Improve Warehouse Productivity by Measuring and Posting Numbers

A common theme we run into daily as we work with warehouse operations around the country is how to reduce labor costs. Labor usually makes up 50% or more of the total cost of operating a warehouse when you consider direct and indirect labor, occupancy costs, and packaging materials. Given this high cost, it is no wonder that it is one of the first issues raised during an operations assessment.

The old adage of working smarter not harder still applies today, but the actualization of that adage is becoming more difficult. In many companies, the responsibility of coming up with “smarter” ideas falls to management. You can imagine how that works.

Some organizations formalize a process that involves the people actually doing the work in coming up with better ways to run the warehouse. This is a better idea but still requires management time to facilitate and guide the process to develop meaningful ideas. What about an alternative?

It is common knowledge that most people want to know what is expected of them and how well they are doing. Surprising though, very few warehouses take advantage of this human trait. How many of you record and post performance results for the operation visibly so that everyone in the warehouse knows what productivity level has been reached?
READ: 38 Fulfillment Cost Reduction and Productivity Improvement Ideas
The process does not have to be a complicated one that requires a lot of resources to manage it. Sometimes, simpler is better. If you are able to measure the overall warehouse in terms that you use such as total man hours and orders processed, you can use this process. If you measure to a more detailed level, you have to decide what will work best for you as motivation – is it the warehouse, function, or individual level of posting that will get the best results?

Most warehouses that start to post results and corresponding goals or standards see increases in overall productivity. These increases come as a result of individuals knowing how they are doing as individuals or as a unit and wanting to get better. It is not uncommon to see increases in overall productivity of 10 -15% using this concept.

How many of you would like to gain a 10% improvement in productivity without a lot of management intervention? If you aren’t measuring and posting results, it might be time to think about it.
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