There are many things to think about if you are involved in a warehouse business. Distribution can be a very lucrative field, but there are a lot of opportunities to leak money. Let’s take a look at the core elements you will need to address.
You can’t have a warehouse business without having a warehouse! Finding a suitable premises at the right price is tough enough, but you have to take all of your other costs into consideration, too. Let’s take your distribution costs as an example. Good warehouses in central locations are usually expensive because good travel links mean that businesses spend less on fuel, freight and fleets. You might find a cheaper store to rent. But, the money you save may have to be spent getting your products from A to B. Look for warehouse rentals at the Big Yellow to give you an indication of how much prices can vary.
You will need all kinds of equipment to get your warehouse up and running. It could just be a few shelving units or a few hundred. You will need forklift trucks to access higher levels and speed up the delivery and signing in processes. You should also think about vehicles. Will you hire a transportation company or build your own fleet? Saving money is hard in these areas of the distribution business, because, after all, they are all necessities. But it can be done if you play the long-term game.
Inventory & Supply Chain
A warehouse business cannot operate without robust software running your inventory. You also need excellent supply chain principles to receive and ship out stock. But doing it yourself takes time, energy and a lot of money. Try an integrated supply company to get you started on the road to full control over your inventory and your logistics. It cannot be stressed enough how important inventory and supply chain is, especially when you are servicing many different clients. Which brings us to…customers.
Your business will not survive without customers, so where are you going to find them from? Raising awareness of your business doesn’t come cheap, but you can save money by teaching your marketing team a few tricks. Look at trade directories for small to medium sized businesses who sell products directly to their customers. Part of their problem will be that they want to expand, but don’t have the premises to store goods. As the middleman, you can supply their solution.
All warehouses need staffing – unless you intend to do everything yourself. But how can you save money? Invest in raw, eager people with little experience that you can start on a basic wage. You will need to train them up well, and reward them gradually as their skills improve. However, it is always a good idea to hire a few people with experience who know what they are doing. They will be able to guide, train and mentor the rest of the team in your absence.
One area that you can’t cut costs in is your licenses. Anybody that uses specialized equipment in your warehouse will need a license to do so. That goes for fork lift truck drivers or even food handlers if you are in the frozen food distribution business. Have these in place or, quite simply, you will find yourself in a lot of troubles. However, proper planning will help you save you a bit in wage payouts. Learn to rota your staff properly so that you never have too many qualified staff working at the same time. This will also help your productivity levels stay up.
Got any more advice on how to save money for a distribution business? Feel free to share in the comments section below!