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Optimizing Warehouse Operations: 3 Key Strategies for Effective Labor Management and Employee Growth

Warehouses have a variety of overhead costs to contend with, including rent, utilities, property tax, and insurance. But their largest cost is labor. The continued rise in the cost of labor and growing competition for talent has led to increasing challenges within the industry. This is why implementing a reliable labor performance management program is essential for logistics organizations to succeed. A comprehensive strategy focused on creating and fostering labor optimization will lead logistics organizations to success. This starts by investing in frontline employees, ensuring they feel recognized and valued, and continues with a measurable and standardized performance management program. 

Read on for 3 key strategies organizations can embrace to take their operation from surviving to thriving in these challenging times. 

#1 Never stop measuring

Data is a powerful tool when harnessed properly. Logistics organizations that identify key performance indicators (KPIs), develop labor metrics, implement scorecards, and utilize detailed performance feedback systems will be able to successfully track warehouse operational performance. Measuring performance against set targets will demonstrate what operational areas need improvement and which are working as planned. 

1: Selecting operational key performance indicators (KPIs)

Not every warehouse functions the same, so KPIs must be customized. Each metric should drive productivity, agility, and overall service excellence. Examples include capacity used, dock to stock, and time to ship. With the right targets, operations can benchmark their results against other operations in their network or against industry standards.

2: Selecting and evaluating labor metrics

Labor metrics are used to measure the productivity of the frontline workforce. Choosing the right labor metrics involves a data-driven approach. To help identify the best labor metrics to implement, the goals of the operation must be understood. You must also ensure that the labor metrics selected are in alignment with the operational metrics chosen. Some examples of labor metrics include pick rate, labor utilization rate, unload labor rate, and labor cost per unit.

3: Implementing scorecards and performance feedback systems

Scorecards and performance feedback are a simple way of communicating company goals and KPIs with the frontline team. Scorecards with metrics can help drive desired behaviors while encouraging employees to put their best foot forward. There are different kinds of feedback systems, such as:

  • Regular 1:1s with frontline employees
  • Roundtables with employees to gather feedback regularly
  • Review scorecard results during team meetings
  • Post scorecard results on a central location and update data weekly, or daily if possible

Measuring productivity and keeping an eye on what works and doesn’t will allow operations to address issues as they arise. Tracking key metrics tied to warehouse operations priorities can build engagement and lead to overall workforce optimization. 

#2 Implement Process Management Standards

Standardizing warehouse processes, like receiving, putaway, picking, packing, and shipping, reduces errors and increases productivity. When the labor force is working off a set of standard procedures, it’s easier to keep track of what processes work and what needs to change. While every warehouse will have a different set of needs, standardization will require:

  • Documenting and developing step-by-step guidelines for completing each step in a process (picking, packing, putaway, etc.), also known as standard operating procedures (SOPs)
  • Monitoring processes to identify any bottlenecks or areas for improvement, which may include eliminating redundant steps or automating certain procedures
  • Looking for an organizational standard that fits in well within your warehouse culture and implementing it. Lean Methodology is an example that may work, it promotes continuous improvement, waste reduction, and respect for all people.
  • Training is critical and should be ongoing. Initial onboarding training is key and should be completed for all documented SOPs. But operations should provide periodic training throughout the year to ensure there are no gaps in knowledge, and to communicate to the workforce the organization’s dedication to their employee’s continued growth. 
  • Using scorecards, establishing metrics and measuring the effectiveness of each SOP. With live audits of each process, organizations can identify sticking points to either modify the procedure or provide further coaching and training as needed.
  • Making use of SOPs and reviewing them periodically to identify potential areas for improvement. More importantly, involving frontline workers in this process empowering them to take a more active role in improving their day-to-day.

Engaging the workforce in the operation’s plans for improvement will give you much-needed insight from within the four walls. And while labor is one of the highest expenses of a warehouse, it is also its most valuable asset. One way to engage and motivate employees is to establish a performance-based culture that prioritizes employee growth.

#3 Foster Employee Growth

A performance-based culture provides employees insight into what the organization’s expectations are regarding productivity, safety, and communication, empowering employees to work toward individual and team excellence. A strong performance-based culture can help drive greater operational efficiency, increased customer satisfaction, and improved employee retention. 

Logistics leaders committed to implementing a successful warehouse performance culture must:

  • Set clear expectations
    • Providing employees with a clear understanding of safety procedures, protective gear requirements, code of conduct, and all efficiency expectations of the position empowers employees to have a real sense of ownership over the work they do. Employees with the ability to remain accountable for the work they do can lead to different operational benefits, including:
      • Throughput predictability
      • Improved communication
      • Increased safety
      • Superior individual and team performance
  • Training employees
    • Training is an ongoing process. Once employees undergo onboarding training, the work is not done. Establishing a cadence for developmental training which occurs after onboarding is critical. Employees who are shown a commitment to their growth and continued learning can help improve employee retention rates and productivity as the employee is continually learning and growing. Developmental training should not be limited to hard skills needed for the position, but expand to include communication and leadership skills, as well as continuous learning and lean processes. 
  • Expecting continuous improvement
    • Involve frontline employees in the operation’s mission to always be improving. They are on the floor every day and will have the best insight into potential bottlenecks, including waste management challenges and efficient storage utilization. Include employees in productivity brainstorming sessions, train them to identify root causes of inefficiencies, and make them active participants when deploying new technologies or automation improvements. 
  • Recognizing and rewarding good work
    • Employees thrive on recognition and on being rewarded periodically for a job well done. Implementing a recognition and reward (R&R) program is an excellent way to boost morale, increase job satisfaction, and improve employee retention. Different employees will prefer different rewards, whether it be gift cards to a local coffee shop or being entered into a raffle for the chance to win an extra day of paid time off. Engage your employees and survey them to see what rewards align with their wants and needs. A recognition and rewards program will only succeed if the offered rewards are desirable, and your employees can help you ensure the right offerings are on the table.

Warehouse operations have a real impact on labor management. Implementing a way to objectively track progress through scorecards and measurable KPIs will go a long way in ensuring warehouse practices are efficient and always working toward the operation’s goals. Logistics leaders don’t always have the bandwidth to determine what is working and what needs to change within their operation, that’s where Cornerstone Edge can help. With over 20 years of experience in the field, we know how to identify your needs and implement a solution that works well, on time, and within budget. If you’re looking to level up your logistics operation, reach out, and let’s see how together, we can make your supply chain your differentiator. 


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