June 28, 2005
Volume 1 Issue 18       

Be aware of warehouse costs 

Warehouse costs are made up of many elements. It is sometimes too difficult to look at warehouse costs and remain objective about product purchasing decisions. Looking at these costs is another activity based costing area that we previously discussed. By finding out your warehousing bringing to the table. As we hope you are beginning to see one of the only ways you can reduce costs is to know your costs. Lets now look at the simple way of determining the cost of warehousing.

·         Warehouse Occupancy +

·         Delivery Equipment +

·         Salary and Benefits /

·         Case or Pounds purchased equals your unit warehouse cost. Now that you know the formula, below if you are interested, are the components of the formula.

Warehouse Occupancy =

·         Total square footage times rent per square feet Rent +

·         Cost of refrigeration, is the maintenance costs added to the replacement cost/ useful life of refrigeration +

·         Utility Costs + Pest Control Service

Delivery Equipment =

·         Cost to replace trucks/useful life +

·         Estimate repairs of trucks and refrigeration units

·         Vehicle insurance and Licensing

 Salary and fringe benefits =

          Note:  If people have other jobs outside of warehousing prorate their Costs by the % of time spent on warehousing.

Know your Warehouse to boost Gross Profit margins

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