Across the materials handling industry, labor costs frequently comprise as much as 50% of the expenses at any individual warehouse. The industry is labor-intensive by nature, requiring workers to receive and check orders by hand, sort them into bins, put away bins of inventory in an organized and documented way, then pick orders by hand to ship to customers.

To stay competitive in the face of growing competition, many warehouse managers are looking at their wage bills and asking the same question: "How can I reduce labor costs at my business without compromising the quality of work and adding to the number of errors?" It's obvious that simply asking workers nicely to be more productive is going to produce costly errors that balance out any productivity gains.

Smart warehouse managers are using the latest mobile cart technology to empower workers to accomplish more, helping to minimize errors while driving down labor costs at the same time. Here's how:

A Principled Approach to Reducing Labor Costs

First off, let's state the obvious. The best way to reduce labor costs is to fire all of your workers, but that's obviously not the solution we're looking for - it leads to zero productivity! Let's add a few more parameters for what we want to accomplish while getting labor costs under control:

  • Avoid producing more errors and reduce errors if possible.
  • Avoid reducing productivity and increase productivity if possible.
  • Avoid increasing the workload for individual workers and reduce the workload for individual workers if possible.

Any attempt to reduce labor costs that didn't also accomplish these three objectives would be futile. An increase in errors would cost much more than any labor savings, reduced productivity would lose as much money as it saved, and overworking your employees would lead to burn-out and resentful workers that would probably start making errors out of spite.

Business process improvement and worker empowerment are the best ways to reduce labor costs and boost efficiency throughout your organization.

Increasing Efficiency by Reducing Walking Steps

Getting more done in less time leads to a direct reduction in labor costs, as individual workers can complete more work throughout their shift. Whether working in receiving, put-away, cross docking or order picking, workers can increase their efficiency with the help of mobile computer carts.

Minimizing the number of steps in each process and minimizing travel steps in the warehouse are two important benefits of mobile computer carts. Workers engaged in receiving can unpack, count, label, and sort new inventory without walking back and forth to a stationary workstation. Order pickers can take a mobile workstation with them everywhere, verifying their picking accuracy with each item retrieved and eliminating the need to travel from the aisles to a stationary workstation to scan items and update inventory counts.

When your employees can get more done in less time, that translates to a direct decrease in labor costs while maintaining or increasing productivity. If a worker can pick an order in four minutes instead of five minutes, that's a 20% increase in worker productivity per shift. Looking at the big picture, that translates into thousands of dollars of value per year.

Triggering Labor Savings by Eliminating Preventable Errors

Errors are one of the major preventable costs at every warehouse. An order picking error turns into a dissatisfied customer, leading to preventable expenses in customer service, receiving the returned item, sending out the correct order, and sometimes even providing a refund. Industry experts have estimated the cost of individual errors at $150-300 per instance.

Mobile computer carts reduce human errors by allowing workers to perform all of the critical tasks in each business process at the same location, without walking back and forth between a stationary workstation and the inventory storage areas. This minimizes walking steps and reduces distractions that lead to careless work and avoidable mistakes. Order picking particularly benefits from the mobile workstation because workers can pick whole orders together, instead of one item at a time, and verify their accuracy along the way.

Conclusion

Mobile computer carts are one of the most effective ways of reducing labor costs in the warehousing industry. When employees are empowered to work more efficiently, they can get more done in every shift, reduce the number of errors at your facility, and contribute to growing efficiency and profits.

Patrick Ney is Vice President, Definitive Technology Group, which provides engineered products and services that optimize the mobility of users that depend on electronic equipment to perform their job function resulting in improved workflow, efficiency, and profit for the customer. He can be reached at pney@definitivetg.com or 978.532.0444

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