How to Reduce Labor Costs by 25%
By Jim Laverty
Labor costs can have the biggest tangible impact on your bottom line.
Managing labor costs is the most important factor when it comes to controlling overall warehouse operation expenses. As the largest variable cost in your warehouse, it’s the place where monitoring and change implementation can have the biggest tangible impact on your bottom line.
Identifying and capturing labor metrics in the warehouse is the key to improving performance. Publicly displaying performance metrics in real-time for your workers to see will help them gauge what they do and don’t do in a cost-effective manner. The goal is to set higher standards of performance and to continually raise them as your labor force becomes more efficient, more productive, and less error-prone. Reward your highest performers to drive their production higher and you’ll build a capable, cost-effective, and self-directed workforce.
“Labor costs comprise the largest part of a warehouse's operating expenses. The ongoing challenge is managing those costs without jeopardizing customer service and reducing productivity.” - Inbound Logistics Magazine
On the flipside, you also need to hold underperformers accountable for their lack of performance on the job. Ignoring this crucial part of you management duties will lead to increased costs and lowered efficiency. In effect, you’re accepting lowered performance standards and this continued support makes it harder for your lowest performers to improve and for your highest performers to continue to be motivated to do their job well. If you’re lowest performing employees don’t improve, eliminate them for somebody that will be cost-effective. Controlling your labor expense is really that simple.
More than diagnosing your best and worst performing employees, labor tracking also helps to reduce overtime costs, decrease your dependence on temporary labor, quickly identify bottlenecks, eliminate unnecessary positions, and add positions where there’s opportunity to grow.
Our irms|360® Enterprise Warehouse Management System tracks labor with a fresh and innovative approach. Out of the box, it utilizes advanced technology to provide the tools necessary to continually raise the standards of performance within a facility.
Performance tracking and visibility tools allow you to monitor progress against standards in real time throughout the workday, allowing you to reward your best workers and diagnose/address your lowest performers.
When you buy a cloud-based warehouse management system, you are buying greater efficiency and a blue print to reducing costs throughout the supply chain – especially when it comes to warehouse labor. Schedule a cloud-based WMS demo for yourself today to see how it can start making your warehouse run more efficiently.