How do I reduce warehouse labour costs without replacing my WMS?

Two places the labour cost goes

A warehouse's labour bill is paid hours, so the question is where those hours go. They leak in two places. Keeping the two apart helps, because the fixes are different.

The first is paid hours that never reach the work: the gap between clocking on and the first task, waiting on stock that should already be in the face and work the WMS never records, which makes the team look idle when it isn't. That's utilisation, which sits under whether you're using your people effectively.

The second is work that reaches people but needn't have happened: the extra walk because a fast line sits at the back, the extra replenishment trip because its face is too small, the pick from bulk because the stock never made it to the right location. That's efficiency, which sits under whether the warehouse is set up to work efficiently.

What the first one costs

Two warehouses we've worked in measured labour utilisation at 65 per cent once the off-system work was counted. A realistic level is 85 to 90 per cent, around six and a half hours of work in a 7.5-hour shift. The 20 to 25 points between the two are the paid hours that could reach the work and don't, so their cost is a fifth to a quarter of the labour bill.

Take a warehouse with 300 operators, each costing £30,000 a year with the employer's costs included. The labour bill is £9m a year, so the gap is worth £1.8m to £2.25m a year. Read it as hours rather than heads: the same team gets more of the work done, with less overtime and agency cover.

Work out what the gap costs in your warehouse

Where the saving usually comes from

1. How the pick work is grouped. In a warehouse of around 600 people, regrouping the pick lists so pickers stopped queuing for the same aisles lifted output 12.5 per cent, by changing the method rather than asking anybody to work harder. On a 7.5-hour shift, 12.5 per cent more output is nearly an hour's extra work from the same people.
2. Where the stock sits. Slow lines in prime faces and busy lines still picked from bulk both add walking to every pick. In one warehouse we've worked in, pickers walked 950 metres to fill three cages.
3. The start of the shift. In one week in one warehouse, 572 hours sat between operators clocking on and starting their first task. Time like that tends to sit in how the shift starts: the briefing, when the first work is released and how it's handed out.
4. Agency and overtime. Planning labour against the demand that's coming is where the agency bill comes down. One warehouse we've worked in cut £23,000 a week from its agency spend that way.

ONE WEEK, ONE WAREHOUSE

Time between clocking on and the first task

572 hours the same as the whole paid week of more than fourteen people on 40-hour contracts

572 hours in one week between operators clocking on and starting their first task, drawn as fourteen full 40-hour weeks and part of a fifteenth.

Each block is one person's 40-hour week.

One week in a warehouse we've worked in.

Why none of it needs the WMS replaced

The WMS already records the picks, the locations and the stock moves, while the clocking system holds the paid hours. What's missing is reading them together, with the off-system work and your own rules alongside, so the causes show up. Most of the changes that follow are ones the WMS you run can already make, such as how work is released, how it's grouped and where each line lives.

Around 80 per cent of the value we've found early on was already inside the operation as it ran, so nothing had to be rebuilt to reach it. A new system wouldn't change the method on its own, though it would add a go-live.

Where to start

1. Put a cost on the first gap: utilisation with the off-system work counted, against 85 to 90 per cent.
2. Look at the work before the people: the walking, the replenishment trips and the picks from bulk.
3. Agree a starting point before changing anything, so every change is measured against the same line.
4. Hand the changes over at a pace the team can take on, such as a day's worth of slot moves at a time rather than the whole list.

Fettle reads the WMS and the clocking system you already run and puts both kinds of lost time in front of you, with your first numbers within two weeks of starting on site.