Cut your warehouse costs this festive season

Cut your warehouse costs this festive season

13 October 2021

  • festive warehouse
    festive warehouse

Many manufacturing businesses involved with e-commerce are growing at a phenomenal rate and with this growth comes greater strains on warehouse processes. That never used to matter because you could just employ some extra temps to clear any backlogs. Things are different now and recruiting has become increasingly difficult due to a general shortage of workers. Where it is possible to fill jobs, employment costs are increasing. Why not invest in a WMS and cut your warehouse costs?

According to the United Kingdom Warehousing Association (UKWA) as quoted in Reuters, warehouses in Britain are having to pay up to 30% more to recruit even entry level logistics staff. A chronic shortage of workers has exacerbated pressure on already buckling supply chains and threatened to derail warehouses in the run up to Black Friday and Christmas. In previous years, migrant workers would have come to the UK from mainland Europe to work during the festive season, but numbers have dwindled now after Brexit and the pandemic. Clare Bottle, the Chief Executive of UKWA estimates that British warehouses are going to be tens of thousands of people short this winter.

So, maybe the time has come for all warehouses to ditch their paper based processes? Why overpay for resources when you don’t have to? Forget about trying to hire in extra operatives that are already in short supply for peak periods.

Investing in a rapid results warehouse management system (WMS) may be the best – and most cost efficient option available to be able to cope with the extra pressure on order fulfilment throughput rates to come in the next few months. Now that rapid implementation WMS options like Indigo QuickStart exist, you can be sure that introducing new software will not equate to lengthy business disruption.

Here are just two ways a WMS improves efficiency and profit margins. Consider a typical manufacturing business with a £6 million per annum turnover that is fulfilling 1,000 orders a day. Here are some of the operational savings to expect:

Costs without a WMS

Many warehouses run on paper and have operatives employed just for data input. Two admin assistants working 35 hours a week and earning £10 per hour costs this manufacturing business £700 per week, £36,400 per year.

Automating with a WMS helps avoid common mistakes which can be costly. If this warehouse is shipping 1,000 orders a day and has a standard 3 % error rate, which is typical for a paper-driven warehouse, that is 30 mistakes being made every day. If each of these costs as little as £20 to rectify, the costs will soon escalate and before you know it they will be North of £600 per day, likely to be much more during peak periods.

Over the year, for a warehouse operating 5 days a week, that will cost £156,000 – a phenomenal amount of money. So far, the running total of expenditure in this warehouse without a WMS is £196,400.

Let’s see how the same warehouse can be saving money if they invest in warehouse management software.

Savings to be made with a WMS

Using a WMS with mobile devices will remove most of the administrative costs associated with logistics from your business. You may only need to employ one admin assistant for instance, saving 50% of costs in one year. That is a saving of £18,200.

Most warehouses that implement a WMS will see error rates cut to 1% or less, this represents a £104,000 saving, potentially even more. This is just the financial benefit of eliminating miss-picks, a further advantage will be the extra goodwill you can generate among customers for offering an error free operation and fantastic service. What price can you place on building long term customer loyalty?

By introducing a rapid results WMS like Indigo QuickStart, a business can very quickly transform its warehouse operations with an easy to implement, rapid return starter package that can scale as your business expands to meet the ever-changing requirements of your customer base. In this example, the business could be saving over £120,000 a year.

Indigo QuickStart has been designed to transform and optimise all warehouse operations in record time by offering a scalable, cloud-based solution with a simple to manage and low cost, 12-month subscription model for up to 10 simultaneous users.

The QuickStart Program is being delivered by Indigo Software’s team of leading industry supply chain experts and includes a free site assessment with resource / operational optimisation consultation and technology review.