With omni-channel and e-commerce, warehouse production becomes more complex. Companies focus more on efficiency and costs in warehouse production to increase competitiveness

Labor costs are one of the largest costs in warehouse production but at the same time it is a cost that we can influence by utilizing resources in an optimal way.

It is not easy though especially if you have several departments in the warehouse where you need to keep track of all hours. Remember, time is everything. It is difficult to know what department to prioritize when you want to increase the productivity.

In a warehouse, the workload often fluctuates regarding both outgoing and incoming goods. It means you have to move staff from different tasks and departments if you want a high efficiency and secure the delivery performance.

To make the right decisions, we need a good basis because as I have written before we humans cannot think statistically (Daniel Kahneman “Thinking, Fast and Slow”) even if we have worked with statistics in many years we do not make good assumptions if it is complex variables.

A great tool to get a trustworthy basis is a LMS (labor management system). A competent LMS keep track of all hours you use in the warehouse and on what tasks and departments you use them. In this way you can analyze where you need to optimize the flow. The system also help you secure the delivery performance, it helps you move staff to areas with a high workload and too few hours to manage the workload.

You can use the statistical history to evaluate changes you do in the warehouse. You can also see if you decrease the amount of hours in the operations and tasks you optimize.

With a competent LMS there are lots of possibilities. You can connect the LMS with WMS, ERP and payroll system to look at the current costs of your warehouse production and predict the near future costs depending on the planned workload regarding inbound and outbound. You get the exact cost of each task in the warehouse.

If you have a primitive WMS that doesn’t measure time or you have tasks outside WMS like packing or cleaning you can use tablets at each station where you log in and out manually for example with a RFID tag. In this way, you can measure time in all tasks (even them not included in WMS) in the warehouse.

With a LMS, you will find out exactly what the individual and collective performance level should be for good productivity. In a good LMS you have a feature where you can produce performance incentives based on the data from LMS. In this way you can increase productivity even more.

In my opinion, a LMS is necessary if you want to take your warehouse production to the next level. It is one of the most important tools to both evaluate and predict your operations and more important increase productivity. Remember labor costs is the main item in warehouse budget you as a manager can have influence on.

Roberth Karlsson