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The wholesale distributor buys large quantities of goods from manufacturers or suppliers and resells them to retailers and e-commerce sites. Wholesale distributors face numerous challenges such as stiff competition, demand for fast delivery, and high operational costs.
Despite the challenges, a forecast by Research and Markets expects the global wholesale market to grow to over 64,000 billion US dollars by 2025.
Therefore, wholesalers such as McKesson Corporation, Arrow Electronics Inc., and others must find solutions to these challenges to remain competitive. One of the solutions is finding ways to reduce operational costs.
This article will discuss how U.S.-based wholesale distributors can reduce the operational costs of material handling.
Leverage on Technology
Wholesale distributors can reduce material handling costs by using the right warehousing equipment. For example, distributors can install gravity-driven equipment such as gravity chutes, slide lines, and conveyors. Such equipment uses gravity-fed movement without the need to install power-driven equipment.
Managers should evaluate the efficiency and cost-effectiveness of each piece of equipment before buying it. In addition, investments in low-energy equipment could lead to significant cost savings. Replacing older equipment with modern equipment will also improve productivity as well as reduce maintenance and repair costs.
Though robots are expensive to purchase and install, they can effectively reduce operational costs for U.S.-based wholesale distributors. Robots replace manual workers in handling repetitive tasks, reducing wasted time and increasing productivity. In addition, robots can work for long hours and handle hazardous materials.
Material handling automation includes proper scheduling, tracking, and communication tools. In addition, distributors can integrate cloud-based operations and software to improve their procedures. These tools play an important role in improving productivity by eliminating redundancy, wastage and enhancing accuracy.
Lean Material Handling Techniques
U.S.-based wholesale distributors can adopt a lean material handling system which reduces the effort, time, and cost required to accomplish procedures. In addition, a milk run system on the distribution floor will allow for frequent deliveries of materials to sections that need regular restocking.
Wholesale distributors can also reduce costs by decreasing touch labor. For example, an automated distribution system reduces the number of times an employee handles materials. As a result, workers significantly reduce the time and distance they travel on the distribution floor.
Optimizing the materials workflow will reduce the distance and time spent moving materials from one section to another. Materials will quickly move from the receiving section to inspection and eventually dispatch. An optimal material workflow will also optimize space.
A continuous monitoring and improvement program will assist in reducing the error rate within a distribution warehouse. Such a program effectively reduces wasted inventory, time, and motion, eventually reducing operational costs. In addition, the program should include process mapping, visual communication, and process control to identify and eliminate defects.
Wholesale distributors and other manufacturers should also store materials under optimal conditions to reduce damage. For example, temperature and humidity can easily cause materials to deteriorate. However, distributors can employ IoT devices to monitor such conditions and prevent theft.
Proper storage procedures are also essential in preventing damage. Damaged materials result in losses. Wholesale distributors should monitor the shelf life, moisture, and temperature levels. Continuous staff training, provision of appropriate material handling equipment, and documentation of material handling procedures are crucial in preventing damage.
Manufacturers, wholesalers, and distributors must employ deliberate strategies to reduce operational costs. Material handling in distribution involves moving, storing, controlling, and protecting materials. Unlike in production, material handling creates no value. Therefore, distributors should keep material handling costs at a minimum.