Ways to Optimize Industrial Labor
Evaluation and solutions for manufacturing and distribution facing labor shortfalls
73% of warehouse operators said they can’t find enough workers. The National Association of Manufacturers sees shortfalls today, and more in the future: an astonishing 2.1 million manufacturing jobs will go unfilled by 2030. With labor shortages the norm today and for the foreseeable future, how can you optimize, retain and improve labor in your operation?
Understand your labor constraints
It’s been apparent for years that labor is getting harder to hire, rarer and more difficult to retain than at anytime in recent memory. Everything from demographics to an aging skilled labor force to the rapid pace of construction manufacturing contributes to the situation. However, labor markets are fluid and specialized. Depending on location and operational factors, you may have it easier — or harder — than others in the warehousing and manufacturing space.
Understand your competitive situation
If you’re in a competitive labor market — and most of us are — what can you do to keep workers?
Who’s hiring your employees? For entry level work, you may be competing with retail work in air-conditioned facilities. If you can understand where people are going, it’s easier to build a retention plan. What companies, and what kinds of companies are targeting the same labor pool you do? If you know, your retention plans will be more effective.Â
Competitive on salaries and benefits are mandatory, but don’t stop there
People will always value compensation. In competitive markets, everyone from entry level warehouse workers to CNC programmers to assembly technicians will have options. You’ll need to compete on pay and benefits, but that shouldn’t be the end of the story. Workers like flexible schedules, better pay and ways to advance. They want to be developed and have have a pathway towards advancement.
What are some other ways to optimize your work force?
Make the working environment as appealing as possible
You won’t be competing only with industrial operations. You may be competing with air-conditioned retail shops, gig work, office jobs and other types of employment that are frequently in more appealing circumstances than a typical production line or shipping facility.
If your warehouse is clean, comfortable and cool, you will have a competitive edge when it comes to retention. Look at climate control, ergonomics, and processes that can be made better for employees. If you can install HVLS fans, create ergonomic flooring, reduce walking, light the facility better or otherwise improve the work area, your people will work better and stay with you longer.
Consider incentive programs
Incentives can help you increase compensation and hit your goals. The trick is creating balanced incentives that encourage the right behaviors, rewards the right people and helps you reach your goals. You should also focus on recognition and non-monetary rewards that help you retain everyone, but your top performers in particular.
Good ergonomics retains employees
Warehousing and manufacturing can be tough gigs.
People are on their feet a lot, in large, loud spaces with concrete floors and plenty of walking. Better ergonomics means a more productive operation, but also helps retain employees by making their day easier, healthier and better. Some ways to approach this include making everything from conveyors to picking positions to palletizing less difficult.
Read more: The Relationship between Automation and Ergonomics
Does your operation encourage labor flexibility?Â
The concept of labor flexibility is straightforward: you want as many people as possible capable of doing the workin your labor pool. Can you alter the job to broaden the pool so that more people fit the bill?
That means:
- You can employ people just out of high school…or people who are nearing retirement age.
- Whether built like an offensive tackle or a gymnast, a wider range of people can do the work.
- The focus is less on physical attributes and more on skills and competence.
Companies who broaden the range of people capable of working in their various functions have a competitive advantage. Do this by deploying smart, ergonomic layouts, by reducing walking, by using devices like lifts and hoists that reduce physical demands. If you can hire more kinds of people, then you’ll have a broader and deeper labor pool.
Don’t rely solely on a particular kind of person with exacting physical attributes. Can you employ older people? Smaller people? People who cannot lift heavy weights? Relying on a narrow type of individual makes a difficult labor market even tougher.Â
Understand what labor costs vs. the alternatives
To optimize labor, you should understand the true cost of it. When you attempt to justify new hires, automation or other changes, how do you calculate ROI on the investment? If you are operating without issue today, will you be able to in a year, when inflationary pressures and competition for a shrinking labor pool put upward pressures on cost?
- What is the total spent on a given position or function based on hourly rates?
- What are the potential overtime and bonus costs?
- What are the payroll tax estimated costs, including federal, state, Social Security, and Medicare?
- What are the costs of benefits and insurance?
Once you know these basics, you can estimate the total cost of labor. Calculate gross wags by multiplying the number of hours worked by the hourly rate or annual salary. Roll in all related costs. This can give you a baseline for what you’re really paying today and what it may cost in the future. You can compare that to the costs of automation and changes that reduce the number of employees needed to execute the work. Always rely on your accounting department, as they may have already built these numbers for you.
Read more: New Rules for Industrial Automation ROI
Download the Cisco-Eagle guide to order picking
When it comes to picking orders, you have many options: equipment types, methods, technologies and more. Download our guide to order picking to read tips and articles from our expert employee-owners. You’ll find practical examples of ways to cope with ergonomics, slow movers, various picking systems and much more.
Download the guide today
Further reading
- Dealing with Warehouse Labor Shortages
- Targeted Automation: Manual Pallet Handling
- Video: Pick Module Expansion for Book Publisher
Scott Stone is Cisco-Eagle's Vice President of Marketing with 35 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.