WAREHOUSE COST REDUCTION BY IMPROVING THE STORAGE POLICY

Abstract

The basic aim of enterprise activity is to optimize profitability by increasing revenue and decreasing cost.  The result reflects the value for shareholders, customer satisfaction, and employee satisfaction.  Supply chain management is an effective system to achieve all this.  A warehouse has a significant impact on the supply chain as its cost is a major component of total cost. This study focuses on reducing warehouse cost through optimizing its interior traffic by forklifts.

A revised storage policy, a class-based policy, was chosen and applied to the warehouse operations, especially to improve the way a location is selected for each incoming cargo.  The results indicate that applying this storage policy reduces the forklift traffic and distance travelled within the warehouse.  It reduces maintenance costs, and direct and indirect manpower costs.  It has further possibility for reducing manpower and equipment cost.  This improvement uses the existing configuration of the shape and layout of the warehouse, and therefore does not need huge investment during implementation of the new policy.