Warning: Articles in this archive are not updated for post original publication date law changes. Articles are also not providing legal, accounting, or other professional advice or opinions on specific facts or matters and, accordingly, no liability is assumed in connection with their use whatsoever. Please consult your tax advisor.

Wholesale & Manufacturing Industry Update:

Increase Your Bottom Line Through Better Warehouse Organization

 

Taking the time to get your warehouse in order will decrease your warehousing costs.

 

Have you considered the additional costs incurred as a result of warehouse disorganization? Now is the perfect time to reevaluate your warehouse operations – a little spring-cleaning and reorganization in the warehouse will result in lower labor costs, increased storage capacity and improved customer service. Consider the costs generated by the following warehouse inefficiencies:

  • Rehandling of Inventory. Your storage system and procedures should allow goods to go directly from the unloading area to the appropriate location in the warehouse. Having to relocate the merchandise even once while it is being stored essentially doubles the labor costs relating to storage of those goods.

  • Fixed Slot Location Storage Waste. A warehouse in which all storage locations are fixed is quite inefficient, requiring because it generally requires you to dedicated the maximum amount of space that could possibly be needed to an item which on average requires little more than half that amount. In contrast, floating slots offer storage efficiencies as well as handling efficiencies.

  • Packing & Shipment Errors. Your system should provide for each shipment to be checked against the pick list to verify accuracy. Inaccurate shipments result in customer complaints when incorrect items are shipped or the quantity shipped is too low, and inaccurate shipments result in decreased profits when the quantity shipped is too high.

A warehouse audit should be completed to assess performance in the areas of receiving and inspection, storage, handling, picking and packing, packaging and shipping, transportation and general warehouse information, as well as to evaluate overall warehouse layout and design. It will highlight problem areas that are too costly to ignore. The following is a summarized version of our checklist which can be used as a guide to perform a warehouse audit.

Kim Gregoris, CPA, MS (Tax)

Inventory Group Leader