Insights: The State of Warehouse Productivity
Manufacturing & warehousing insights - March 2024
Because labor has the lion’s share of costs in most warehouses and manufacturing facilities, productivity is always about the labor. Below we dive into a report below on the state of warehousing productivity and the ways you can analyze and improve it. Because we’re seeing worker shortages in the sector across the board, finding ways to help integrate younger workers into your operation is critical – also covered here.
The state of productivity in the warehouse and beyond: Bostontec
Our partners at BOSTONtec recently published “The State of Productivity”, which covers productivity across industries and geography. For the warehousing sector, there are many takeaways that help us understand what’s driving the industry forward.
Key takeaways
- Data is king: Companies that deploy a WMS (warehouse management system) report a 25% productivity increase. This brings the power of data and analytics to the conversation. For large-scale distribution, aligning what happens on the warehouse floor with your ERP and other systems will help you make better decisions.
- What states are most productive? California and Tennessee saw their productivity climb, while states like Nevada and Florida are seeing productivity declines.
- Your workforce is getting grayer: The average age of a worker is climbing, and will do that until at least 2050. Does your warehouse have systems in place that could allow older, less physically capable workers? Currently, many employers report that older workers are more productive than younger ones, which helps support any accommodations you make for them.
- Manufacturing productivity continues to grow. Output has increased since the second quarter of 2022 and rose 4.7% between 2019 and 2022.
- Labor is still your largest cost driver. Its costs range from 50% to 70% of any warehouse operating budget. Smart, justifiable automation makes more sense than ever given that labor costs will rise while labor productivity declines.
- What factors influence warehouse productivity? This will vary from industry to industry and sector to sector, but in general, pay attention to: facility layout, company culture, flexibility and standardization of processes.
- Ergonomics plays a significant role today, and will play a more important one moving forward in an environment of an older, smaller labor market. An ergonomic workstation will increase productivity by 18% vs. a standard workstation. Aside from that, better ergonomic workstations reduce injury risks 59% from an ergonomic standpoint.
Ergonomics are a key productivity factor
Gallup: How to work with GenZ
People of different ages and generations see work differently. You see that every day if you employ a broad range of people. According to Gallup, younger workers have become increasingly disengaged since 2020, while older workers – chiefly Baby Boomers – remain the most engaged in their work. This has more implications for warehousing and manufacturing than other sectors because our sectors require younger, physically capable employees.
To quantify it, the percentage of Boomers who are engaged has increased by 2% since 2020. All other age groups declined: GenX declined by 4%, millennials by over 7%, and GenZ by 5%. As a group, our youngest labor force (GenZ and millennials) have nearly a 1:1 ratio of engaged and disengaged workers.
Gallup’s data suggests that younger workers “progressively” feel more detached from their organizations and managers. They don’t see a future in their current roles. Employers should strive to help them find a purpose they can identify with. This means that your younger workers are far more likely to job hop than older workers did. Organizations that engage them will be more successful in retaining these workers.
Key takeaways: how to inspire younger workers
- A clear vision of your company’s purpose is critical. Younger workers need to know why they work.
- Be certain your managers revisit job duties and roles. This helps them understand their position and its importance, and reinforces that management cares about them and what they do.
- Establish clear expectations for in-office work. Gallup suggests that fully remote roles give workers a “gig worker” mindset. While this doesn’t typically apply to warehouse and manufacturing workers, it’s worth noting as some roles near and around your distribution operation could benefit from this understanding. For “on site” work like warehousing, offering flexibility options can be helpful.
- You should be on-site, and in their work lives regularly. Initiate team discussions and coordinate in-person time.
- Encourage collaboration with your teams. Ask for their opinions and use their input when you can.
Moutray: manufacturing labor productivity on the rise
Manufacturing labor productivity rose 2.3% at the annual rate in the fourth quarter, rebounding after declining by 0.8% in the third quarter. Output in the sector declined for the fourth time in the past five quarters, dropping by 2.4% in the fourth quarter. The number of hours… pic.twitter.com/zpPp3Nsipv
— Chad Moutray (@chadmoutray) February 1, 2024
Quick hits
- According to The National Bureau of Economic Research’s The Characteristics and Geographic Distribution of Robot Hubs in U.S. Manufacturing Establishments, the top five U.S. states for robotic automation are Iowa, Michigan, Kansas, Wisconsin and Minnesota.
- In its latest article, MHI argues that Ergonomic Industrial Workstations Reduce Worker Fatigue.
- This 2017 article The First Time America Freaked Out Over Automation outlines the persistent anxieties we felt in the late 1950s that persisted into 2017 – and today. By 2017, what once took 1,000 workers to produce took only 200. By 2024, that number decreased. At the same time, American manufacturers are struggling to fill those positions.
Tags: Manufacturing, productivity, labor management, Lean
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.