

Modula & MiR: automatic storage systems and autonomous mobile robots. How do they work together?

Autonomous mobile robots allow you to:

• Automate time-consuming tasks so operators can focus on value-added work requiring human intervention

• Increase accuracy and productivity to fulfill more orders in less time

• Balance demand fluctuations during peak seasons

• Adapt to evolving needs without requiring structural modifications

• Optimize inventory management when integrated with Modula’s warehouse management system

Interested in learning more about AMRs? Check out our guide to autonomous mobile robots!

5. Modula Warehouse Management Systems

Gain inventory control and visibility to prevent dead stock and overstock with Modula warehouse management systems.

Modula WMS is a comprehensive warehouse management software that improves operational accuracy, efficiency, and visibility.

It integrates with Modula vertical lift modules and any local ERP systems, offering a complete warehouse solution.

This enables centralized, easy-to-manage data storage. Its scalability supports business growth and evolving warehousing needs.

Modula warehouse management solutions allow you to:

• Accurately pick and replenish inventory

• Enhance control over inventory management, preventive maintenance, and material handling

• Provide next-level security and identity systems, preventing employee theft and unauthorized access

• Operate in batch and multi-order modes

Gain complete visibility over your inventory.

Explore Modula WMS

Reducing warehouse costs through automation can prepare you for unexpected challenges.

At Modula, our automated solutions streamline operations and reduce costs across various warehouse functions, from storage to picking and beyond.

Automate your warehouse operations with Modula.

Explore our solutions

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