Keep an Eye on Warehouse Labor Costs

Jun 24, 2009 7:59 PM  By

Your customers are finally buying again, and your warehouse is getting busier. But is it time to bring back all of the workers you had to lay off earlier in the year?

Not necessarily, according to a session last week at Internet Retailer Conference and Exposition. Rather, it’s time to think about how to increase your workforce while staying in line with budgets.

“In most businesses, labor is going to be at least half of your operation’s cost,” said Bob Betke, vice president with operations consulting firm F. Curtis Barry. “And it’s going to be your biggest overall expense.”

So how do you start bringing back workers without going overboard? According to speaker John Rice, vice president of operations for wholesale pet products supplier PetEdge, the biggest opportunity is with forecast and demand. You also need a team effort to product proper scheduling.

“Work upstream, work with all the departments in the business,” Rice said. “If they can tell you what you have to deal with and when seasonally–monthly, weekly–it will make a big difference in your labor costs.”

Hiring back part-timers as opposed to full-timers will help you bring the labor costs down as well, Rice said. This will offer your company flexible scheduling, and cut down on overtime costs.

“Bringing in temporary help, aside from the ultimate flexibility, means you also won’t have any benefits to pay,” Rice said.

You should also cross-train workers when you have a leaner staff, to help combat unexpected absenteeism, Rice said. This way, you could move a worker from another department to cover an area that’s short-handed.

And even if it seems like the season will be busy, resist the urge to overstaff.

“You need aspirational goals in the warehouse,” Rice said. “Anything you think you can do, you can do more. If you think you can handle a 5% reduction in labor, go for 12%. You will figure it out, and your team will figure it out.”