What does it cost you to get one order line out of the door? Add up what your warehouse costs in a year, put in how many orders and lines you ship, and you get your cost to serve: the number you need before you quote a customer, price a channel or compare yourself with a 3PL.
All warehouse wages including employer costs and agency staff: receiving, put-away, picking, packing, shipping and supervision.
Rent plus energy, service charges, insurance and maintenance. The pallet storage cost calculator gives you this figure if you do not have it to hand.
Truck and racking leases, scanners, packaging machines, software subscriptions and maintenance contracts. Annual figures, not purchase prices.
Shipments that left the building. Count a split delivery as the number of shipments, not the number of sales orders.
Total picked lines across those orders. Your order system can export this; it is the single most useful volume figure a warehouse has.
4.40
Cost per order line
What one picked line costs, all in.
Why this number: What a WMS costs: pricing, TCO and payback
What one shipment costs, all in.
The part of a line that is people.
Usually between 50 and 70 per cent in a manual warehouse.
Tells you whether you are an ecommerce or a wholesale profile.
A one-page summary with your figures, the method and what the answer means.
Cost per line moves when handling time moves. See what a few seconds off each line is worth across a year.
See what handling time is worthIn plain terms: everything the warehouse costs in a year has to be paid for by the orders that go out of it. Add labour, space and equipment, divide by the lines you shipped, and you know what one line costs. Divide by orders instead and you know what one order costs. Both are needed: customers order differently, and a single-line order is far cheaper to serve than a twelve-line one.
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Whether you are a 3PL pricing a contract or a manufacturer deciding whether to outsource, cost per line is the common language. Compare it with the handling rate in any quote you receive, and add storage separately.
One average across all customers hides the fact that small, frequent, single-line orders often cost more to serve than they earn. Run this per channel or per top customer once and the picture usually changes somebody's mind.
Keep it out here. Carrier cost varies by destination and weight, so it belongs in its own line on the quote. This figure is what happens inside your four walls.
There is no universal benchmark: it depends on order profile, product size and how automated you are. The value is in tracking your own figure over time and per channel.
Loading metres, floor area, volume and trailers needed, from your own pallet sizes and stacking height.
Volumetric weight calculatorDimensional weight, real weight and the chargeable weight your carrier actually bills.
Warehouse space calculatorSquare metres for a given number of pallet positions, including aisles and support space.
Loading metres, stock levels and order points are only as good as the stock data behind them. That is what a warehouse management system keeps accurate, every movement, without anyone maintaining a spreadsheet.
How many of your articles sit in a pick location they empty less than once a month?
Part one: Laying out a warehouse does not start with the racking
After your last integration, how many systems hold a stock quantity for the same item? Name them.
Background reading: What a WMS costs: pricing, TCO and payback