Main Warehouse Activities as Percentage of Total Cost

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warheouseWarehouses have typically been viewed as cost centers. But it seems that with the rise of e-commerce, many companies are thinking of warehouses as part of their value chain.  They understand that the warehouse can be a competitive advantage when it comes to product availability, delivery time, and delivery accuracy.

Compare shopping on Amazon to going to Wal-mart.  With Amazon the selection is much larger, the prices are just as low, and you can shop from the comfort of your home.  If Amazon can deliver your purchases within a day or two without any damages or mistakes, you’ll probably be a happy customer.  Without incredibly efficient warehouse operations none of it would be possible.

Because of the importance of warehousing to our economy, I’ll be writing about warehouse management and best practices on this blog.  The point is to share information and experiences and I strongly encourage feedback and interaction. This post simply introduces the idea and shares some information I recently found.  Below is a list of the main warehouse costs from most expensive to least expensive.  This came from the book Warehouse Management by Gwynne Richards. The list will give you a good idea of where to start when looking to reduce costs in your warehouse.

  • Order Picking – 36%
  • Packing – 13%
  • Loading – 12%
  • Receiving – 12%
  • Storage – 8%
  • Put-away – 7%
  • Value adding services – 5%
  • Stock counting – 4%
  • Other activities – 3%

 

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