By a number of estimates, labor costs account for 50% of a warehouse’s total operating costs. Following are some ways to reduce labor costs without sacrificing performance:

  • Optimize the physical layout – Strategically placed storage and pick locations will reduce travel time and congestion. As business requirements change, companies need to reconfigure.
  • Streamline your operation – On a regular basis, review pick/pack/ship procedures to find out how productivity can be improved. If you have a high number of backorders, it’s time to look at inventory management practices.
  • Manage seasonal spikes – Temporary and part-time workers can help when demand is high. Distribute bonuses after the peak season is over to reduce employee turnover at a critical time.
  • Reduce turnover – Replacing an employee costs 1/3 of the employee’s salary. High turnover indicates lower productivity and low morale. Review hiring process and conduct exit interviews to improve retention rates.
  • Provide sufficient training – An effective training program is essential and should be an ongoing process. Cross-training employees will help a company to more effectively manage the workload.
  • Provide clear expectations and frequent feedback – Make sure employees understand what they should be accomplishing for the job or activity.
  • Measure employee performance – If an employee is not meeting reasonable expectations, he or she may need additional training.
  • Motivate and engage employees – Encourage open communication with employees and listen to their ideas. Provide incentives to increase production. Implement an employee recognition program to improve morale.

Scout cloud based inventory management enables companies to streamline their warehouse operations.

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