Warehouse and DC managers face a unique challenge in their roles: managing a variable cost that ebbs and flows on a daily basis. Of course we are talking about warehouse labor, i.e. the crucial folks in the inbound supply chain who receive product, organize it, and move it through to the storefront (this role is sometimes fulfilled by a lumper service). If your job is managing a warehouse for profitability, here are some strategies you can use to run the most effective operation possible.
Every Warehouse Manager is an HR Manager
As covered in detail in our whitepaper “The Seven Keys to Outstanding Warehouse Operations,” labor is usually the biggest driver of cost in a warehouse or DC. The other side of the coin is that labor can provide the best operational advantage versus an average warehouse if laborers are motivated, like their managers and coworkers, and have incentives to perform their best.
Warehouse and DC managers should recognize that their people are the biggest key to their success. There are a lot of moving pieces when it comes to managing company employees. If cost-control is on the manager’s mind more often than helping employees reach their fullest potential, a third-party solution might reduce some of that burden.
However, it’s not enough to outsource and be done with it—selecting the right warehouse labor partner is a matter of finding one that’s fully invested in their human resources. Without that attention to people, outsourcing isn’t going to solve the management headaches that prompted the search in the first place.
Set Measureable Goals
As with any business process, beginning with the end in mind is key to running an efficient warehouse. Having goals to track against motivates workers to excel, and gives managers a roadmap to compare performance against.
Goals will be unique across warehouses and DCs, but common goals include completing processes like picking, packing, and replenishment within a given window of time, unloading a truck at a certain speed, and maintaining a good threshold for lost or damaged product.
While setting measureable goals gives workers a standard to perform to, adding incentive-based pay or other incentive models motivates the best workers to reach their full potential.
Costa Solutions incentivizes its workers through pay-for-performance compensation schemes which reward focused, diligent work while keeping worker safety and product quality the highest priorities.
Provide regular feedback, guidance, and training
Warehouse laborers are not a cog in a machine, but too often work in an environment where they are treated as such. The best 3PLs and managed labor providers foster a career mentality in their workforces. They regularly review performance and provide constructive feedback. And, they provide opportunities for raises and advancement for top performers.
Employees who feel valued and invested in invariably perform better than people stuck in a churn-and-burn operation. And, while it may seem like a no-brainer, fostering a positive work environment should be a top priority for warehouse and DC managers. Unloading and production are tough work, often with long hours. Instilling positivity and rewarding the laborers that make the system run smoothly are key steps to improving performance, as Harvard Business Review unpacks in detail.
Use data to find opportunities for efficiency
We cover warehouse data management extensively in this blog, and with good reason. Collection and interpretation of data in the warehouse leads to process improvement, better utilization of each laborer, and short and long-term cost efficiencies with no exception.
Whether the technology is adopted internally or is brought into the fold by a trusted 3PL or warehouse labor management firm, a warehouse management system (WMS) should be any operator’s go-to resource for evaluating performance and taking corrective action.