According to the LABOR management strategies in the warehouse study conducted by Peerless Research Group (PRG) on behalf of Logistics Management for Kane Is Able, labor costs in the warehouse account for 50 to 70 percent of the average company’s warehousing budget. Learn how to better utilize your labor to improve the financial performance of your company. Some of the toughest challenges companies face relating to the management of a workforce for warehouse/distribution center operations include finding and keeping skilled, dependable and qualified workers. Also trying to increase workforce productivity and control labor costs. According to the Bureau of Labor Statistics, the turnover rate for warehouse workers is 36 percent. The Material Handling Industry reports the logistics industry will be looking to fill about 1.4 million jobs, or roughly 270,000 per year, by 2018. Some of the workforce management practice companies would like to change over the next 24 months include: identifying and improving productivity gaps, refining real-time labor productivity and visibility, implementing or upgrading labor analytics, software and tools, tracking incidents and overall safety, and automation of labor management process that are currently manual.
18 percent of shippers use a formal labor management system. When companies look to improve productivity and labor costs they use the following strategies: lean manufacturing strategies, aerospace industry quality management system, activity0based management, and flexible workforces with variable hours. Only 11 percent of companies are “extremely satisfied” with their labor management system application and 33 percent of companies are either using or planning to implement a cloud-based labor management solution. Some uses for labor management systems include time recording/time clocks, time and attendance software, scheduling, and labor activities tracking.
Companies that are not considering a labor management system cite the following reason why not; No need at the present time, manual procedures fit current needs, other IT tasks are considered a priority, and costs. 83 percent of companies developed and implemented engineered labor standards and preferred methods for performing a task. Labor management system usage provides significant benefits. Such as ability to objectively measure associate performance, reduction in labor costs, visibility over performance throughout the day and the capacity to monitor progress against a production plan. When identifying the benefits of using a 3PL to manage labor within a DC, companies look at reduced direct and indirect labor costs, continuous improvements in productivity and quality, and reduced human and equipment assets. 71 percent of companies implemented pay-for-performance in their operations. Some companies are reluctant to outsource labor management to third parties because they have a fear of losing control, they feel they can do it cheaper themselves, and concerns about a possible lack of knowledge about their specific products or work environment.
For more information on Maximizing Workforce Productivity read our new blog post: Maximizing Workforce Productivity Pays Dividends Warehouse Financial Performance.