What Does Operational Efficiency Mean in Warehousing?

Male worker wearing hardhat in warehouse with tablet

What Does Operational Efficiency Mean for a Warehouse?

Warehouse workers often get mixed representation in the media. In real life, they struggle to meet the deadlines placed on them by big brand companies.

The reality is that these employees are only as good as the management who oversees them. Improving your operational efficiency is key to meeting deadlines and streamlining the job. But what does operational efficiency mean for a warehouse and how do you improve it?

Here’s everything you need to know about operational efficiency.

A warehouse faces many different obstacles and challenges that must be accounted for to operate at its peak efficiency. Some of the most common problems are redundancy, unorganized inventory, and a bad floor layout. There may also be stressful seasonal demands and issues with its order management.

Dealing with all these various issues is a fundamental part of operational efficiency. By eliminating or minimizing these problems, you can generate greater income and lower the costs of your operations.

Male worker labelling shelf in warehouse

Increase Operational Efficiency Meaning for Your Industry

The operational efficiency definition states that it is a metric to measure economic efficiency. Your profit is weighed against your operating costs. In other words, higher efficiency means that you’re making more than you’re spending.

The easiest way to achieve high improved operational efficiency is if transaction costs and feeds are reduced. However, those lower costs may not last. The only way to achieve long-term efficiency is by making changes within your own company.

Unfortunately, warehouses are made up of a lot of different moving parts. As such, finding out where to make changes for improved efficiency is difficult to do on your own. That’s where logistics technology comes in.

Automated robots can improve your overall workflow. Innovative AI helps by collecting data from all the different areas of your warehouse. Warehouse management software can then visualize that data to help you make informed decisions.

Benefits of Operational Efficiency

The changes you make to increase your operational efficiency also benefit your warehouse.

For example, you can see reduced costs in your daily operations. The lead-time and rates of accidents and user error will also be lower.

Your team will have more clarity on what’s expected of them, which will boost their mood on the job. Happier workers stick around for longer than unhappy ones. They also work harder and are more willing to put in overtime hours.

Customer experience also benefits from operational efficiency in every industry. People love it when they get their purchases on time. It’s even better if they get their package earlier than anticipated.

Customers also respond very negatively to damaged goods. Don’t be surprised if they leave a bad review that can negatively impact the warehouse responsible.

High operational efficiency means that the supply chain is strong and runs smoothly without any major hiccups or delays.

Calculating Operational Efficiency

Before you make any changes to how your warehouse operates, you’ll need to calculate its current operational efficiency. It’s the only way you’ll know for sure if your changes are working.

Complete regular and extensive operational audits to calculate operational efficiency. An audit will assess your capacity and throughput, the layout, your storage systems, and your computer systems.

After the audit is completed, you should define your warehouse performance goals.

Schedule meetings with your department heads to hear them out. Discuss their expectations for your warehouse efficiency.

What kind of numbers should they see, and at what rate do they expect these changes? You want to start with the problem areas first before moving on to less important processes.

Establish specific KPIs for each role in the warehouse. For example, packers should go through a certain volume every hour with a high accuracy percentage. Shippers may be measured based on order process per hour and quality percentage per order.

On a similar note, make sure you’re working with an efficient volume weight per shipment. Volume to weight refers to how much your shipment will weigh and how much space it takes up in a shipping container. Calculating it can help save money since you could opt for a smaller container instead of using a larger one.

How to Increase Efficiency in Your Supply Chain

You can improve warehouse operations once you’ve isolated the areas in need of changes or upgrades. If you have trouble identifying those areas, there are some general improvements that you can make.

First, see how your warehouse can improve its layout. A properly designed warehouse is essential if you want maximum productivity. It’ll help prevent any unnecessary bottlenecks, lost inventory, or unsafe storage practices.

Your order reports can help your team determine what goods move fastest. Position them closest to your shipping areas for easy movement.

Upgrading warehouse storage is another way to improve your operating efficiency. All the goods should be neatly stored in a specific place, and your employees should be able to find them without much trouble.

New warehouse technology can help a lot with a warehouse’s organization and communication.

Track your inventory every step of the way to its final destination. Get real-time warehouse analytics and automate accounting processes. Teach your employees how to access these systems so they can keep tabs on any problems that come up.

Tackle Supply Chain Challenges

So what does operational efficiency mean for a warehouse? In short, it means better service at a lower cost for both parties.

Big companies like Amazon and Target have their own warehouses around the world. Most smaller businesses can barely afford a single one. Lucky for them, there are warehouse management services that can help.

AmerTrans has been a leading provider of logistics services for decades. We have offerings in transportation, warehousing, local storage, and more. Contact us today to discuss your logistics and distribution needs.

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