How E-S-P Inefficiencies Cost You More Than You Know.

The role of warehouses and distribution centres in today’s supply chain cannot be overstated. 

Some experts even say they are the most important part of the entire supply chain.

While it’s main premise of storage hasn’t changed much over the centuries, there are considerations that MUST be factored into running a modern warehouse.

The use of warehouse management software to monitor many aspects of the operation has helped managers identify potential problem areas before they develop. Implementing lean manufacturing and just-in-time processes also help to reduce waste. But with advancements comes more pressure.

The quest for instant gratification has increased the prevalence of online shopping and especially the increasing demand for next day delivery by online retailers. These and more put an immense strain on warehouses to get it right the first time.

A survey carried out, showed that there are many common inefficiencies affecting UK warehouses in 2014.

However, three of them combined can cost up to £210 million per year. At Monarch Shelving, we have dubbed them the E-S-P inefficiencies. They are Energy, Space and Processes; let’s see how each of these can affect your business.

Energy – From sorters to heating to battery charging to office equipment, most warehouses are consuming power up to 20 hours daily. Little wonder, it consumed over 220 million tonnes of oil to produce energy in 2008; with 620 million tonnes of CO2 released. With the government pledging to reduce CO2 emissions by 2020, there is a ‘compulsory’ green revolution sweeping the UK.

Reducing the carbon footprint, saving money and maintaining peak productivity may seem like an impossible goal, but it can be done. A combination of more efficient operations, replacing inefficient equipment and optimizing building energy efficiency, can help achieve these savings.

Space – Let’s assume you have a new supplier, or your regulars are shipping more than their usual volume and you accept to take it all on. You will quickly find that your pallet racks are packed full. You’ll also start finding stacks of customer goods in aisles, hidden in corners of the warehouse, products stacked higher than regulations allow etc. It may seem like you have hit the jackpot, but you have also run out of space.

This is a problem that isn’t worth the hassle. Pallet tumbles (especially in food industries) will attract rodents. Hidden pallets can lead to expired goods and misplaced goods can lead to lawsuits. Cleaning up after a spill is downtime where you are paying staff for doing the ‘wrong’ thing. And no, the solution isn’t renting another property. The added cost of transport, rent, unknown unknowns simply isn’t worth it.

In the run-up to the holiday shopping season, be mindful of the contracts you accept. Assess your space before you take on any contracts.

Process – Refining existing processes and becoming more efficient is usually seen as a good thing, right? It’s not so if your progress is in a vacuum. If your production process has improved and your distribution process is still stuck in the Dark Ages, there will be all kinds of problems. Not keeping departments in sync with each other, will lead to them constantly falling short of their targets.

Other process recommendations include:

• Increasing the size of the receiving area to avoid initial inventory errors.

• Using cycle Counting to identify inventory that just doesn’t seem to move

Today’s managers have to juggle many roles. They include:

• improving efficiency while keeping costs low,

• maintain overall quality,

• keep up with technological advancements,

• maintain a good relationship with the workforce,

• establishing an excellent safety record.

Little wonder many managers turn a blind eye to “minor” issues, but every tweak matters. For example, for many businesses a 20% cut in energy costs equals the same bottom line benefit as a 5% increase in sales.

Why chase more sales (with added marketing expense), when addressing an inefficiency will give you the same value?

Evaluate your current processes today. Adjust where you can and call the experts to help you streamline where we can. Call us today.