Phantom or hidden costs may not be very noticeable but they have a real impact on a daily basis. These costs generally have two types of repercussions, the first is maintenance and the other is the replacement of assets, which represents a "badly closed faucet". This faucet is leaking and adding daily costs that if analyzed at the end of the month could be prevented in a better way. Normally they are not fixed in this way until the end of the year and it becomes very difficult to justify, which represents a bad management of expenses and budgets of the area.
These phantom or hidden costs are a headache, they are a small problem that becomes a waste of time, diverting the focus of the business and the relevant functions that can generate optimization and efficiency in your logistics processes and operations. All of this finally generates an extra cost for the company and demerits the use of your human resources.
That is why in the medium and long term it is essential to have an effective level of investments and efficient processes, turning your phantom costs into real savings, making profitable and optimizing the efficiency of your processes.
A clear example is industrial protections, where many times companies do not consider any type of protection or implement basic protections such as iron protections that lack technology. This type of protections have been in the market for more than 30 years and many times they are not adequate, on the contrary, they become a phantom or hidden cost. These protections give the impression that they protect but do not last, generating constant maintenance and replacement costs, also they damage the company's fixed assets such as racks, structures, offices, machinery, etc. impacting the tasks of those workers responsible for optimizing logistics processes and the operation of your warehouse.
Author: Mirko Pavlovic / Partner and Commercial Director Ennat Group