Lowest Unemployment Rate in a Decade Impacting Cost of E-commerce Warehouse Labor

Jennifer Smith reported in the Wall Street Journal that retailers and logistics companies have been opening warehouses at a record pace to ensure online orders reach customers as quickly as possible and are struggling to find workers to staff them.  Small or large e-commerce success relies on “pickers” to grab items off warehouse shelves and prepare shipments.

The unemployment rate, now at a ten-year low, has made the competition for warehouse workers very tight. These workers are demanding and receiving much higher hourly wages, now averaging $12.15 an hour according to ProLogistix, a logistics staffing firm.

The Bureau of Labor Statistics released data showing that in March there were nearly 1 million warehouse workers. By the year 2020 this number could easily double. With the thin margins of e-commerce  the need for warehouse efficiency is vital. New technologies ensure a lean manufacturing approach where current workers achieve best practices, higher productivity, and improved quality, accuracy and throughput without adding staff.

Lean teams and technology solutions can start measuring worker performance and effectiveness of warehouse layout. By identifying who is doing what and in what timeframe, order picking operations can be quickly reduced.   Lean efficiencies can be a series of kaizen events for small e-commerce. Low hanging savings opportunities can be pinpointed immediately.

Since small e-commerce operations usually have everyone wearing multiple hats, too often people do not stop to physically watch the overall flow of a packing and picking process. Products are often poorly or improperly organized. Twenty percent of the total products account for 80 percent of all picking activity. The top selling products must be placed in the most ergonomically sound locations and given ample storage space.

The most obvious way to achieve lower labor costs is to automate the warehouse operation. Too many small e-commerce operations use manual, paper-driven methods for putaway, picking, and gathering shipping information. Manual methods are time consuming and involve a higher risk of error; eventually the data will become electronic. Automated data-gathering extends the electronic environment out onto the warehouse floor, with information-gathering tools such as handheld scanners, bar-code readers, and other remote devices. These tools are proven to improve accuracy, make personnel more efficient, and help operations run smoothly.

Industrial executive coach, Ignacio Isusi suggests that one of the most important cost-saving is to reduce warehouse labor turnover. It costs money to train employees, so keeping current warehouse workers happy and on-the-job is essential. Leadership in e-commerce means motivating employees and keeping them satisfied. While this can involve monetary incentives, it should also include employee recognition, or special perks for great performance. Employee retention leads to a reduction in costs associated with hiring replacement workers, managing downtime for missing staff, and retraining of warehouse employees.

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