What is a good labour utilisation rate for a warehouse?
Measured in people's time rather than floor space, good warehouse labour utilisation is 85 to 90 per cent: around six and a half hours' work in a 7.5-hour shift. Utilisation is the share of paid hours spent on the work. Two warehouses we've worked in read around 42 per cent on their systems and 65 with the off-system work counted.
Why you might have been told 65 per cent or less
Ask an AI assistant this question today and you'll probably be told around 65 per cent or less, with a warning that anything higher could mean your people are overworked. The answer borrows its definition from professional services, where utilisation is the share of a consultant's week billed to a client. A consultant needs unbilled time for selling, admin and training, so a ceiling makes sense there.
A warehouse works the other way round, because nobody on the floor is choosing between billable and unbillable hours. What matters is how many of the hours you pay for reach the work. The ones that don't are mostly lost to how the shift is set up: waiting for a pallet to come down, walking to a pick face that's run empty or standing at the start of a shift with nothing released to pick.
Search for warehouse utilisation in the UK and most of what comes back is about space: how full the racking is and how much of the floor is in use. That's a different measure with a different answer, so say which one a figure means before anybody acts on it.
The same warehouse, measured two ways
The usual way to work out labour utilisation is the time spent on tasks recorded in the WMS, divided by the hours paid on the clocking or time and attendance system. The WMS records picks, putaways, receipts and stock moves well, which is the direct time. What it doesn't see is the indirect time: replenishment done without a scan, unloading at goods in, housekeeping, training and the minutes between tasks.
In two warehouses we've worked in, utilisation read around 42 per cent on their own systems. Once the off-system work was counted, the same two read 65 per cent. Nobody had started working harder; the measure had started counting what people were already doing.
ONE SHIFT
Where the paid hours in a 7.5-hour shift go
Two bars show a 7.5-hour shift. On the systems alone, the tasks the WMS recorded fill around 42 per cent of it, about three hours ten minutes. With the off-system work counted, the bar reaches 65 per cent, about four hours 53 minutes. A shaded band from 85 to 90 per cent marks the realistic level, about six hours 23 minutes to six hours 45 minutes, at least 90 minutes further on.
Two warehouses we've worked in, measured on their own systems and then with the off-system work counted. The hours are those percentages applied to a 7.5-hour shift.
| What was counted | Share of paid hours | In a 7.5-hour shift |
|---|---|---|
| Tasks recorded in the WMS | 42% | Just over three hours |
| With the off-system work counted | 65% | Just under five hours |
| A realistic level | 85-90% | About six and a half hours |
The first two rows come from two warehouses we've worked in, measured on their own systems and then with the off-system work counted. The hours are each percentage applied to a 7.5-hour shift.
Why 85 to 90 per cent is realistic rather than perfect
Around six and a half hours of work in seven and a half leaves the rest for what every shift needs besides the task: the briefing, breaks, the walk to the first pick, a wait for stock and the handover at the end. Aiming at 100 per cent would mean planning for time no warehouse has.
Nor is 85 to 90 per cent a sign of people being run too hard. The gap between 65 per cent and that level is rarely about effort. It sits at the start of the shift, in stock that isn't where the system says it is and in pick lists that send three people down the same aisle at once.
572 hours in one week sat between operators clocking on and starting their first task, time no report ever showed
What the gap is worth
The 20 to 25 points between 65 per cent and a realistic 85 to 90 come to between an hour and a half and nearly two hours an operator on every 7.5-hour shift. Priced up, the gap is a fifth to a quarter of your labour bill.
Take a warehouse with 250 operators, each costing £32,000 a year with the employer's costs included. The labour bill is £8m a year, so the gap is £1.6m to £2m a year of paid hours that could reach the work and don't. Read it as hours rather than heads, since closing the gap means the team you already have gets more of the work done, with less overtime and agency cover.
Work out what the gap costs in your warehouse
Where to start
Count the off-system work before judging the figure, since a rate taken from the WMS alone reads low wherever work goes unrecorded. Then compare like with like: the same job, in the same zone, on the same kind of order. The distance between where you are and 85 to 90 per cent usually comes down to a few causes you can name and fix, such as where the stock sits, how the pick work is grouped and how the shift starts.