QC Software’s Practical Approach to Containing Warehouse Costs

March 23, 2011 - PRLog -- Companies are finding it more challenging to control costs when market conditions keep changing.  For the warehousing industry, managing the largest expenditures – labor, freight, materials, and facility – will have the greatest impact on containing costs and improving profitability.

Jerry List, Vice President of QC Software (http://www.qcsoftware.com), a leading provider of warehouse control software, states, “With thousands of orders processed each day, managers have to closely monitor their operation and be ready to make the necessary adjustments. For instance, when shipping rates spike, they need to offset these costs by reducing back orders, changing carriers or service levels, or using other methods.”    

Key steps for successfully managing operating costs:

Perform a comprehensive audit of your operation. Assess the physical layout, production reports, equipment, shipping practices, etc. Identify improvement opportunities and implement key changes that will improve productivity.

Optimize the physical layout of the facility.  As new inventory and equipment are added, you need to reconfigure the layout to maximize throughput.

Make sure you are effectively managing the work force. Labor costs account for about 50% of total operating costs and represent the largest controllable expense. Review order forecasts and develop a labor budget. Make sure staffing levels are appropriate for the workload. Use temporary and part time workers to minimize overtime, especially during peak periods. Find ways to reduce employee turnover.

Manage your freight program using best practices. Outbound freight costs average 6-8 per cent per order and inbound costs can be even higher. Evaluate freight costs and service levels to find more cost-effective solutions. Make sure vendors are in compliance. Use shipping consortiums and renegotiate contracts to lower costs.

Implement effective inventory controls. This will not only reduce costs but also improve customer service. Cycle counting and bar code labels will improve inventory accuracy and help you maintain proper inventory levels.

Ensure inventory visibility across the supply chain.  Make sure you have software that provides real-time data and statistics.

Reduce the number of touches.  Streamline your processes to improve throughput and eliminate inefficiency.

Use dynamic slotting practices.  Make sure you can easily reconfigure storage space as needed. Optimize slotting each season to lower picking and replenishment costs. The rule of thumb is to have a seven day supply at the active pick location. Balance fast moving SKUs over several aisles to avoid congestion.

Implement quality assurance measures. Focus your efforts at the packing station to improve order accuracy and minimize returns.

Manage receiving efficiently.  Use an electronic purchase order system to ensure orders are in the system before inventory arrives. Make sure shippers are providing advanced shipping notices to facilitate receiving and improve order accuracy. Use cross-docking when possible to reduce handling costs and improve customer service.

Reduce the number of returns. Evaluate why returns are happening and minimize the volume.

Consider outsourcing to reduce costs. Outsourcing helps you minimize overtime and utilize people that have additional skills.  

QC Software (http://www.qcsoftware.com) is an industry leader in providing innovative warehouse control system (WCS) solutions for order fulfillment and distribution centers across North America and in Europe. These solutions enable customers to streamline their warehouse operations with the lowest total cost of ownership in the industry. By using cutting-edge technology, their warehouse control system, the QC Enterprise, provides greater visibility and control across the supply chain. As the customer’s business grows and evolves, QC Software’s agile WCS easily adapts to the changing business environment.

For more information, contact Jerry List:
Phone: 513.469.1424
Website: http://www.qcsoftware.com
Email:  info@qcsoftware.com

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About QC Software: Our company is a leader in innovative software solutions for order fulfillment and distribution centers across North America and in Europe. For over 15 years, these solutions have enabled our customers to streamline their warehouse operations with the lowest total cost of ownership in the industry. Our results-driven solutions are leading the way in profitability, efficiency, and customer satisfaction.