Manufacturers and retailers who outsource distribution activities to third-party logistics companies (3PLs) understand that there is a certain amount of churn among warehouse workers. But just how much churn is something they should be paying far more attention to. When you work with a 3PL with high warehouse employee turnover, it drags down your business in ways far beyond what you might think.
Other than inventory, your logistics workforce is the largest expense in your distribution centers, eating up 50–70% of the warehousing budget. It’s why managing and reducing labor-related expenses is a top priority for just about every logistics executive.
At Kane Logistics, we’re proud that our associate retention levels with our top 10 customers is 80.2%, compared to the industry average of 53.9% (U.S. Bureau of Labor Statistics). Here are 10 logistics workforce management strategies that work for us, and may work for you.
After inventory costs, labor is your biggest cost bucket in the warehouse. If you can increase efficiency on the warehouse floor, it’s realistic to drive labor costs down up to 20% – even without automation. That money drops straight to the bottom line.
Labor savings are a product of reduced time and touches, and there are dozens of strategies you could pursue to achieve these objectives. But one strategy – warehouse slotting – is both under-rated and under-utilized.
KANE’s new Chief Operating Officer is Patrick Coughlin, a 30+ year logistics industry veteran with a strong history of driving performance excellence in corporate logistics and 3PL environments. We recently sat down with Patrick to discuss the trends and opportunities he’s seeing in the market.
Every logistics operation will say safety programs are a priority. But many such claims are lip service only. Safety solutions, over and above OSHA-mandated programs, cost money – for training, equipment and software. Many companies struggle to invest money in things that might happen.
If you were contracting for home renovation work, you might deal with a single general contractor to coordinate the project. But you’d like to feel confident that the people actually laying the tile, putting up the drywall, and attaching the plumbing fixtures have the experience and training to do a quality job.
The same holds true for the use of temporary labor for warehouse staffing. As a user of third-party logistics (3PL) services, you want to understand how your 3PL utilizes temporary labor and how that might impact work quality.
$7,000 dollars to replace a warehouse worker.
Sound like a lot? Well, that could be the low end.
Calculating the traceable costs, the cost of warehouse worker turnover can reach 25% of salary. Using an average salary for warehouse workers of $28,000.00 (according to Salary.com), $7,000 is about where you end up. But some experts calculate the real costs, when you factor in lost productivity and other indirect impacts, at 150% of salary. Either way, turnover in the warehouse can be a major drain on profits.
Other than inventory, labor is your biggest warehousing expense. And that warehouse labor… well, it's costing you a lot more than you may think.
According to salary.com, the average warehouse associate's salary is about $28,000. But many related expenses combine to make the total cost to your company for that full time employee much higher. Let's take a look at these additional warehouse labor expenses.