Document Management: The Hidden Costs of Warehousing

By:Tracy Pell on:August 27, 2014
Hidden Costs

It started out easy enough.  Susan had a few materials for her sales team. She got them printed up and had them warehoused at her company. As the year progressed Susan added pieces, replaced pieces, distributed pieces. Then later that year Susan’s company acquired a whole new company. Suddenly her sales team was twice as big as it was before. She had three warehouses to manage and lots and lots of obsolete items…. Or at least she thought she did. She couldn’t be sure. Suddenly she was filled with dread… what in the world did she have sitting on the shelves? It was just too much to tackle, so she just ordered all new materials.

Sound even remotely familiar? Unfortunately situations like the above are all too common. Warehousing seems so simple, but if you don’t ask the right questions it can cost you BIG!

As you evaluate your warhousing options or your current solution here are some things to consider:

Should you be warehousing items at all?

Depending on your quantity and level of customization you may not need to warehouse some (or any) items. Instead you may need to be considering a print on demand solution. Print on demand means you have less capital tied up in inventory, less waste and more flexibility. If your volumes are low or changes are common, print on demand may be a better way to go!

  • Potential savings: By printing on demand you eliminate all storage fees, waste, and labor associated with storing and discarding materials

Is the facility suited to your needs?

Meaning is it big enough to organize your items correctly? Does it have the right kind of equipment (boxes, bins, skids) to organize your materials correctly? Is it following efficient processes? Items in the warehouse need to be organized and easily accessible. This means they need plenty of space to house new items as they come in. Older items should be the easiest to access, because they need to go out first. You want to be sure that the company you are working with follows efficient systems to manage and inventory your materials. Do they know when materials are expired? How much moving around of your items are they doing and why?

  • Potential savings:

    • You reduce waste from spoilage because you make sure and use all items and eliminate the risk of reprinting materials that instead need to be either eliminated or replaced.

    • You save labor by ensuring that items are only touched when they are needed and not before.

What kind of reporting are you getting? How customizable is it?

Information is critical to how you manage your materials. At a minimum you need to know:

  • What you have

  • How much of it is getting used

  • The pace of usage

  • When it is going to expire.

  • When it is going to run out.

  • What other information do you need to manage your business materials?

    • Make sure you ask for all that information and get it to the folks who need it. Without this information they have no way of knowing when things are getting wasted, or over used.

  • In highly regulated businesses like Pharma this information can help you stay compliant with all governmental regulations and save you some really big headaches.

  • Potential Savings:

    • Reduce waste

    • Eliminate redundancy

    • Save time

    • Reduce risk of fines for non-compliance

    • Reduce risk of customer dissatisfaction due to out dated materials

What kind of support are you getting?

Who is watching out for your materials and raising red flags if needed? Let’s face it, you are not in the business of managing inventory. Whoever you trust to manage your materials should be watching out for you. You should have peace of mind; knowing that your inventory is being managed well.

Let me give you an example: We recently uncovered some hidden waste for one of our storefront customers. This particular customer recieves a  finished goods report every week from us. This report is sent organized by brand to all the marketing and brand managers at the company. Because we send this report so much, we noticed that they had many skids of materials that were inactive (with a per skid charge per month) of those about half had not been touched in months (in quarantine per client request). The other half were not being supported by any salesperson roster we had. Not only were they not supported by a roster they had also not been used in 120 days. translated into dollars this meant our customer was spending over $2000 a month to store stagnant inventory. We ran some custom reports for the Director or Marketing highlighting this unused inventory. The reports we provided made it easy for her to check in with her staff to find out the status of each item. In the end we were able to discard all the materials for a one-time fee. Saving the client $24,000 for the year.

So keep in mind. Your materials costs are much more than your warehousing fee. Take a look at everything because you never know how much you might be wasting!

Want to find out more? Check out this article on Document Management




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