Are Your Warehouse Workforce Costing You Money?

The warehouse workforce training productivity drain can result in a decrease in profitability and good customer service.

In the warehouse, labour is the biggest operational cost. Profitability and customer service quality are directly tied to the productivity of the warehouse workforce.

As a result, you need to continually find ways to increase productivity, despite the issues that plague virtually every warehouse:

High turnover.

About one third of warehouses report a 10% to 25% turnover in the permanent warehouse workforce, and nearly another third report turnover from 25% to as high as 100%.*

A large temporary workforce.

Up to 19% of your workforce are temporary workers required during peak times.^ Turnover in the temporary workforce is even higher than the permanent workforce: about 30% of warehouses report 10% to 50% turnover, while 22.5% report turnover between 50% and 100%.*

An inexperienced labour pool.

To further complicate the situation, experienced workers are hard to find. A majority 61.2% of distribution centres report that over half of their new hires have no warehouse experience.+

The high cost of the productivity gap between skilled and unskilled warehouse workforce.

Substantial training time is required to bring permanent and temporary workers up to speed. The majority of today’s warehouses spend one to three months training new hires* to achieve the same productivity and accuracy metrics as skilled workers. As a result, some short-term temporary workers may not have the time to ever reach peak productivity.

What is the answer? Can technology help?

Moving more product through the warehouse with the same amount of staff or not having to hire additional temporary staff during peak times are key for reducing labour costs.  Even shipping the same volume of stock, but needing fewer people to do it is a cost saving – resulting in better efficiency & profits.

By introducing a cloud based Warehouse Management System (WMS) in conjunction with wireless handhelds, will allow to realise numerous benefits – more stock being shipped with less people, less time and less mistakes.

So how does a WMS hold the key to labour efficiency?

Warehouse workforce can be divided into three categories: direct (receiving, put-away, picking, replenishment), indirect (supervision, training, inventory control) and administrative (inventory management, order planning, customer service, data entry). Those three groups are all tied together and the right WMS will reduce labour costs at every tier, resulting in substantial cost savings throughout the operation.

See labour productivity improvements ranging from 20 to 30%.

Much of these labour savings come from a smarter picking process. The No. 1 labour expense is time spent traveling to gather products. The WMS software will help workers on the floor (“direct”) by assigning them to specific tasks in a specific sequence to maximise efficiency. The system will know where all your inventory is located and will assign picking based on proximity to the item, maximising the efficiency of receivers, pickers and others. No time is wasted planning these activities as the intuitive software works out the best sequence for you.

The right  picking strategies that will increase the hourly and daily picking rate of every person on the floor will result in a saving of a minute or two every few hours that will add up over months and years, making this is an area of significant value by installing a warehouse management system.

A warehouse management system also eliminates the paper trails that are not only a constant source of mistakes but also eat up working hours. When all this information is stored electronically, you will eliminate endless piles of paper to wade through or endless pages of paper documents to fill out – resulting in less work for administrators, ultimately lowering operational expenses.

Less paperwork and handwritten forms will also improve warehouse workforce productivity as well as reduce labour costs by freeing operators to focus on completing actions rather than handling/locating paperwork. However, do not be misled into believing a paperless environment is a completely hands free environment. If the data collection option chosen is radio frequency (RF) or batch hand held units, operators will still be required to handle and manage the hand-held units. Hand held data collection units are, however, a far better alternative than paper intensive systems in many operations. Moving towards Voice WMS is also an alternative that can result in even further cost savings and give that hands-free environment.

Are peak seasons such as Easter, Black Friday, Christmas, January sales a real headache for you?

Predicting how many workers you need on different days of the week or at different times of the year is another hurdle a warehouse management system will help you with. The system will track order volumes, inventory levels and other information allowing a company to effectively plan their staffing levels and eliminate over-staffing or under-staffing that is difficult to predict without a WMS.

Once you start to realise the benefits of the WMS, managers will be able to spend time more proactively managing the day-to-day operations rather than firefighting problems such as allocating resources to expedite rush orders due to errors in inventory availability or lost products.

Additionally, stock control staff can implement and manage cycle counting programs that will result in an overall reduction in the need for an annual physical inventory – further cost & time savings.

From a training and learning curve perspective, by automating processes using an intuitive and simple to use cloud WMS, new employees will have less to learn and can become efficient more quickly by simply following instructions provided by the WMS.

Although lower labour costs is one of the biggest reasons to invest in warehouse technology, it’s not the only reason. A WMS will also enable you to have better inventory management – resulting in giving your customers an excellent service and of course a more efficient organisation of the warehouse.

A WMS can drastically reduce money spent on your workforce while simultaneously improving productivity. These factors can have a major impact on the financial health of a company – resulting in improved efficiency & increased profits.

About us:

Speak to one of our team to understand how Clarus’ WMS system can cost effectively support best practice warehouse management processes, better customer service and highly efficient working for a range of warehouse operations with pay per month options and no IT infrastructure needed.

Our platform can scale from a one user, small depot system to a 100’s of user distribution centre operation. The Clarus WMS platform will cost effectively scale with your business based on demand.

Clarus WMS is a UK based supplier of warehouse management solutions with a wealth of industry experience in third party logistics, wholesale / retail distribution, online fulfilment and manufacturing warehousing.

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* The Best Tactics for Retaining Warehouse Workers; Logistics Viewpoints. Steve Banker; ARC Advisory Group.

^ Logistics Management; 2018 Warehouse / Distribution Centre Survey: Labour crunch driving automation; Roberto Michel · November 5, 2018; https://www.logisticsmgmt.com/article/2018_warehouse_distribution_center_survey_labor_crunch_driving_automation

+ Four Management Strategies for Retaining Labour; DC Velocity and ARC Advisory Group Study; Ben Ames; June 18, 2018; https://www.dcvelocity.com/articles/29832-four-management-strategies-for-retaining-labor

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