Small Errors, Big Impact: The hidden warehouse cost
July 6, 2026
The biggest financial damage in most warehouses doesn't come from catastrophic failures - it comes from something quieter. In a recent Dexory webinar, Emily Nerland (SVP of Growth, Dexory) and Michael Robson (founder of Aspire-360, 20-years logistics veteran) explored what that looks like and what it costs. Here are the key takeaways.
The problem has a name: Drift
Emily's team isn't fielding calls about dramatic collapses. The pattern they keep seeing is something slower:
"We're not having conversations about catastrophic errors or failures. What we're finding is something that we're calling drift. A bunch of small errors that, seemingly, aren't an issue in isolation. But when they all start to add up, what does that actually mean to your bottom line?"
Mike recognised the pattern immediately. Drift builds through exception reports nobody followed up on, problems found too late, and workarounds that became habits - quietly undermining operational excellence.
"You only know about these when you stumble upon them, or an exception report comes out and somebody's manually gone and checked it. It's the whole end-to-end process of the operation and it probably starts right from when the pallet comes through the door."
6,500 hours a year and the data is already stale
Dexory's Cost of an Error white paper puts the average at 6,500 hours per year on manual cycle counts - and Emily noted that, in many operations, that figure is conservative.
"We have a 3PL in Germany that has 12 FTEs just constantly counting, every single day, year-round. 6,500 hours is more like 3 FTEs."
The hours aren't the real problem. By the time those counts reach decision-makers, the data is already out of date. Real-time data isn't a nice-to-have - it's the difference between managing your operation and reacting to it. Yusen, a leading UK 3PL, ran yearly wall-to-walls consumer over 200 hours, plus regular cycle counts. Stock kept moving. The data kept going stale.
"Most of the operations I get involved in are still doing manual cycle counts. They're relying on exception reports and they're also relying on people raising issues as they stumble upon them. And that's where the inventory and operational drift happens."
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From the pick floor to the P&L: How errors travel
Drift rarely stays where it starts. Emily drew on a striking figure: delivery failures cost UK retailers an estimated $2.1 billion every year.
"That's not on the warehouse floor, it's what's leaking beyond it. The costs don't just show up in an error log. It's the overtime, the expedite, the knock-on rework, the penalties, maybe there's expiry. This isn't bad decision-making. This is the downstream consequence of not having visibility upstream."
One US grocery retailer quantified this at $250,000 per year per site in 'chaseback' - pickers hunting for stock the system says exists but isn't there.
"They've assessed that 6% of their total labour costs are basically 'we know it's there, we just don't know where it is.' Again, this isn't a pick or operational problem, this is a visibility problem."
Mike built a worked example from a single put-away error. Five drivers per shift. Thirty minutes each resolving a pallet conflict. Three shifts. Seven days.
"That ultimately equates to 52.5 hours per week. And that's a resource cost beyond what you should be paying. It's hidden, because it's just 30 minutes. But it's not 30 minutes on its own. It might be 10 minutes here, 5 minutes there. It's a hidden cost which doesn't turn up on any P&L."
A pallet booked in as 100 cases but holding 50 creates a phantom location. Overpicking follows, creating marshalling rework - or worse, incorrect quantities reaching the end customer and damaging customer experience.
"What you see is these just end up growing because it's a job that sits outside the usual day job. You end up increasing your safety stock because some of that stock's missing. You're causing congestion for the other processes in the operation, which is impacting your KPIs. These are small errors - but that's how you end up with a big hole in your P&L and no idea where it came from."
Why warehouse managers know something's wrong, but can't always find it
Are warehouse managers even aware they have a problem? Mike's answer was revealing:
"They often know there's something not quite right. They can't always put their finger on it because they don't have the time to investigate. Every day is running around with your hair on fire - it's just about getting the product out the door. And that's often where smaller errors compound into big errors."
This dynamic ran through the whole conversation. When day-to-day firefighting takes priority, continuous improvement stalls and the business processes that create drift never get addressed. Operational leaders focus on headline OTIF and service numbers. The contributing factors underneath rarely get the attention they need.
What good looks like and the shift that makes it possible
Emily described what the shift looks like in practice:
"Trying to change that stance from reactive firefighting to proactive management with real-time, continuous data that can help them make real-time decisions. It helps with earlier identification of errors, and then it creates clearer lines between the operational event and the financial impact."
Vente-unique, a French e-commerce retailer, improved accuracy by 6 percentage points to 99.9%. But Emily was clear that wasn't the real win.
"The fact that they are delivering on their OTIF, on their customer SLAs, keeping their customers happy, that's the real difference."
Mike was direct about the resource reality most operations face - and why digital transformation matters:
"8 out of 10 operations are still today not blessed with big teams. You haven't got a great deal of resources just sitting there crunching data. So it's really about evolving the operations today - putting simple technology in there that can does a lot of that preemptive data cleansing for you."
The payoff is simple:
"You're not spending a lot of time doing your manual cycle checks. You can use that time to be a lot more productive, be a lot more proactive, and put mitigation in there to make sure that your operation runs much smoother."
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No silver bullet - but a clear starting point
The final Q&A asked whether teams should focus on prevention or triage. Mike's answer:
"Both. When you have the opportunity to be proactive, you're armed with information. You get ideas, you work with the team, you put a project together. But I guarantee after a few weeks you will see improvements."
"And then the warehouse doesn't stop. It's 24/7. Products change. Customers might change. So you've always got to be willing to adapt. I don't think there's a one-solution-fits-all, because what's right today may not be right for tomorrow."
"This is just the start of the conversation." - Emily Nerland.
Find out what it's costing you
The errors Emily and Mike described are on your P&L - they just don't have clear labels. Dexory's Cost of an Error white paper sets out the full framework for supply chain visibility and operational excellence. The DexoryView ROI calculator, built on Forrester's Total Economic Impact study, helps you apply those numbers to your own operation.
