Most distribution centres rely on labour-intensive operations, often involving multiple shifts and many people. Labour costs can account for 50 per cent of the operating expenses of a distribution centre and, often, the devil is in the detail.
The issue is further complicated by the task of finding and deploying appropriately the right staff with the necessary skills to meet the organisation's changing operational requirements.
Finding the best people, motivating them, training and retaining them are all important. However, attaining operational efficiency at the lowest possible cost means introducing lean methodology into the workplace, removing waste from processes and quantifying the nature of each operation so standards can be adopted.
And you must also accurately forecast your future labour requirements.
More jobs for unskilled staff?
Many of these challenges are common everywhere. For example, it will be increasingly difficult for companies to recruit younger employees. For those without a college education, there are many more choices of career than there used to be – such as homecare, customer support and services. Those jobs don’t require a lot of training.
The older generation may not be willing to embrace new technology. Understanding the unique needs of a multi-generational workforce will enable companies to develop programmes that will help attract and retain people.
Money is a big driver. Developing an incentive programme is critical in driving productivity. Meanwhile, the skills needed to quality check, put away stock and pick orders, pack, label and dispatch require appropriate training.
Ensure that best practice methodology is followed for each process and replicate it across the entire warehouse. Establish goals based on engineering standards for how much time it will take staff to perform each process, measure how people are doing against those goals and provide feedback – helping staff continuously become better at performing those processes.
Many companies are deploying labour management systems that interface with their warehouse management systems, helping them understand what each worker is doing and to apply a standard to that work to measure the productivity of the individual. This means people can more easily be rewarded appropriately.
Systems can be implemented to calculate performance and work out what the incentive payment should be, based on that performance.
When assessing and measuring each task it is important to ensure that all considerations related to that task are examined. For example, taking into account not just what goods need to be picked but at which location and with which piece of equipment. The employee will know the travel distance as well as the physical exertion required – because of characteristics in the inventory, they will know whether to drive a forklift or to walk.
The warehouse staff will know all the parameters. Each activity has its own set of characteristics, and by measuring them, organisations can accurately estimate how long a task should take.
Most warehouse workers who are not being measured are working at about 65 per cent productivity. There is a lot of built-in waste. It is not necessarily that someone is not doing their job properly; there is a lot of wasted time moving from one task to another, getting from clock-in to the first activity, for example.
How much extra time is taken on breaks and lunches? Most people seem to take extra time. It doesn’t seem like a big deal if someone takes five minutes extra for lunch, but if there is a warehouse of 100 people, multiply that five minutes by 100, and times the total by hundreds of days a year, and it translates into hundreds of thousands of pounds' worth of lost productivity.
A combination of training and change management is needed. It is a matter of making sure that people understand what the process is and that appropriate discipline and reward programmes exist. Also, if someone is not doing their job well, they need to know. People want to know how they are doing – even if they are not doing very well – and if they don't know, they cannot improve.
Align a labour resource, and the hours that the resource is required, to the volume of work at any given time. In a warehousing operation this can be difficult. Getting it wrong can be expensive, with either too great a resource available, or too few trained staff to hand, resulting in overtime payments or costly temporary labour bills.
Managing labour resources in the warehouse is a highly complex task requiring a sophisticated set of tools, but it can create a cost-effective, productive and happy workforce.
Steve Smith is senior vice president for EMEA at Manhattan Associates
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