Material handling costs are constantly adding up. Many business leaders don't realize that this is a daily expense coming from many activities, and must be kept under control. To contain these costs, you should know the problem areas where inefficiency is often found. Here are the five areas of material handling that are likely to cost you the most.
1. Over-Handling Material
Each time an item is touched, it's taking employee time and therefore your money. Attention to detail is important, but for each time that materials are moved, sorted, counted, stocked, or prepared for storage or shipment, it's wasting a little more profit. Handling of any item is no more than the minimum necessary.
You should work with your vendor to see that sorting, inspection, and counting is done on their end. It makes receiving so much easier if you can rely on this. In production environments, as much material as possible should be put straight onto the floor when and where it's needed.
2. Workflow Bottlenecks
With a poor material handling system, machines may sit idle waiting on raw material, which is impacting productivity. It's important that the correct materials in sufficient quantities be on hand before production starts. Material handling should follow the shortest path possible.
Inefficient operations can cost companies up to 30% of their revenue. Processing that involves moving materials from one point to another, or worse, back to the same point twice, is a waste of time and resources.
3. Damaged Materials
Accidents or rough handling leading to breakage of goods is costly over time. Incorrect techniques, outdated materials, and inadequate equipment are usually to blame. Everything that gets damaged, whether it's product loss, equipment wear, or torn packaging, is a needless expense. It's estimated that reusable packaging in the food industry alone could save over $2.5 million per year on costs.
Storage techniques must be in place to ensure shelf life is tracked, as well as moisture or temperature levels where applicable. Every time an item is moved there's a chance of damage; conveyor systems can help reduce the risk.
4. Poor Space Management
Having adequate storage space is essential, but maximizing existing space should be a priority before you consider buying or leasing more. There are a variety of flexible steel construction options, such as taller racks, overhead ceiling racks, and raised platforms in open areas that can create multiple levels of storage area.
Every inch of storage space should be examined for ways that it can be safely and efficiently utilized. However, over-use of space can create traffic bottlenecks. Generally speaking, using more than 27% of your total cubic space is probably inadvisable. The most efficient use of space will bring the greatest value in storage costs.
5. Inefficient Equipment
Equipment like forklifts can be very useful, but also bulky and expensive. Lift trucks cost money to maintain. The equipment you buy should be chosen for efficiency and economy as well as functionality. Having the right equipment for the job, such as scissor lifts or smaller electric forklifts, can reduce your need for bulkier equipment.
Gravity-fed systems are cheaper and lighter than power-driven conveyors. If materials can be moved in sufficient quantity on pallet jacks, it could reduce the dependence on forklifts. All the equipment you buy should be weighed in long-term benefits and returns. Look for alternatives that can get the job done cheaply, but without reducing productivity - even if it means a little rethinking of your methods.
The single most important solution to reducing material handling costs is to store materials where they are needed, rather than having to fetch them with a forklift on demand. The more equipment, time, and personnel that are needed for moving materials, the greater your costs. Proper material handling is the most efficient balance of all three.