Maximizing profit has always been a challenge in the materials handling industry, and it has 3 main components:
1. Determining the best prices you can charge in the free market.
2. Keeping costs as low as reasonably possible.
3. Eliminating waste, in the form of unnecessary labour, lost time, and redundancy.
Unfortunately, these are not only the keys to profit, they are also the points of huge financial loss for many companies.
The first two are primarily management issues. These are the concern of company or site leadership, although every employee has the potential to assist in these objectives by being aware of industry best practices. The problem is that these first two have been areas that are often the focus of all profit efforts, while the third offers the best opportunities to stand out from the pack.
Waste is the biggest hindrance to profit maximization in the material handling industry. This can be in many forms:
– Lost labor (scheduling conflicts, employee integrity or competency issues, or inefficient usage of labour)
– Overuse of resources (excess plastic wrap, fuel loss due to idling or poor maintenance, having more staff than required)
– Theft ( An integrity issue for the HR department to deal with)
– Damage. (Unplanned downtime due to overloaded or under maintained equipment, abuse, improper usage of equipment)
-Redundancy. This is the least obvious and is often overlooked, but a major component of efficient profit. This is an example of the saying,
” If you want to earn what the top 5 percent of your industry does, figure out what they do that the other 95 percent doesn’t”.
This often requires thinking outside of the box. Maybe the way you route the forklifts through the warehouse is not optimized. Think that this doesn’t matter? Think this out:
Pallets loaded, driven through the warehouse to the floor scale, weighed and recorded, then rerouted to the appropriate loading dock. In a busy cross dock, there may be the additional cost of forklift operators waiting their turn at the floor scale.
The 5% Solution :
What if you could change that up? For example, put a Seko Scale on each forklift truck. Initial cost may seem steep to some “budget-conscious” owners, but look at the facts. No longer do forklifts need to be routed to a floor scale, but instead driven directly to the destination dock. Even if you save only 1 minute per pallet, that can really add up! What could you do if that operator could free up another 30 minutes a day? Multiply that by your number of employees and shifts per day, then by the average hourly rate. Pretty amazing isn’t it? So you may spend $4000 once for a quality forklift-mounted scale, but that unconventional thinking ( unless you are in Europe, where this is already standard thinking) can rapidly pay for itself in labor savings, and then you can watch the profits continue to roll in. This is even more amazing when you start to calculate some other savings:
-No lost “wait times” at the floor scale.
– No lost time recording weights ( automatic on a Seko Scale)
– No fines for overweight trucks (“legal for trade” accuracy)
-Fuel and tire savings due to less idling time and more direct routes
That “this is how we’ve always done it” mentality will cost many warehouse and logistics providers exponentially! Read here for more information on SEKO scales.
What else could you do to “get outside the box”?
- Adopt a Long-Term view on equipment maintenance, using quality parts from a quality source like Intella.
- Cultivate good planning and forethought by rewarding it.
- Reward good customer service, don’t just say it’s important.
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