10 Tips to Manage Labor More Effectively in Your DC
Most fulfillment processes are largely manual in nature; only the very largest companies can justify advanced automation. When you look at the total cost of back end order fulfillment—as we did by studying our proprietary F. Curtis Barry & Company Benchmarking ShareGroup data—you’ll find that out of costs that include direct and indirect labor, occupancy, and shipping supplies, total labor generally makes up 60%-65%. (We have excluded shipping costs because it distorts comparisons.)Typically, labor rates were in the $7.00/hour range five years ago. In many direct businesses today they have reached $12.00 to $13.00, plus a 20% benefit rate added on. But overall productivity in DCs has remained flat over a 5- to 10-year period. So, after factoring in the increasing labor rates, productivity has actually declined. Then consider employee turnover. Industry experience is that employee turnover in many centers is 15%-25% or higher. Turnover costs range from $3,000 to $10,000 in people time, training, testing and the ramp-up to full production. This does not include expenses for agencies, ads, etc., which must be added on.
Given the current economic climate, most businesses are mandated to get more out of the resources they have. Here are 10 ways to improve productivity by managing DC labor more effectively.
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