We hear from our clients that labor is the biggest challenge in their business every day. In particular, labor availability and turnover are often mentioned as issues companies are desperate to find a solution for.
The costs associated with employee churn add up in a tangible way for fulfillment and distribution centers. On average, the total cost of a warehouse associate is roughly $50,000 per year (a $20-per-hour wage at 2,500 hours per year), and the average cost of replacing that associate is roughly 25% of their total cost.
In a warehouse that employs 100 associates, those costs start at $500,000 per year. Then you should consider the costs of training new employees, onboarding, unemployment taxes, and additional overtime required to keep your operations running at the desired rate.
While labor appears to be the problem, here at Storage Solutions, we believe employee walking is the most detrimental activity in a warehouse. Though there are management-level and HR-level tactics to reduce turnover, we can’t ignore the reality that no one likes walking around a facility for miles every day. In addition to walking, manual pick processes are rigid on your associates’ physical well-being. With so much competition for the labor out there – and competitors constantly offering slightly higher wages and signing bonuses to warehouse workers, why would an employee continue to work for you?
Automating your pick process can drastically improve your employee’s job quality, so they aren’t interested in going elsewhere. By introducing goods-to-person picking technology, for instance, warehouses:
- Essentially eliminate walking from the job. You automate the picking and delivery of a product from storage to a place where your associate can be stationary at a pick station and conduct their business, rapidly expediting the picking process and keeping your employees from manually transferring packages across long distances.
- Give your best employees higher-level tasks. Employees who are loyal to your company can be rewarded by focusing on higher-level tasks than walking. No one wants high levels of labor intensity when they can be using their brains more than their feet.
- Reduce onboarding and training costs. If you are operating a 500,000 square foot warehouse storing a high volume and variance of SKUs without automating your pick process, it takes a while to learn which product is stored in every location. When employee churn is high, it can lead to a slower pick speed and a higher number of inaccurate orders.
- Improve accuracy and nearly eliminate costs of inaccurate orders. An automated solution can dynamically learn where products are stored and deliver goods with nearly-perfect precision. These solutions help your bottom line by increasing fulfillment speeds and reducing product returns. It is estimated that each return costs up to $50, which adds up quickly in high-volume fulfillment scenarios.
How Can We Help?
With automated solutions, you reduce your reliance on manual labor and unpredictable labor markets. Storage Solutions has formed partnerships with several of the industry’s most dynamic, innovative, and creative technology providers and has the operational experience to implement the right solution to meet your business goals.
We take an agnostic approach to learn your unique challenges and provide options with return on investment in mind that help you scale as your needs change.
Click here to let us know how we can best assist you, or give us a call today, so we can learn about your challenges and begin to develop a roadmap to help you grow faster without relying on the dynamics of the ever-changing labor market.