Carrying cost comprises the three-headed cost monster: labor, warehouse space, and equipment. Carrying cost adds these three categories together, multiplies those costs by the number of years in operation, and divides that number by the number of storage locations.
Our equation and focus on carrying cost provide a functional dollar amount that allows our clients and team to understand how each of the three costs affects the others.
Labor Costs
Minimum wage continues to rise, and soon it will reach $15.00/hour. The warehouse design and equipment that was efficient just 2 years ago can be rendered inefficient in today’s hostile labor environment. Taking a look at how to trim warehouse space and refine equipment needs is the foundation of realigning carrying costs and creating a modern, optimized warehouse.
Warehouse Space
In Southern California, we are seeing space lease for more than $1.00/square foot near port cities. Inland rates can be in excess of $0.50/square foot. Determining the best location and the space needed over a five-year plan is important for maintaining a low carrying cost.
As prices continue to rise and space is more limited than ever, a customized and modern warehouse design considers the space you need and the efficiency you demand. Our designs keep safety paramount so that expensive fines, workman comp claims, and work stoppages don’t add to the growing cost of doing business.
Warehouse Equipment
There have never been more options in warehouse equipment than today. Each specialized piece of equipment plays an important role in increasing productivity and reducing the amount of warehouse space needed. The right equipment can save millions in labor. However, equipment that isn’t chosen for the right design can slow down production and cause work-related injuries.
Our experts understand how equipment affects labor costs and influences the amount of space needed for your newly designed warehouse. The right, curated warehouse equipment choices will help reduce operational costs and dramatically increase the throughput processes of your product.
Conquering Carrying Cost Together
If it sounds like your company could benefit from designing your facility around carrying cost, IWS West, Inc. is ready to discuss how we can partner to design, test, and implement your new warehouse system. IWS West’s expertise ensures that the new scalable design is your solution for today’s problems and tomorrow’s growth.
Contact us today for a free, no-cost facility evaluation.
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