Increase Efficiency with Outsourced Warehouse Staffing
When a company moves into new territory, rolls out a new product or solution, or responds to an increase in market demand, logistics can become increasingly complicated.
This can also be the case as a business simply matures; what started out as a minor inefficiency can morph over time into a warehouse operation that lags significantly behind industry standards.
Of course workforce management is one major area where warehouse operators could search for opportunities to streamline. This is especially true when operations suddenly scale up to meet elevated demand. A low volume of workers can find themselves scrambling to make rate while maintaining accuracy. A new wave of contingent workers can overburden your in-house managers.
If supervision of your warehouse staffing operations is a thorn in your side that’s turning into a major pain point, this article can help you discover why the costs of in-house contingent workforce supervision might no longer match the benefits you’d expect. It’ll also tell you how you can balance the equation by outsourcing this component of your operation.
Why do warehouse operators find themselves with little room for error, and what’s the way forward?
Rising Warehouse Costs
In part, warehouse operations have little wiggle room because of rising costs. A major source of rising warehouse costs is the high price inherent in leasing facilities. While growth in warehouse demand dipped in the most recent quarter, the ecommerce-fueled expansion of warehouse construction continued at a rapid clip. Still, demand remains high relative to construction and availability, which means high costs for renters.
The Wall Street Journal cited Colliers research director James Breeze as projecting a leveling out of warehouse demand and availability in 2017. This comes after a multiyear period of rent increases.
So, while things might be headed toward a plateau now, this plateau is significantly higher than where we were just a few years back.
In tandem with the rent increases of recent years, warehouse equipment and labor costs have risen. According to data from the U.S. Bureau of Labor Statistics, for nonsupervisory warehouse and storage workers, average hourly wages rose $1.02 from December 2007 to the same time in 2016. While wages dipped from 2012 to 2013, the data since late 2015 displays a net incline. Between September 2016 and February 2017 alone, these hourly wages rose by $0.59. What’s the takeaway? Your warehouse staffing strategy can have a big impact on your costs.
Taken together, the rising costs of facilities, equipment and labor could mean trouble for warehouses that are not operating at optimal productivity.
Falling Warehouse Performance
Another reason you need to keep your warehouse operations lean is because low performance can carry big costs.
According to recent data published by the Warehousing Education and Research Council, the time it takes an item to travel from the loading dock to its stocking point is less than two hours at warehouses performing at the top of their class. At warehouses that rank in the second tier of performance, items are stocked between two and four hours. Best-in-class warehouses also maintain order picking accuracy rates in excess of 99.8%.
How does your warehouse stack up next to these performance metrics? If your operation is not performing up to these standards, one cause could be inefficiencies in your contingent workforce program. If there’s a drag on your contingent workforce’s productivity, it’ll be especially stark during peak volume times.
There is a solution though; if you outsource management of your contingent workforce to an onsite staffing partner that has expertise in your field, you can focus your priorities on operational efficiency instead of dividing your attention between that task and the demands of managing your contingent workforce. Your onsite staffing partner will make sure to hire the right workers and to supervise them in a way that ensures their productivity meets your organization’s targets.
While you focus on boosting overall operational efficiency, your onsite staffing partner manages your contingent labor program to help you discover opportunities for big overall operational gains. That’s a warehouse staffing strategy that’s headed for success.
The Right Track for Warehouse Success
When you hire an onsite staffing partner to take over the management of your warehouse’s contingent workforce, you get more than you would from a traditional staffing partner. By managing workers at your facility, and by committing to your success instead of splitting their commitments among your operation and other facilities nearby, onsite staffing partners display a strong commitment to lowering costs and enhancing efficiency.
At Staff Management | SMX, we believe that our path to success starts by viewing our clients as partners with a shared goal. And our clients appreciate this approach. One of our partners, a major food and confection company, noted the benefits of our model.
“Staff Management | SMX partners with us on potential ways to improve our production rates and reduce our labor usage – for instance, to use four associates on a line instead of five – and to reduce our costs over the long term. While this may seem counterintuitive for Staff Management | SMX, it strengthens our partnership,” said the client.
Because of our commitment to supervising that client’s contingent workforce, and to helping them run an efficient, lean operation, we were able to save them more than $2 million over five years.
Staff Management | SMX is ready to commit to your warehouse operation’s bottom line by running a lean contingent workforce. If you’re interested in joining forces with a warehouse staffing partner, learn how Staff Management | SMX can help you Increase Efficiency and Reduce Costs with Outsourced Workforce Management >
Ready to start the conversation?