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Dealing with Warehouse Labor Shortages

Reduce the need for labor and retain your best workers

Warehousing Inquiry

warehouse workers with cartons

If you run a distribution center, factory or warehouse, it’s not news to you that labor is in tight supply. Demands is up, and workers — particularly skilled, motivated, productive ones — have more options than ever. E-commerce has transformed the business, with constantly-escalating demand for pickers, packers, assembly workers, drivers and warehouse labor. With national unemployment rates below 4%, many other industries are competing with you for the same labor pool. What can you do to cope with these issues?

Remember that you should attack this issue from two broad angles:

  1. How do I reduce the labor needed to execute my business without impacting quality?
  2. How do I retain a quality workforce in the face of increased competition?

The issue is far more nuanced of course, but these are the drivers of the primary way to keep a productive workforce as labor demand increases and quality workers scarcer.

Make the job more attractive

warehouse worker near a conveyor system

Cash tends to be king, and you will always have to compete for workers—particularly good ones—by paying them. Look at min-mid-max pay schedules that reward productive, experienced workers and create incentives for others. Aside from base pay, though, what are some options to cultivate and retain a great workforce?

Consider specific incentives

This is a process that you must undertake with real forethought. But when done correctly, it can pay tremendous dividends, particularly when people understand how their actions impact real-world results. Read: How to Create an Effective Warehouse Incentive Program

Train for flexibility

Warehousing & manufacturing jobs can be repetitive and one-dimensional. A more dynamic environment allows more people to try more types of work and can increase job satisfaction. This also helps you make your operation more flexible, as people are able to function in more roles. This process also helps you identify the kind of ambitious and flexible people you will want to retain.

Schedule more flexibly

You may be competing with the so-called “gig economy” for people, who can make money on their schedule. Make schedules more attractive to employees and you’ll be able to keep them from competitors who can’t offer that flexibility. If your business model allows you to offer shifts that let people work when they prefer, your labor pool broadens. You may find people like mothers, students, or retirees who can do the work for you in smaller chunks of hours, if your system is flexible enough. Offer 20-hour shifts, flexible hours and other innovations that could attract these types of employees.

Connect (and communicate) all the dots

Track critical metrics, such as on-time shipments, returns, damage, error rates  and other factors that your warehouse directly affects, then educate your employees on how they contribute to success or impact failures. Celebrate and track the victories. People like to understand the output of their work. As they become aware of these things, some will contribute ideas and process improvements that help you improve.

More: 5 Key Warehouse Metrics

Invest in engagement

Find ways to engage your entire workforce. People who don’t feel valued, or who feel they aren’t treated fairly, will leave. Train your line managers on problem-solving and how to treat employees with respect. Track turnover rates to be sure one of your managers isn’t causing employees to leave. Engagement has many forms, but it begins with open, honest and fair dealing with every employee in the building.

Automate and re-tool to reduce labor stress

light directed picking in an e-commerce fulfillment centerFind solutions that can go all day, every day that minimize the labor needed to execute the business. Your process should include an evaluation of which areas can be automated, and the ROI for doing so. Well-planned systems don’t have to involve site-wide automation, and certainly one size does not fit all. You can reduce labor stress by automating specific areas that have an outsized impact. Remember that all automation isn’t a dark room with a robot. It could be as simple as a conveyor that does some of the work people had to do previously. It could involve a revision to storage methods that are outdated and pull too much labor to execute.

You can surround it with manual work if that’s needed, and still improve your operation dramatically while reducing the need to throw people at the problem.

A rough analysis may include a workflow study that targets bottlenecks in your operational flow for improvement. You should then move toward a desired outcome and engage in evaluating material handling and automated solutions that could achieve your goals.

Some basic metrics to get started on an automation project include:

  • Location information: where are your SKUs physically located in racks, shelving, flow storage etc.
  • Costs: what are your current costs to process an order? Include labor, returns, and any other relevant information. These numbers do not have to be precise, but need to be grounded in fact.
  • Labor: How many shifts? How many employees per shift? What types of workers (pickers, assembly, packers, maintenance)
  • What are your current picking/packing processes?
  • Order information: current number of orders, pieces, shipping data, error rates etc.
  • Map the physical flow of an order from end-to-end.
  • Define the key issues as you understand them.

New processes, better operations and employee retention

ergonomic balancer in a manufacturing operation

  • Reduce muscle-power jobs and increase ergonomics: In a tight labor market, you want as many people as possible in your labor pool. If a job requires someone who can lift 100 pounds, your labor pool is limited. If you deploy lifting assistance equipment, adjustable workstations and other effective methods for reducing physical demands and musculoskeletal stress, you have essentially broadened the pool of people who can do the work. Target repetitive areas where jobs require physical strength with process improvements or new equipment. Simple improvements such as hoists near a production area mean that you can put more types of people into that role. Importantly, you can also retain aging workers who are skilled, but cannot physically do demanding jobs for longer.

More: Ergonomic Safety Tips for the Warehouse  |  Conveyors and Industrial Ergonomics

Don’t forget to work on yourself

Remember that managing a warehouse or assembly floor means that you must possess a singular skill-set and thought process that requires you to be adaptable and informed. Engage in continuing education and training. Attend industry conferences when possible, so that you can be exposed to new ideas and peer comparisons. Don’t focus solely on your people. As a manager, you will need to grow and improve as well. See more: Essential Skills for Warehouse Managers

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Scott Stone is Cisco-Eagle's Vice President of Marketing with more than thirty years of experience in material handling, warehousing and industrial operations. His work is published in multiple industry journals an websites on a variety of warehousing topics. He writes about automation, warehousing, safety, manufacturing and other areas of concern for industrial operations and those who operate them.

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