How to Boost Warehouse Efficiency and Reduce Cost

Mike DeFabis
Outside of the IDS Fulfillment Center

Everything in the world is constantly changing and evolving around us. In the world of logistics and fulfillment, it is no secret that efficiency is always something we are trying to improve upon. However, many people don’t know where to begin when trying to cut costs and get more from their employees in the warehouse. Here are some sure-fire ways to keep your warehouse running like a well-oiled machine without breaking budget and keeping workers engaged and happy.

The number one thing when trying to boost efficiency in your warehouse is employee engagement and satisfaction. The warehouse begins and ends with the crew. Let’s face it, if they aren’t happy and fulfilled, the whole system can fall apart. There are many ways to keep the quality of work up while staying in budget for employee appreciation.

Provide you employees with Feedback

                This doesn’t necessarily have to be positive feedback. If there is something you think would help your employee perform better, tell them. You can’t improve if you aren’t aware of your mistakes. Employees who receive continuous feedback from their employer are proven to work harder, smarter, and more efficiently. In a survey conducted by Zenger Folkman, it was concluded that “Employees are far more content, put forth extra effort; stay employed longer, and have enormously better relationships with their manager if their leader provides effective feedback.”

Provide Recognition and Incentive Programs

                There are many forms of incentives and recognition that you can give your employee. Incentive pay is a good way to get your warehouse crew to go that extra mile. Since the majority of the crew is pick and pack, a plan like this can really motivate them and keep them going. Once you start seeing the rewards from a more efficient warehouse, it is important to reward your hard-working employees also. Though profit sharing is a great reward, luncheons and even a personal note can go a long way. In the long run, spending a little more on your employees will save you money in efficiency losses and keep everyone engaged in their job.

Motivated Managers Motivate the Entire Team

                Be sure to check in on your management staff continuously also. They have the job of running and organizing the whole floor and are the number one voice the warehouse crew hears. Keeping your floor managers and supervisors motivated will greatly increase productivity. The warehouse team looks to their supervisors for guidance and support, so you must make sure they are taken care of. Sit down with the managers once a month (preferably over lunch) and go over concerns each of you have. It may seem obvious, but they probably have more ideas and concerns than you are aware of.

Engage Upper Level Management with Employees

                Adding to staying engaged with the management team, you should also consider integrating upper level executives with the warehousing team. A lot of times, the people in the warehouse can feel their employee doesn’t even know they exist. Getting them together and talking to them directly as an executive can have a huge impact and let them know that they exist in your eyes.


Another key element in boosting the efficiency in your warehouse is learning how to reduce costs without cutting too much. A lot of times, companies are losing money in ways that may seem obvious, but just aren’t being done correctly. Controlling costs can be tricky, but we have some tips on what you can do.

Maximize all Space in the Warehouse

                A lot of people think expanding the warehouse is the solution to gaining more space, but that isn’t necessarily the best solution if you want to save money. Before you spend thousands on expansions consider vertical space. Expand your shelving as high as possible and utilize every inch of the space on the shelf. This was you are still able to move around the warehouse and hold more inventory at the same time. Take the time to look at your racks and shelving system. You may find that you’re storing small stuff in an area better suited for large items. If this is the case, consider specialized bins for the smaller items that can be easily organized and tracked.

Maintain Reality of you Inventory

                We all get busy. Sometimes it’s easy to forget to keep track of your inventory. Take the time to go through your warehouse rack-by-rack to make sure you aren’t utilizing essential space for a product you no longer sell or a company you no longer work with. Once you’ve gone through and figured out if you’re holding onto something you don’t need, track it. Track every bit of inventory you have. Once you’ve done that, go back through it monthly and check up on everything. You may find that you were spending money on racks you don’t use and have opened up more space for priority inventory.

Consider More, Newer Technology

                A Warehouse Management System (WMS) or an ERP system with a strong WMS can suggest the best methods and routes for picking or putting-back. These also provide automatic pick lists that can be sent to mobile readers and devices to help eliminate mistakes and reduce wasted time and paper. Check you barcode scanners. Are they out-dated? Do they malfunction or refuse to work occasionally? It may be time to upgrade. Even though the goal is to save money, keeping up with the best technology will do that for you in the long run, using better barcode scanners can reduce picking and shipping errors, which saves time and money down the road.

Closely Monitor Hours/ Cross-Train

                Even though incentives are an optimal way to keep your employees engaged and improve their efficiency, you must be sure you are still monitoring hours. A lot of money can be spent in overtime pay. Cross-training is also effective. If your employees are trained in more than one area of the warehouse, you need fewer employees, and therefore save your warehouse some money. It is also a good way to break the day up by allowing your crew to move around and try new things.

Control Inbound/Outbound Freight

                This should be your number one ongoing focus to keep costs reduced. Most companies are very good at monitoring outbound transportation, but inbound transportation is where they start getting lost. One piece of good news is, you no longer have to pay premiums for inbound transportation. You can save a lot of money by controlling this process yourself; however you must learn how to effectively do that. Set up an inbound collect billing program with your 3PL or Logistics consultants. By controlling inbound volume, you make yourself more profitable to your carrier because of the high number of inbound packages per day. Discuss your intentions with all of your suppliers so everyone is on the same page. Finally, develop and implement the operational plan to keep everyone and everything on track.

Boosting warehousing efficiency while controlling costs can be a very challenging and daunting task. Follow these tips and tricks, and you should be able to keep your employees engaged and save your company money at the same time.

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