Strategies to Minimize Waste and Save Money in Warehousing
Businesses are all seeking efficiencies in their operating processes and wise companies don’t leave waste out of the equation. In this two-part series, we look at the strategies and technologies that can help warehousing operations to drastically reduce their waste bills as well as reducing costs associated with labor, equipment and energy.
Benefits of Implementing Waste Minimization Strategies
Many companies underestimate how much waste they are producing, and the true cost of that waste on the business. Typically, the cost of waste is between 4-5% of company turnover, but it can reach as high as 10%. This means that warehouses can save hundreds of thousands of dollars by just focusing on the greatest waste reduction opportunities.
To calculate the true cost of waste for your operations, you should take into account the costs of packaging, labor, energy, storage, transport and lost margin, as well as disposal costs.
Common Sources of Warehouse Waste
In order to identify the practical strategies that can be used to minimize costs, we have to first understand the types of waste that are being generated. For most warehouse operations, these are:
- Inventory waste
- Packaging waste
- Transport waste
- Motion waste
- Waste of time
Waste Minimization Strategies for Warehouses
Implement Efficient Inventory Management
Right-sizing your inventory levels will free up warehouse space, reduce the cost of carrying that inventory, and reduce the risk of damage or obsolescence. Better demand management will make your warehouse more responsive to customer requests and reduce out of stocks, while also reducing the costs associated with overstocking.
Warehouse inventory waste can be reduced greatly by implementing a “just-in-time” strategy, a process of matching available inventory to demand forecasts.
If your warehouse operations aren’t able to adopt a just-in-time inventory strategy, consider taking a math- or data-based approach to inventory management. Base orders on a formula that incorporates your standard deviation in supplier lead-time and demand averages. This will have the effect of limiting inventory costs, without completely eliminating your buffer stock levels. A Warehouse Management System should automatically generate this data for you (see our technologies article for more information).
Reduce Packaging Waste
Suppliers generally provide materials in the format that is most convenient and cost-effective for them. This can result in your business receiving bulk goods with more packaging than may be needed, which may not be recyclable. Your staff then has to de-package the goods and dispose of this material, costing your business time and money.
Cutting down on packaging waste should therefore be a key concern.
For any packaging material that you have to accept into the warehouse (see Push back on Suppliers for how to reduce the volumes you receive), the first strategy should be to reuse as much as possible within your operations. For example, sturdy cardboard boxes and pallets can be reused many times around the warehouse before needing to be recycled.
Ensure that materials are packaged correctly and with an appropriate amount of packaging the first time around. Waste can often occur when products have to be repackaged due to original packing errors. Train your warehouse staff on packaging methodology, and correct waste disposal routes for the different waste materials generated as bulk items are broken down.
Utilize appropriate filler material to ensure that the smallest dimension of packaging can be utilized to protect fragile items. Once you have reduced the quantity of materials in your packaging, then the next step is to investigate how to incorporate recyclable or degradable content. For example, cushioning can now be provided with inflatable air packs or corn-based packing peanuts, rather than utilizing non-recyclable polystyrene.
Minimize Transport Waste
Transport waste is when products are moved unnecessarily. This can cause warehouses to pay for unneeded storage space and excessive inventory. It also results in increased energy costs, and inefficient use of labor and forklift operations. These combined costs make it a key area to focus your attention on.
The most common causes of transport waste are double handling, shifting inventory for accessibility, large batch sizes and multiple storage locations. Redesigning the warehouse layout and aligning it with warehouse processes can resolve the majority of these issues.
If warehouse processes require certain equipment, then ensure that the machinery required for each step is located close together. Reorganizing warehouse storage can resolve many of the issues associated with transport waste due to inventory reshuffling and stock presence in multiple locations.
Reduce Employees’ Need to Move
Each movement of a person beyond what is process-critical costs your business time and money, while also causing additional stress to your employees. When people move more than necessary within a warehouse, it’s known as motion waste. This can be excessive travel between work areas, or unnecessary motion of workers at a workstation.
Motion waste is generally a result of a poor warehouse or equipment layout, or poor work methods. Look at the movement of employees through your facility. How often are they doubling back when picking orders? How far are they walking each shift?
Often your employees will be able to provide you with the best solutions to prevent this waste, telling you which tasks are overly cumbersome, require long distances to be covered in the warehouse, or put undue stress on their bodies. Engage with staff and get their feedback on potential new warehouse layouts and working practices to counter these problems.
Eliminate Time Waste
Time is valuable, and yet it’s frequently wasted in warehouse operations. This can include time wasted as your employees wait for a process to complete, products waiting to pass to the next step of the production line, or waiting to be shipped to their onward location, and process bottlenecks that cause equipment to idle. This leads to unnecessary labor, equipment and energy costs.
A key strategy to counter this problem is to redesign warehouse workflows to ensure the continuous movement of product, and the best utilization of employees. Another strategy is to employ a preventative maintenance program for all warehouse machinery, since downtime of equipment can be a regular cause of process bottlenecks. Not only does this save your warehouse time, but it also reduces maintenance bills since regular checks and timely replacement of parts are cheaper than emergency repairs.
Engage the Entire Organization
The entire workforce and management team need to be involved in order for waste minimization practices to be followed diligently and the appropriate funding to be assigned. Make sure to:
- Allocate responsibilities and agree on what success looks like. Include waste management objectives in job descriptions, or add bonus targets for existing employees.
- Involve all personnel so that they know what’s happening, and to ensure that the waste minimization efforts are carried out collectively.
- Establish regular, ongoing training and education to promote awareness and understanding.
- Reward and publicize any waste-reduction efforts made by employees.
- Quantify and then share the results of successes with the entire organization.
Conduct Staff Training
For effective waste minimization, it is essential for warehouse employees to be well trained. Ensure that all waste programs make it clear as to how waste is classified, sorted and stored before it is collected. For greater engagement, provide your staff with an overview of the costs associated with waste disposal in your warehouse and make sure that they are clear as to where waste arises.
Undertrained employees are often responsible for a significant proportion of wasted time, money, and even an accelerated depreciation of equipment, so training should also tackle workplace efficiency. Consider cross-training staff so that when you experience staff shortages, you have appropriately trained replacements to fill any critical gaps.
Audit and Push Back on Suppliers
Regularly audit your suppliers to ensure that packaging material entering your warehouses is kept to a minimum. Where supplier packaging cannot be reduced or reused, then explore if there is a recyclable alternative for any non-recyclable material currently used.
Many suppliers will agree to take back some or all of their packaging waste if sufficient pressure is applied, taking this cost away from your business entirely.
Utilize Waste Minimization Technologies
In part two of this series, we will explore the technologies that can be utilized in warehouse facilities to streamline operations and further reduce waste generation.
Waste minimization offers a huge cost saving potential. By taking a systematic approach, you will ensure that your strategies are sustainably executed throughout the organization.
An expert waste management firm can review your entire warehouse operation and provide insights that you may have missed. It can also identify the strategies that will generate the fastest ROI for your business, and then guide your sites through the necessary steps to help them achieve your minimization goals.
Need help to make your waste minimization plans a reality? Talk to our waste experts today by calling us at 1-888-692-5005, or emailing firstname.lastname@example.org
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