Warehouse Labor Management Guide

Your ecommerce business can’t run without an amazing team of warehouse workers. These individuals carry out daily tasks – like managing inventory, picking products, and packing orders – and you depend on them to get orders out the door.

But how you allocate and manage this workforce hugely impacts your operational efficiency. To improve productivity, reduce costs, and minimise idle time and overstaffing, you’ll need an optimised labour management strategy. 

Read on for our guide to warehouse labour management, including basic principles, best practices, and more.

So, what do you want to learn?

What warehouse labour management is

Why warehouse labour management is important

Basic principles of warehouse labour management

The role of technology in labour management

Elevate warehouse labour management with ShipBob

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What is warehouse labour management?

Warehouse labour management is the process of strategically aligning your labour resources to your operational requirements to improve business results. It often involves the use of a warehouse labour management system to maximise employee utilisation, improve productivity levels, and reduce costs. 

Some of the key components of labour management in the warehouse include:

• Managing staff schedules
• Allocating different tasks to the right workers
• Making informed hiring decisions
• Providing necessary training on technology, equipment, and standard operating procedures
• Monitoring staff performance
• Offering constructive feedback to improve performance

The importance of effective labour management

Labor is often the largest cost centre in a company’s warehousing, accounting for 50% to 70% of the total operating budget for most warehouses. With so much capital invested in this area, it’s crucial for businesses to effectively manage their workforce to maximise ROI and minimise costs.

But while demand for warehouse workers is high, labour scarcity is the top concern for 55% of warehouse managers – making it an even bigger concern than insufficient space and outdated equipment. 

About 41% of warehouse managers are unable to attract and retain qualified hourly workforce. This shortage is only aggravated by poor labour management in the warehouse, which leads to employee burnout and dissatisfaction, resulting in high turnover and poor performance KPIs. 

Being able to effectively manage your workforce and strategically assign workloads is key to improving employee engagement, morale, retention, and productivity, while simultaneously reducing error rates and labour costs.

Basic principles of warehouse labour management

There are four basic components to effective warehouse labour management that businesses need to keep in mind.

1. Hiring and training

For your warehouse to run at peak productivity, you’ll need to have the right number of workers with the right skills. To achieve the perfect staffing balance (without over- or under-staffing your operations), it’s important to understand how shifts in management, seasonal demand, and other factors impact your warehousing operations. For example, you will probably need to hire additional staff in the lead up to a busy holiday season.

Additionally, warehouses should invest time and money into training and onboarding new staff so they’re equipped with the necessary skills to perform the tasks assigned to them. Moreover, ongoing training is important for existing staff to help them stay up-to-date on best practices and safety measures. Without proper instruction, your staff is not only less productive (as it takes longer to complete tasks) but also potentially at risk for injuries. 

2. Staff scheduling

Staff scheduling may sound boring, but it is a critical aspect of warehouse labour management. It is a highly strategic activity, as it involves balancing your warehouse demand with staff availability and skill sets. 

Order volume, the types of orders, and seasonality greatly affect labour demand in the warehouse, and tend to change over time – which means you’ll need to adjust staffing accordingly to minimise employee idle time, avoid overloading your workers, and maintain productivity. You also need to consider worker availability to effectively plan a schedule that works for everyone, while staying mindful of which workers possess the necessary skills and qualifications to perform the required tasks for that day.

Warehousing space and available equipment is also important to factor in. You can’t simply schedule as many workers as possible on a given day just because you had a significant increase in orders – if you do, you’ll risk overcrowding in the warehouse. Too many workers all getting in each other’s way is a recipe for inefficiency, not to mention a higher risk of accidents and product damage.

3. Task allocation

Once you have your scheduled workforce, you must distribute workers strategically across various warehouse processes based on your needs and existing workflows. It’s important to assign the right people to the right tasks according to their skills, qualifications, and performance. For example, if you’re fulfilling a large item that needs to be picked using a forklift, you should assign someone who’s qualified to operate a forklift.

Warehouses may use a skills matrix or a seniority system to manage their task allocation. Some may use a bidding system as well or even combine these different methods based on what works best for them.

4. Monitoring and feedback

The key to effective warehouse labour management is consistent monitoring. By tracking how your workers are performing, you can ensure that people are meeting their individual and team goals and maintaining a productive warehouse. In addition, you can more easily identify which workers are struggling and provide constructive feedback and assistance. 

However, if lots of your workers are having trouble meeting their goals, it could be a symptom of a larger problem with your labour management strategy. Whether it’s an inefficient system, outdated equipment, ineffective scheduling, poor task allocation, insufficient staff, or something else entirely, working closely with your staff and collecting their feedback is necessary to get to the root of the problem.

The role of technology in labour management

With intricate staff scheduling, dozens of tasks, and lots of data to gather, managing your warehouse labour strategy manually can be highly complicated. That’s why many brands choose to use labour management software and warehouse automation tools to make the job easier and optimise results. 

Here are just a few of the ways that brands leverage technology to improve their labour management, and how an expert partner like ShipBob can help. 

Scalability and dynamic labour management

As your business experiences growth, so will your demand for labour. You’ll need more workers to handle the growing number of products, and to fulfil the ever-increasing number of orders. You may add new equipment (which workers will need to be trained on), new warehousing space, new partners, and more to support your brand’s scaling. 

As such, your labour management strategy should be dynamic and flexible enough to keep up with your business growth. Many brands achieve this by outsourcing warehousing operations to a third-party logistics platform like ShipBob. These businesses leverage ShipBob’s existing teams of expert warehouse workers to manage their inventory, fulfil their orders, and ship them out to customers. This not only reduces their own labour costs, but often streamlines their warehouse operations thanks to built-in automations and best practices – and with dozens of fulfilment centres across the US, Canada, Australia, Europe, and the EU, ShipBob has the capability to support your warehouse management needs wherever you grow.

“Because ShipBob has a lot of people to handle our orders and additional warehouses we can expand into, we can scale up with ease as we continue to grow quickly. If we ran our own warehouse, it would be much harder to hire people and we’d inevitably outgrow the space.”

Oded Harth, CEO & Co-Founder of MDacne

Other brands prefer to keep their operations in-house. These brands can use ShipBob’s warehouse management system (WMS) – the same one that powers ShipBob’s network of fulfilment centres – in their own warehouse to improve labour management in their existing facilities.

Data-driven labour management

Data plays a critical role in effective labour management. Keeping track of relevant warehouse KPIs is essential, as it enables you to analyse labour productivity and understand how to better utilise your workforce.

Some of the most important metrics to track over time include:

• Efficiency metrics, such as average fulfilment cost, picking cycle time, and order lead time
• Accuracy metrics, such as OTIF rate, picking accurate rate, and on-time shipping rate
• Safety metrics, such as accidents per year and time since last accident 

With ShipBob’s software, you get access to an analytics dashboard that gives you comprehensive insights into warehouse performance – whether it’s one of our fulfilment centres, or one of yours. 

From this dashboard, you get a snapshot of warehouse productivity through a progress bar indicating the percentage of orders fulfilled today. You can further break down labour productivity using metrics such as the number of orders shipped today, the percentage of orders fulfilled on time, and average fulfilment cost (among many others). 

Combining these insights helps you make data-driven decisions relating to labour management. For example, significant drops in your order picking rate could be a sign that you need to allocate more staff in this area. Alternatively, it could mean that you need to optimise picking routes to reduce transit time and speed up picking processes. 

Leveraging ShipBob’s analytics has helped brands like Spikeball drastically reduce the labour required to run their warehouses. With ShipBob’s WMS powering their in-house operations, Spikeball only needs one team member to manage fulfilment.

“All our manager has to do is pick the orders, bring them back to the pack station, pack them up, and send them out. Now she doesn’t have to worry about selecting couriers and putting weights and dimensions in herself, because the ShipBob WMS does that for her. 

We went from 3-4 people spending all day packing orders, and now we have our manager doing everything herself. She picks and packs orders from 7:00 am to noon, and then she’s done with DTC orders for the day. And now our team doesn’t have to rely on tribal knowledge for anything!”

Adam LaGesse, Global Warehousing Director at Spikeball

Managing seasonal workforce

Technology is especially useful for brands navigating seasonal workforce changes. The right WMS will provide demand forecasting tools to help you predict seasonal demand changes, enabling you to prepare for temporary staffing and staff allocation to accommodate peak seasons.

ShipBob offers seasonal inventory solutions to help you keep up with fluctuating labour needs throughout the year. This includes advanced data and analytics to predict demand changes and distributed inventory so you can still continue to enjoy fast and affordable fulfilment even during high-demand seasons. ShipBob also has long-term partnerships with leading couriers, which means you don’t have to scramble for couriers at the last minute.

“Our experience with ShipBob has been outstanding thus far. This past Q4 was really good, with December being our best month yet, even though it was really competitive. ShipBob was solid during the holidays, and at one point they even paid for expedited shipping for everyone, keeping their customers happy.”

Josh Hollings, Founder & CEO of Drop FX

Occupational safety in warehouse labour management

Having and enforcing safety protocols isn’t just the right thing to do to protect individuals from accidents and injuries; it’s also the smart choice for brands that want to keep staff fit to work and at peak productivity. 

Being safety-minded is one of ShipBob’s core values, and we have a strong commitment to maintaining safe working conditions for all our employees and contract workers. We take care to follow strict health and safety protocols and labour standards to improve warehouse safety, which subsequently enhances labour management. 

This includes equipping our workers with the necessary tools and equipment to minimise manual handling, performing regular warehouse audits, providing regular safety training to employees, and much more. 

Handling returns and reverse logistics

Returns and reverse logistics are some of the more complicated aspects of warehouse management. Having your workers handle it manually could lead to inefficiencies and inaccuracies while diverting valuable human attention to a process that could essentially be automated.

With ShipBob, you can streamline your returns management process by integrating our platform with leading returns management tools. This allows you to essentially automate some of the processes by allowing customers to schedule returns themselves. ShipBob’s warehouse management system also keeps track of returned inventory systemically based on product condition and return reason. You can then effectively allocate staff to handle returned inventory.

“About a year and a half after building out our business, we figured it was time to optimise some of our processes, including returns. The ability to work with one of the co-founders of ShipBob to launch a new, custom returns process was awesome. Returns were taking a lot of time and resources to process on our end, but ShipBob was super helpful and critical in creating a solution for us.”

Nikolai Paloni, Co-Founder of Ombraz Sunglasses

Elevate warehouse labour management with ShipBob

Whether you choose to leverage our teams of experts or use your own workforce, ShipBob’s solutions are designed to make managing warehouse labour easier. ShipBob’s leading software solutions and fulfilment services allow you to enhance labour management across all your warehousing operations through automation, real-time data, and best practices for efficiency. 

To learn more about how ShipBob can help you manage your warehouse labour, click the button below.

Warehouse labour management FAQs

Below are answers to the most common questions about warehouse labour management.