3 Workforce Strategies to Improve Warehouse Productivity and Reduce Labor Costs
Warehouses and distribution centers rely on specialized warehouse management software to support and optimize inventory and fulfillment processes. This sophisticated technology makes it easy for warehouse operations managers to closely monitor inventory, shipments, and orders – right down to an individual package.
However, the same can’t be said for how they plan and manage the labor resources needed to perform the work — or, more specifically, how they forecast labor needs and schedule employees. This isn’t a shortcoming in management process or skills. The fact is, warehouse management systems were never built to consider the impact the workforce has on warehouse productivity and processing capacity.
When warehouses and distribution centers overlook the impact of labor, there are high-cost ramifications such as missed order fulfillment commitments and higher than expected labor costs. It can also translate into lost business opportunities. After all, it doesn’t take many incorrect orders, shipment delays, or other distribution hiccups before a customer looks elsewhere for their fulfillment needs.
Such costly errors can be avoided. Here is a closer look into those challenges and how effective warehouse labor scheduling can reduce warehouse labor costs, improve warehouse productivity, and streamline operations.
1. Improve Labor Forecasting
Workforce managers for warehouses and distribution centers understand all too well the stress and business impact of being short-handed. Some may tend to overcompensate and “overschedule” workers. It’s not uncommon for companies to overschedule by as much as 20 percent when forecasting upcoming labor needs.
Most companies perform long-range workforce planning to assess workforce capacity needs. This is often performed on an annual or semi-annual cadence and focuses on setting staffing levels over the next year. Though important and necessary, these efforts do not necessarily help operations managers forecast labor needs closer in – such as within the next 30 days. Accurate forecasting in this timeframe is critical because this is when managers publish work schedules and commit to a particular level of workforce capacity.
Luckily, warehouses are rich in data on historical workload patterns, which likely includes visibility into upcoming orders. This information can be leveraged to understand staffing needs before work schedules are published to the organization. With any labor forecasting tool, perfection is not a realistic goal; rather, it is to reach a level of accuracy so that last-minute labor requirements can be supported through day-of options such as flex pools and temp resources. Better medium-range labor planning helps avoid over-scheduling (and the higher labor costs that come along with it). It also safeguards against a potentially more damaging situation, under-scheduling, which could translate into fulfillment delays and missed revenue opportunities.
2. Optimize Scheduling to Lower Labor Costs
While medium-range labor forecasting provides visibility into future labor needs, managers still need to ensure staffing levels can support forecasted production demand–– without compromising important business goals such as improving labor utilization and minimizing overtime.
Optimized scheduling requires understanding how various worker attributes factor into scheduling decisions. Optimization requires real-time visibility across all labor pool resources (full-time, part-time, contract labor, etc.). It provides managers the ability to mine workforce data to make better scheduling decisions. By understanding individual worker attributes such as overtime status, schedule flexibility, productivity by role, and more, managers can drive higher productivity and avoid unnecessary overtime.
Most warehouses lack the systems needed to mine workforce data for high-quality decision-making. Instead, most are dependent on simple tools like spreadsheets that fail to deliver the real-time visibility and data-mining capabilities required.
3. Build Daily Operational Resilience
It’s a scenario every warehouse manager deals with often, and even more often during the COVID-19 pandemic: Several employees call in sick for a particular shift. When this happens, managers scramble to fill the shift by leveraging paper-based call down lists.
Other last-minute changes, such as a surge in orders to pick or downed equipment, can be equally challenging and disruptive. Urgency is high to resolve such issues quickly as delays often lead to missed order processing commitments, overtime, and other unwelcome outcomes.
Managers often lack the tools to react to these kinds of daily changes quickly, whether that means moving employees around or tapping standby workers at a moment’s notice. Front-line managers need clear visibility into coverage issues as they arise and the ability to resolve these issues in real-time, ideally automatically. Additionally, last-minute schedule adjustments must align to scheduling policies, union agreements, and local labor laws. Automated workforce scheduling allows you to be more proactive in situations like these, covering open shifts quickly and effectively while taking into account critical factors like compliance and overtime.
The Role of Technology with Warehouse Labor Scheduling
Workforce scheduling software is an essential element of a warehouse’s workforce operations tech stack. This powerful tool connects daily operations to the resources required to accomplish their order processing goals. Workforce scheduling software adds intelligent decision-making and automation to achieve higher workforce capacity, efficient labor utilization, and daily operational resilience. As a result, operational goals are achieved; orders are filled accurately, efficiently, and on time; and the customer is happy. In other words, it’s an all-around win.
Recommended Additional Resources
Employee Scheduling for Warehouses
Staff scheduling software has benefits for warehouses beyond improving productivity and controlling costs.
2023 State of the Hourly Worker Report
Employee satisfaction and retention strategies for hourly workforces in 2023