Increase Your Warehouse Profitability

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The profitability of your business in large part relies on the efficiency and productivity of your warehouse. If your warehouse is organized, bustling, and efficient, it will show in your bottom line. So how do you move your warehouse towards greater profitability? We’ve compiled various techniques and strategies to help you streamline your processes, cut costs, and see greater profits leaving your warehouse. 

Audit Your Warehouse

You can’t know where improvements can be made until you take stock of how your warehouse is currently performing. Unfortunately, warehouse reviews are not a common part of many business strategies. Make this a yearly process, at the least, and review your labor force productivity, work flow, facilities, etc., to take stock of where you currently stand.

Establish Critical KPIs

Once you have determined the current standing of your warehouse, determine the critical KPIs that are vital to determining how your warehouse is performing. There’s no need to have more than a few KPIs that are most essential to your organization. Having a large number of metrics to track is too time consuming and becomes counterproductive once your workforce tires of trying to keep tabs on all of them. Share these KPIs with your warehouse workforce so that they can see how they are performing ahead of or behind the desired outcome.

Streamline Your Labor Force

One of the greatest costs to your warehouse is your labor force. Look for ways that you can use your work force more effectively beginning with KPIs. Tracking how your individual employees are performing allows you to reward those who are doing well, and encourage (or weeding out) those who are not meeting the standards. On top of this, take the time to evaluate your employees’ productivity abilities and assign work accordingly. If you give employees a week to get a task done, they will use all of it – even it they could have finished in three days. By being aware of your employees’ abilities, you have time for more work to be completed.

If your warehouse handles a lot of manual, repetitive tasks, see if any of them can be automated. For these tasks, determine which completes more units in a given time frame and choose accordingly. But remember to weigh the costs of machine upkeep in your decision.

Encourage Employee Ownership

One of the best ways to boost profitability and productivity is by getting your employees to truly feel their place as an important part of your business. Since your warehouse is your source of cash, you want warehouse employees to understand the importance of their jobs and how they fit in to the bigger picture of what your company is doing.

Give your employees a chance to offer feedback on how processes can be improved in the warehouse. This practice is important for two major reasons. First, these are the employees on the front lines of the warehouse. They see the inefficiencies firsthand and will often spot areas for improvement that you may have never considered. Second, if the suggestions are their ideas they are more likely to successfully implement the strategies. They will already feel ownership of an idea and be ready to run with it.

Provide Impeccable Customer Service

If you take care of your customers from the beginning, the impact on your profitability is twofold. First of all, it can cost you twice as much to resend an incorrect order. Second, happy customers mean that they will stick around, continue to give you business, and possibly refer you to others.

Therefore, focus on reducing the amount of errors in the warehouse. This includes creating ample receiving space with veteran employees check everything that comes into the warehouse. Then double checking every order that leaves the warehouse for accuracy. This saves you money, but it also builds your reputation with your customers for providing superior customer service.

Implement a WMS solution

One of the most useful ways of improving your profitability, productivity, and efficiency is by implementing a warehouse management system (WMS) solution. This solution will allow you to manage every aspect of your operations, from receiving to delivery with the use of barcode identification. The upfront cost pays for itself by reducing your operational costs, potential for errors, and providing opportunities for future growth. Specifically, a WMS provides:

  • Increased productivity. With a WMS you can optimize every aspect of your fulfillment chain to your specific needs. This leads to savings in time and labor costs.
  • Real-time monitoring. If you have a WMS solution in place, you can track data in real-time to see if you are meeting the KPIs you have set forth for your warehouse. Now you have all of the data you need at your fingertips.
  • Inventory control. Instead of fumbling with paper or spreadsheets, now you have accurate and automated inventory management systems. This minimizes errors made on the warehouse floor and makes sure nothing slips between the cracks.
  • Lower labor costs. Handling costs are lower with the simplicity of a WMS because less time is wasted on manual tasks.
  • Customer satisfaction. You know with a WMS that you have accurate inventory and can deliver on your customers expectations for superior service. Not only do you limit the potential for errors, but you also have a dedicated space with all the information about your current customers past orders and preferences. Plus you can easily pull reports that they need.

With the time you save by implementing a WMS solution, you will be able to get your work done faster allowing you time for increased work load and greater profits.


Warehouses have great potential for improvement and generating greater profits. It’s a place where things can easily slip through the cracks and money can be wasted. But by taking stock of your current situation and putting these practices in to place you will start to see results in your profit margins.

Are you ready for action?

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