Revolutionizing Warehouse Operations: Unleashing Efficiency and Trimming Labor Costs

Key Takeaways:

• Trimming labor costs must begin with an overall look at your business strategy and operational goals.
• Ensure you have a deep understanding of how products and people move through your space, and back it up with data.
• When seeking to improve efficiency and optimize cost, solution-focused mobile technology can accomplish both.

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Labor costs have been, and continue to remain, a consistent cost challenge for many organizations. In fact, U.S. labor costs have risen 5.1% on a year-to-year basis.

Coupled with increased operating costs, the drive for efficiency, and the impact of inflation, companies are grappling with how to shift their business models.

Warehouse operations can meet this challenge head-on with an emphasis on trimming labor costs and implementing warehouse efficiency measures across their operation.

In this article, we will look at how strategy and planning, warehouse layout optimization, process improvement, and labor management can all contribute to a revolutionized warehouse business model.

Strategy and Planning

Patching together interim solutions to labor cost challenges is not a long-term strategy. To truly revolutionize and automate warehouse operations, organizations should look to labor challenges as opportunities to deploy new technology advancements within their businesses that will help teams accomplish more in less time.

Warehouse Needs Analysis

Begin with a baseline understanding of your warehouse. By conducting a warehouse needs analysis, companies can review current functions and processes, the flow of materials along the production line and the interaction of employees in the process.

This analysis allows you to observe critical areas within your operation, including inventory, order management, material handling, and various components of warehouse management. A thorough analysis of current performance will allow you to identify improvement areas.

Efficiency and Cost-Reduction Goals

Once you have reviewed your current state and necessary improvement opportunities, it’s time to set strategic goals and quantify target outcomes:

• Cost reduction. Can you automate points along the supply chain to cut costs and streamline employee workloads?
• Efficiency improvement. What processes could be reinvigorated to reduce waste and increase speed of operation?
• Enhanced accuracy. Where is lack of information causing mission-critical issues to warehouse productivity?
• Increased staff utilization. How can time-consuming, repetitive tasks be streamlined to free up worker time for opportunities that add more value?

Your target outcomes should align with overall organizational objectives. After all, labor cost strategies are directly tied to business success.

At CarlisleIT, manual warehouse transactions equated to delays and inaccurate reporting. By implementing automated data collection capabilities in line with their overall business outcomes, CarlisleIT is now able to do work 40% faster, improving employee utilization.

Warehouse Management Strategy

Key to labor cost strategies is the role of a warehouse management strategy. A warehouse strategy refers to the management of all parts of the production process within the warehouse, including organization and layout of inventory, storage, and shipping.

Good warehouse optimization strategies tie into overall business goals, like minimizing waste and cutting costs, as well as improving accuracy.

In any given operation, there are a variety of warehouse management technologies to aid in a warehouse management strategy, ranging from basic barcode scanning to advanced mobile inventory solutions.

Larger warehouses may even employ warehouse management software, such as a WMS solution or a more flexible WMS alternative.

The integration of warehouse technology allows organizations to collect data points across the warehouse and improve inventory and other processes.

Automating warehouse data collection allows data to move through connected devices, keeping processes moving and reducing errors. In fact, 70% of Digital Inventory Report participants use technology solutions to streamline efficiencies, resulting in labor and carrying cost savings over time.

Warehouse Layout Optimization

A deep understanding of your warehouse is nothing without a review of the space itself. This includes examining your current space, planning the flow of your space, fixing logistical issues like inventory and then implementing technology to help streamline the process and provide benchmarks and key performance indicators (KPIs).

To begin, audit the available space for maximum utilization. A successful use of warehouse space is typically when it is 85% full of inventory. By assessing where products take up space in your floor plan, or what merchandise needs to be readily accessible, you can make more efficient use of the space.

Understanding what you currently have and comparing it with your past and future needs requires a solid use of accurate, up-to-date data. For instance, data allows inventory managers to identify the most needed product versus one that can remain in long-term storage.

In addition, automated technology can also highlight how products moved throughout the facility and where errors occur.

By maximizing warehouse space, you can begin to streamline material flow. Take, for instance, order picking. One of the most labor-intensive processes, order picking accounts for 55% of operational expenses in a warehouse. And while customers demand faster turnaround times, many warehouses struggle to get orders out the door in a timely, accurate manner.

Mobile automation technology can help solve this problem. Workers can scan and locate an item quickly while simultaneously updating the ERP to current inventory levels. Over time, this data can provide valuable insight into warehouse layout. Software can suggest prime put-away locations and inform the ERP and mobile devices where those items are when it comes to order picking.

This allows workers to find optimal paths for faster fulfillment without doubling back. For one distributor, implementing automated warehouse technology allowed them to not only gain efficiency with direct travel and multiple order picking, but resulted in enhanced speed and the ability to ship the same day.

Another area to consider in warehouse space utilization is the use of AI and robotics. A recent study showed that over 90% of companies believe AI will be essential to driving innovation in a manufacturing space. Its ability to automate repetitive tasks and digest large amounts of data can be utilized to help maximize warehouse efficiencies and streamline task management.

Process Improvement

In addition to optimizing the warehouse, improving business processes is crucial to elevating efficiency.

Here are a few ways to adopt process improvements in warehouse operations:

Standardizing Processes

It’s important to not only define your goals, but to also create and establish best practices among your team to ensure those goals are met. From the why behind what your company does to how you run an efficient warehouse operation, establishing best practices is critical for overall success.

Then, communicate those best practices to your employees. Even in a labor shortage environment, taking the time to train your employees is critical to overall success. A typical training program can take four to eight weeks or more. But by harnessing technology, you can save on employee time and onboarding—by as much as 95%.

Having warehouse automation technology is a must-have for standardization. Mobile software can enforce best practices, keep data clean, and ensure critical steps in material handling don’t get missed.

Ultimately, a quality and comprehensive training plan and continual knowledge sharing of new technologies will ensure your employees are not only ready for their roles but find value in their work.

Adopting Innovative Technologies

The warehouses of the future are embracing the role of technology in creating a more effective operation. After all, warehouse automation has a direct impact on labor efficiency and production issues. When looking to automate your warehouse, try adopting innovative technologies like:

• Use of IoT devices and sensors which collect data and transmit it to relevant enterprise business systems.
• Artificial intelligence to help automate repetitive tasks and optimize processes.
• Advanced warehouse software that gives your company a full view of operations from inventory to shipping.

By onboarding these types of devices in an industrial environment, you can quickly adopt digital innovation and empower employees with effective tools to increase productivity.

Lean Principles

Companies that utilize lean manufacturing methods have seen inventory reduction, quality improvement, and a more productive workforce. In fact, one company saw a 50% reduction in labor costs by using lean principles to improve processes.

Under the lean methodology, products are produced as they are ordered, eliminating high levels of inventory in the warehouse. In addition, companies are constantly seeking ways to streamline processes with the goal of a satisfied customer. The result is a better use of employee time and a centralized goal of making the customer’s life better at each step in the process.

Labor Management and Performance

In an ever-changing business environment, it’s hard to prioritize employee performance and development, yet this critical step is essential to cutting labor costs and building a better operation.

To ensure team growth, consider:

• Conducting skill inventories on a regular basis. This allows you to track current performance, analyze daily routines and find ways to improve processes based on skill sets.
• Reviewing division of labor to ensure the right people are in the right positions to streamline processes.
• Updating technology for maximum efficiency. Over 50% of Digital Inventory Report respondents are planning to increase supply chain technology spend in the coming years.

Taking a human-first approach to your warehouse environment helps you to view technology purchases through the lens of your employee’s well-being and what they need to do their jobs well.

For instance, an understanding of employee movement on the warehouse floor can allow you to better implement staffing models that prioritize quality use of time and talent rather than being over-staffed.

When new technologies are onboarded, ensure you have a guided training plan in place for functional and technical training. Research has shown that crafting tailored training tracks can help speed up new user onboarding by 80%.

A Focus on Labor Management Can Increase Efficiencies

Labor costs remain a constant struggle for warehouse operations. But by assessing your current state, aligning your business goals, reviewing processes, and enabling mobility in your warehouse, you can be better prepared to mitigate labor costs and increase efficiency throughout your operation.

This big-picture approach includes a review of historical data and a forward-thinking mindset. However, while technology is an essential component, it is nothing without your employees. Think of a fully digitally automated warehouse as an employee investment strategy. The tools you invest in should equip your employees to do their jobs faster, safer, and more successfully.

Ultimately, this emphasis on workforce optimization through labor-saving technology gives your warehouse the ability to be more productive and effective in reaching your goals.