Warehouse Labor Management Guide

Your ecommerce business can’t run without an amazing team of warehouse workers. These individuals carry out daily tasks – like managing inventory, picking products, and packing orders – and you depend on them to get orders out the door.

But how you allocate and manage this workforce hugely impacts your operational efficiency. To improve productivity, reduce costs, and minimize idle time and overstaffing, you’ll need an optimized labor management strategy. 

Read on for our guide to warehouse labor management, including basic principles, best practices, and more.

So, what do you want to learn?

What warehouse labor management is

Why warehouse labor management is important

Basic principles of warehouse labor management

The role of technology in labor management

Elevate warehouse labor management with ShipBob

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What is warehouse labor management?

Warehouse labor management is the process of strategically aligning your labor resources to your operational requirements to improve business results. It often involves the use of a warehouse labor management system to maximize employee utilization, improve productivity levels, and reduce costs. 

Some of the key components of labor management in the warehouse include:

  • Managing staff schedules
  • Allocating different tasks to the right workers
  • Making informed hiring decisions
  • Providing necessary training on technology, equipment, and standard operating procedures
  • Monitoring staff performance
  • Offering constructive feedback to improve performance

The importance of effective labor management

Labor is often the largest cost center in a company’s warehousing, accounting for 50% to 70% of the total operating budget for most warehouses. With so much capital invested in this area, it’s crucial for businesses to effectively manage their workforce to maximize ROI and minimize costs.

But while demand for warehouse workers is high, labor scarcity is the top concern for 55% of warehouse managers – making it an even bigger concern than insufficient space and outdated equipment. 

About 41% of warehouse managers are unable to attract and retain qualified hourly workforce. This shortage is only aggravated by poor labor management in the warehouse, which leads to employee burnout and dissatisfaction, resulting in high turnover and poor performance KPIs. 

Being able to effectively manage your workforce and strategically assign workloads is key to improving employee engagement, morale, retention, and productivity, while simultaneously reducing error rates and labor costs.

Basic principles of warehouse labor management

There are four basic components to effective warehouse labor management that businesses need to keep in mind.

1. Hiring and training

For your warehouse to run at peak productivity, you’ll need to have the right number of workers with the right skills. To achieve the perfect staffing balance (without over- or under-staffing your operations), it’s important to understand how shifts in management, seasonal demand, and other factors impact your warehousing operations. For example, you will probably need to hire additional staff in the lead up to a busy holiday season.

Additionally, warehouses should invest time and money into training and onboarding new staff so they’re equipped with the necessary skills to perform the tasks assigned to them. Moreover, ongoing training is important for existing staff to help them stay up-to-date on best practices and safety measures. Without proper instruction, your staff is not only less productive (as it takes longer to complete tasks) but also potentially at risk for injuries. 

2. Staff scheduling

Staff scheduling may sound boring, but it is a critical aspect of warehouse labor management. It is a highly strategic activity, as it involves balancing your warehouse demand with staff availability and skill sets. 

Order volume, the types of orders, and seasonality greatly affect labor demand in the warehouse, and tend to change over time – which means you’ll need to adjust staffing accordingly to minimize employee idle time, avoid overloading your workers, and maintain productivity. You also need to consider worker availability to effectively plan a schedule that works for everyone, while staying mindful of which workers possess the necessary skills and qualifications to perform the required tasks for that day.

Warehousing space and available equipment is also important to factor in. You can’t simply schedule as many workers as possible on a given day just because you had a significant increase in orders – if you do, you’ll risk overcrowding in the warehouse. Too many workers all getting in each other’s way is a recipe for inefficiency, not to mention a higher risk of accidents and product damage.

3. Task allocation

Once you have your scheduled workforce, you must distribute workers strategically across various warehouse processes based on your needs and existing workflows. It’s important to assign the right people to the right tasks according to their skills, qualifications, and performance. For example, if you’re fulfilling a large item that needs to be picked using a forklift, you should assign someone who’s qualified to operate a forklift.

Warehouses may use a skills matrix or a seniority system to manage their task allocation. Some may use a bidding system as well or even combine these different methods based on what works best for them.

4. Monitoring and feedback

The key to effective warehouse labor management is consistent monitoring. By tracking how your workers are performing, you can ensure that people are meeting their individual and team goals and maintaining a productive warehouse. In addition, you can more easily identify which workers are struggling and provide constructive feedback and assistance. 

However, if lots of your workers are having trouble meeting their goals, it could be a symptom of a larger problem with your labor management strategy. Whether it’s an inefficient system, outdated equipment, ineffective scheduling, poor task allocation, insufficient staff, or something else entirely, working closely with your staff and collecting their feedback is necessary to get to the root of the problem.

The role of technology in labor management

With intricate staff scheduling, dozens of tasks, and lots of data to gather, managing your warehouse labor strategy manually can be highly complicated. That’s why many brands choose to use labor management software and warehouse automation tools to make the job easier and optimize results. 

Here are just a few of the ways that brands leverage technology to improve their labor management, and how an expert partner like ShipBob can help. 

Scalability and dynamic labor management

As your business experiences growth, so will your demand for labor. You’ll need more workers to handle the growing number of products, and to fulfill the ever-increasing number of orders. You may add new equipment (which workers will need to be trained on), new warehousing space, new partners, and more to support your brand’s scaling. 

As such, your labor management strategy should be dynamic and flexible enough to keep up with your business growth. Many brands achieve this by outsourcing warehousing operations to a third-party logistics platform like ShipBob. These businesses leverage ShipBob’s existing teams of expert warehouse workers to manage their inventory, fulfill their orders, and ship them out to customers. This not only reduces their own labor costs, but often streamlines their warehouse operations thanks to built-in automations and best practices – and with dozens of fulfillment centers across the US, Canada, Australia, Europe, and the EU, ShipBob has the capability to support your warehouse management needs wherever you grow.

“Because ShipBob has a lot of people to handle our orders and additional warehouses we can expand into, we can scale up with ease as we continue to grow quickly. If we ran our own warehouse, it would be much harder to hire people and we’d inevitably outgrow the space.”

Oded Harth, CEO & Co-Founder of MDacne

Other brands prefer to keep their operations in-house. These brands can use ShipBob’s warehouse management system (WMS) – the same one that powers ShipBob’s network of fulfillment centers – in their own warehouse to improve labor management in their existing facilities.

Data-driven labor management

Data plays a critical role in effective labor management. Keeping track of relevant warehouse KPIs is essential, as it enables you to analyze labor productivity and understand how to better utilize your workforce.

Some of the most important metrics to track over time include:

  • Efficiency metrics, such as average fulfillment cost, picking cycle time, and order lead time
  • Accuracy metrics, such as OTIF rate, picking accurate rate, and on-time shipping rate
  • Safety metrics, such as accidents per year and time since last accident 

With ShipBob’s software, you get access to an analytics dashboard that gives you comprehensive insights into warehouse performance – whether it’s one of our fulfillment centers, or one of yours. 

From this dashboard, you get a snapshot of warehouse productivity through a progress bar indicating the percentage of orders fulfilled today. You can further break down labor productivity using metrics such as the number of orders shipped today, the percentage of orders fulfilled on time, and average fulfillment cost (among many others). 

Combining these insights helps you make data-driven decisions relating to labor management. For example, significant drops in your order picking rate could be a sign that you need to allocate more staff in this area. Alternatively, it could mean that you need to optimize picking routes to reduce transit time and speed up picking processes. 

Leveraging ShipBob’s analytics has helped brands like Spikeball drastically reduce the labor required to run their warehouses. With ShipBob’s WMS powering their in-house operations, Spikeball only needs one team member to manage fulfillment.

“All our manager has to do is pick the orders, bring them back to the pack station, pack them up, and send them out. Now she doesn’t have to worry about selecting carriers and putting weights and dimensions in herself, because the ShipBob WMS does that for her. 

We went from 3-4 people spending all day packing orders, and now we have our manager doing everything herself. She picks and packs orders from 7:00 am to noon, and then she’s done with DTC orders for the day. And now our team doesn’t have to rely on tribal knowledge for anything!”

Adam LaGesse, Global Warehousing Director at Spikeball

Managing seasonal workforce

Technology is especially useful for brands navigating seasonal workforce changes. The right WMS will provide demand forecasting tools to help you predict seasonal demand changes, enabling you to prepare for temporary staffing and staff allocation to accommodate peak seasons.

ShipBob offers seasonal inventory solutions to help you keep up with fluctuating labor needs throughout the year. This includes advanced data and analytics to predict demand changes and distributed inventory so you can still continue to enjoy fast and affordable fulfillment even during high-demand seasons. ShipBob also has long-term partnerships with leading carriers, which means you don’t have to scramble for carriers at the last minute.

“Our experience with ShipBob has been outstanding thus far. This past Q4 was really good, with December being our best month yet, even though it was really competitive. ShipBob was solid during the holidays, and at one point they even paid for expedited shipping for everyone, keeping their customers happy.”

Josh Hollings, Founder & CEO of Drop FX

Occupational safety in warehouse labor management

Having and enforcing safety protocols isn’t just the right thing to do to protect individuals from accidents and injuries; it’s also the smart choice for brands that want to keep staff fit to work and at peak productivity. 

Being safety-minded is one of ShipBob’s core values, and we have a strong commitment to maintaining safe working conditions for all our employees and contract workers. We take care to follow strict health and safety protocols and labor standards to improve warehouse safety, which subsequently enhances labor management. 

This includes equipping our workers with the necessary tools and equipment to minimize manual handling, performing regular warehouse audits, providing regular safety training to employees, and much more. 

Handling returns and reverse logistics

Returns and reverse logistics are some of the more complicated aspects of warehouse management. Having your workers handle it manually could lead to inefficiencies and inaccuracies while diverting valuable human attention to a process that could essentially be automated.

With ShipBob, you can streamline your returns management process by integrating our platform with leading returns management tools. This allows you to essentially automate some of the processes by allowing customers to schedule returns themselves. ShipBob’s warehouse management system also keeps track of returned inventory systemically based on product condition and return reason. You can then effectively allocate staff to handle returned inventory.

“About a year and a half after building out our business, we figured it was time to optimize some of our processes, including returns. The ability to work with one of the co-founders of ShipBob to launch a new, custom returns process was awesome. Returns were taking a lot of time and resources to process on our end, but ShipBob was super helpful and critical in creating a solution for us.”

Nikolai Paloni, Co-Founder of Ombraz Sunglasses

Elevate warehouse labor management with ShipBob

Whether you choose to leverage our teams of experts or use your own workforce, ShipBob’s solutions are designed to make managing warehouse labor easier. ShipBob’s leading software solutions and fulfillment services allow you to enhance labor management across all your warehousing operations through automation, real-time data, and best practices for efficiency. 

To learn more about how ShipBob can help you manage your warehouse labor, click the button below.

Warehouse labor management FAQs

Below are answers to the most common questions about warehouse labor management.

How does technology impact warehouse labor management?

Technology can be used to automate mundane tasks and improve productivity within a warehouse (freeing up more of your workforce to tackle tasks that require human attention). It also provides useful data and insights to help brands make informed decisions on labor management.

How can a warehouse adapt its labor force during high-demand seasons?

Warehouses can plan ahead for high-demand seasons with temporary hires and optimized staff scheduling. Outsourcing to an expert fulfillment partner like ShipBob is another effective way to adapt your seasonal labor demand.

What are key metrics to track for effective labor management?

Efficiency, accuracy, and costs across various warehouse processes are important to track for effective labor management.

How does ShipBob’s dashboard aid in labor management?

ShipBob’s dashboard provides essential data on warehouse performance so you can analyze labor productivity and make necessary improvements.