Recent research from McKinsey shows that warehouse and logistics providers that invest in targeted facilities and operational improvements can see significant productivity and capacity improvements, as well as meaningful cost reductions and efficiencies in revenue-generating business centers. By maintaining logistics uptime, warehouse and logistics customers will be that much better positioned to serve their clients and communities, as well.
Even for logistics and warehousing providers that are keenly aware of their customers’ ever-evolving needs, there’s often a network of indirect costs that are easily overlooked. Without full budgetary transparency, it’s much harder to calculate an organization’s facilities total cost of ownership—the true cost of maintaining physical warehousing and logistics centers.
Hourly rates and trip charges are two of the most tangible aspects of your repair and maintenance budget. But they’re far from the full story. Hidden, indirect facilities maintenance costs have more of an impact on the bottom line than vendor charges. Below are some ways these indirect costs are adding to operational costs.
Below we’ve outlined a few of the indirect operational costs for facilities and explained how they impact your bottom line.
Vendor management is a critical aspect of facilities maintenance for maintaining logistics uptime, and it can add to indirect costs. Dealing with multiple vendors for various maintenance services, such as HVAC repairs, electrical work, plumbing, and general repairs, can result in increased administrative overhead, communication challenges, and potential delays in scheduling and coordination. It may also lead to varying pricing structures, inconsistent service quality, and additional expenses associated with vendor selection, negotiation, and contract management. These indirect costs can add up and impact the overall facilities maintenance budget, leading to increased expenditures and reduced cost control.
To manage these costs, use technology or partner with a provider that can readily access multiple vendors across trades and locations. Outsourcing vendor management can countless management and hours as well as drive the best cost for service.
Emergency repairs and unplanned maintenance
Emergency repairs and unplanned maintenance can also contribute to indirect costs in facilities maintenance budgets for logistics and warehouse operations. Unexpected breakdowns, failures, or accidents can result in costly emergency repairs or unplanned maintenance work. These expenses may include expedited service fees, after-hours labor charges, rush-order parts, and other unforeseen costs. Additionally, emergency repairs or unplanned maintenance can disrupt operations, leading to potential downtime, delays, and productivity loss, which can further impact the overall efficiency and profitability of maintaining logistics uptime.
Implementing a preventative maintenance program can help mitigate these costs by proactively repairing equipment before it fails. Establishing a program helps to stabilize maintenance costs and actually drive down often costly emergency repair costs over time.
Operational disruptions caused by facilities maintenance activities can also add to indirect costs for logistics and warehouse operations. When maintenance tasks require shutting down equipment, blocking off areas, or relocating operations to accommodate repairs, it can result in operational disruptions and productivity loss. These disruptions can lead to delays in order fulfillment, shipment schedules, and other operational processes, which can impact customer satisfaction, contractual obligations, and revenue generation. Additionally, operational disruptions may require additional labor, equipment, or temporary solutions to mitigate the impact, leading to increased indirect costs in facilities maintenance budgets.
Indirect costs can add to facilities maintenance budgets for logistics and warehouse operations through vendor management challenges, emergency repairs or unplanned maintenance expenses, and operational disruptions. Implementing effective vendor management strategies, proactively addressing maintenance needs to minimize emergency repairs, and planning for operational disruptions can help mitigate these indirect costs and optimize facilities maintenance budgets, contributing to overall cost control and operational efficiency.
A well-functioning maintenance strategy is essential to the success of any modern-day facilities portfolio. To make sure your facilities maintenance strategy is meeting your needs, request a demo to learn more about how our programs can help you.