How to Reduce Warehouse Cost with the Right Automation

Table of Contents
1. Introduction
2. Why Automate Your Warehouse
3. Understanding Warehouse Cost
4. Reduce Your Warehouse Cost with the Right Automation
– Optimizing Storage with Automation
– Centralized Inventory Visibility
– Manpower Cost-Reduction and Optimization
– Less Errors Means Lesser Returns and Logistics Cost
5. Opt for the Future of Warehousing
6. FAQs on How Warehouse Automation Reduces Costs

You might have often heard that a warehouse is the heart of any e-commerce business. Let us take that story further: operations and logistics are the two vital veins keeping the warehouse’s heart beating. Order flows just like blood flows—it never stops! Just as the nervous system ensures blood flow in your body, automating your warehouse system also guarantees efficiency in operations, keeping the warehouse healthy and profitable!

Why Automate Your Warehouse

When we talk about profit-making, it goes straight that a warehouse is your most significant investment for your e-commerce business, even if you choose to rent one! And it doesn’t just stop there; maintaining the warehouse is another significant expense. You need the machinery, resources, and manpower as your most essential building blocks. All the other building blocks are unchangeable, but manpower can be used wisely. 

Of course, manpower is essential, but what if I told you that you can only invest in manpower where it is needed? The right technology can improve your workflow by bringing efficiency, accuracy, and reduced cost! Let’s see how! 

For example, if five people were picking up orders, they would be able to pick up 50 in an hour. However, if the automated and sorted picklist is given to them, only one person can process 25 orders per hour. Plus, all of them will be fetched with the correct information. Leaving no room for wrong delivery returns and saving on logistics costs! Benefits after benefits! This was just one example; let’s see how automation can reduce your warehouse cost in more detail. 

Understanding Warehouse Cost

You pay several types of costs in the warehouse. Let’s see what all costs you pay! 

• Fixed cost: The one that remains constant despite the warehouse’s functions, such as rent, tax, security, etc. 
• Variable Cost: It depends on the size of your production. You will require more raw materials, packaging, wages, and other resources like electricity for more production.

• Operational Cost: This is the most significant type of cost in the warehouse, including maintenance, utilities, and equipment running costs.  

You are aware of the visible costs, but hidden financial and operational leakages slowly drain a significant amount of your profits. Let’s consider a few instances how these leakages can turn your profits into losses:

Inventory not rotated properly expires and becomes unsellable. Profit loss count one!  Accidental damage can render products worthless. Profit loss count 2! Manual processes increase the risk of shipping errors, leading to lost sales and additional logistics costs. Profit loss count 3! Inefficient manual logistics allocation slows down your operations, reducing overall efficiency. Profit loss count 4! Operations are dynamic, and common instances like these occur on a daily basis, affecting your business in the long run.

As the problems are common, the solutions are also standard. You just have to pick the right one that meets your warehouse’s needs. Let’s see how automation can reduce your warehouse costs! 

Reduce your Warehouse Cost with the Right Automation

Here, we will explore the beneficial areas where automation functions as a cost-savior. 

1. Manpower Cost-Reduction and Optimization

You might have experienced this while running a warehouse: some unavoidable scenarios happen because of miscommunication or the absence of manpower at certain crucial times, resulting in a loss of profits. What if we told you you can optimize picker-level efficiency by analyzing it per hour? 

Yes, it is possible! It prevents all possible miscommunications, ensuring the accuracy of any information exchange. As the technology is involved, you can easily capture where exactly the discrepancy is appearing and target a solution for it! We understand that time is money, and if you save time, you are also saving your money. If 20 people were doing a particular task, now it can be done by five people. This allows you to reduce the cost of manpower and human error. 

2. Optimizing Storage with Automation

Stocking inventory is a regular task in any warehouse, and you do your best to make it smooth. But if you are not able to use your storage to the maximum efficiency, then you are doing it wrong. For instance, automated storage optimization lets you divide your warehouse into zones or aisles so that you can store the most sold product nearer to the picking zone; this improves the picking efficiency, ultimately reducing the order-to-ship time.  

Innovative steps like Auto GRN streamline warehouse operations by automating the generation of purchase orders, Goods Receipt Notes (GRN), and putaway tasks.  This automation helps you regulate the shelf-wise cycle count, and handheld devices ensure accuracy in every process. 

3. Centralized Inventory Visibility

Believe it or not, seeing all about your inventory on a unified platform synced with your orders and warehouse fuels your business to its best. The chances of inventory leakages decrease because everything is kept in check with the accuracy of handheld devices. Whether it’s rotating your stock according to the expiry dates or damaged or returned items, you can have everything under control. 

The traceability that comes with automating inventory can help you function at all levels, whether item, product, or SKU. You can quickly merge the batches you want to create or bundle your products. Automation is right for your e-commerce business when it fits your needs. With innovative tracing, your order processing will become fast and efficient. 

4. Less Errors Means Lesser Returns and Logistics Cost

One of the everyday tasks that e-commerce businesses face is returns. The goal is to reduce returns, and the main idea behind it is to reduce the cost of all the extra logistics involved. 

Secondly, customer satisfaction is affected. The cost is constant regardless of the cause behind the returns, like incorrect information fetching, wrong product delivery, or anything else. Hence, you need a warehouse with an automated flow of information and simplified returns management! 

Opt the Future of Warehousing

Smart sellers have an intelligent warehouse! The critical fundamental behind making a smart warehouse is using automation in the right way to suit your inventory and business needs. Let us give you an example: a healthy snack brand faced an issue because its product shelf-life was limited. This resulted in the loss of inventory and more returns. The storage was sometimes occupied with products that were unsellable in the market. 

With the right choice of automation, they were able to set a tolerance level for managing their expiry. This simplified things on many levels! For example, a product had a shelf life of 6 months. The tolerance was set to 5 months. Once a particular tolerance level was set, the product would not be processed for further sale. They were able to store the products that still had time to reach their expiration dates. The returns were minimized, and all the extra logistics were saved in one go! The main thing is that the customers were satisfied! 

This is the goal of your automation! It should not just be technology for your process but make it efficient, maximize your growth, and fit your business needs! 

FAQs on Reducing Warehouse Costs with Automation

1. Is Warehouse Automation beneficial for small and medium businesses? 

Yes, warehouse automation is beneficial for small and medium businesses. With the correct automation of the process, small and medium businesses can prevent the financial leakage of operations. And it expands their capacity by ensuring accuracy and efficiency. 

2. What is the best warehouse management system for e-commerce businesses? 

The best warehouse management system automates your warehouse operations. It also reduces costs, saves your business profits, and streamlines your workflow. It captures the correct information at every step and ensures accuracy. 

3. How does warehouse automation reduce the cost?

Warehouse automation reduces costs by minimizing errors, optimizing storage space, saving the cost of all the extra logistics, lowering returns, and reducing the need for manpower. It also analyzes and monitors manpower efficiency.