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Eight Places to Look for Labor Savings in the Distribution Center or Warehouse

An article in the December issue of Distribution Center Management newsletter recommends strategies for cutting labor costs.

(Boonton, NJ, December 20, 2011) — With the economy still sputtering along, labor costs are a target for many managers.

For DC managers, controlling labor costs can seem like a difficult task, especially if you're expected to do this while maintaining customer service and without making a big investment.

An article in the December issue of Distribution Center Management, looks at what those costs are and how to cut them.

In most DCs, the order picking area accounts for the largest chunk of labor costs, says Norm Saenz, senior vice president and principal at TranSystems. Picking makes up nearly 43 percent of labor costs, while the putaway/stocking function takes up nearly 23 percent of payroll.

In the article, Saenz lays out eight strategies for getting more work from fewer people.

  1. Layout/material flow. Your DC should be designed to minimize workers' travel time. Pickers typically spend 38 percent of their shifts walking. If your pickers are walking more than that, it might be time to study your layout.

    In a large storage area, tunnels and cross aisles reduce travel time and backtracking. A U-shaped layout flow is the most common, and is used for most retailers. A straight-through layout flow is best for manufactures or freight forwarder operations. Changing your layout might require a capital investment, but the cost is less than new equipment.

  2. Procedures. Look at your day-to-day procedures and methods to find inefficiencies. Use Visio or another diagramming program to visually review the process flow. By mapping the process, you can identify inefficient backtracking, delays, and repetitive tasks. For example, if you are performing the order quality process in the pack area and delays are extensive when correcting the errors, you might move this process into the picking function.
  3. Training. To be productive, workers must understand the importance of their tasks. For example, if replenishment isn't performed promptly and correctly, pickers may run out of stock during order fulfillment.

Five additional suggestions from Saenz appear in the December issue of Distribution Center Management.

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For more than 40 years, Distribution Group publications have helped distribution center and warehouse managers increase productivity, cut costs, and meet increasing customer demands. Distribution Group publishes Distribution Center Management newsletter, books and reports, and a free e-newsletter.

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