3 Strategies & 6 Technologies to Reduce Warehouse Labor Costs

For a large percentage of warehouses, distribution centers, or order fulfillment operations, the greatest expense (aside from the cost of inventory) is labor.

After all, for each additional employee on the books you’re on the hook not only for payroll, but also for training (especially for new hires) and benefits like health insurance, disability insurance, and time off. These costs have only continued to increase in recent years as state governments push for higher minimum wages and as we have had to deal with the challenges of COVID-19.

Are you struggling with rising labor costs? We’ll help you understand which automation options will provide the biggest ROI and labor savings.

The good news is that there are strategies and technologies you can use to lower the labor costs of your operation and increase your bottom line.

Strategies to Reduce Labor Costs in the Warehouse

1. Optimize Your Existing Labor

Analyze your existing labor force. Are you leveraging your workers as efficiently and effectively as possible? Can roles be consolidated in order to reduce headcount? Will additional training make your employees more effective? Can new technologies serve to boost performance—such as Pick-to-Light, Pick-to-Voice, or Augmented Vision which enable workers to be more productive while picking orders?

2. Optimize Your Existing Material Handling Equipment, Technologies, and Systems

If you currently leverage any automated technologies in your warehouse, you should regularly analyze the performance of each piece to better understand whether it is living up to its potential. If it is not performing as well as you would expect, why not? Could something as simple as a little preventive maintenance increase your uptime and throughput? Could an upgrade enable the equipment to be more effective? Could the implementation of a better software, such as a Warehouse Execution System Software (WES), allow you to better orchestrate your labor needs on a day-to-day basis?

3. Optimize Your Current Processes and Workflows.

Finally, look at your processes and workflows and determine whether there are any bottlenecks or inefficiencies that are either directly or indirectly causing your labor costs to rise. For example, consider your picking strategy. Are you utilizing wave, waveless, or overlapping waves? Could your operation benefit by changing to a new strategy? Likewise, if you find that inventory replenishment and returns often lead to challenges (product not being where it is needed when it is needed) how might you address that to remove the inefficiencies?

6 Technologies to Support These Initiatives

Whether you are trying to optimize your existing labor and employees, your existing automation technologies, or your workflows and processes, the right equipment and systems will help. Below are some options to consider:

1. A Warehouse Execution System (WES) Software

If your operation does not currently make use of a WES, implementing one can have a large impact nearly immediately. That’s because a high-quality WES will provide functionality that a WMS and WCS simply can’t (learn more about the differences between the three softwares here). Most importantly the WES acts as a conductor, optimizing labor and equipment utilization across the entire facility. Likewise, a WES can perform tasks, processes and functionality very efficiently rather than changing or upgrading your WMS.

2. Autonomous Mobile Robots (AMRs)

Autonomous Mobile Robots (AMRs) are often considered the next evolution of AGVs and supply chain automation. These systems are designed to traverse a facility completely independent of an operator, using cameras and other sensors to navigate and create the most efficient path each and every time. As such, AMRs can perform a number of tasks that empower you to reduce your labor needs. You can, for example, use AMRs to transport inventory or product, assist in the picking and returns processes to increase throughput, or provide a flexible sortation solution, among other applications.

3. Automated Storage and Retrieval Systems (AS/RS)

Like AMRs, AS/RS comes in a variety of different forms (including fixed-aisle cranes, moveable-aisle cranes, shuttles, Horizontal and Vertical Carousels, Vertical Lift Modules, and more). Each of these different material handling technologies can be leveraged in its own way to automate processes that would otherwise need to be completed by human workers.

4. Robotic Picking

While utilizing AMRs or AS/RS can help you boost the efficiency of your pickers and reduce labor requirements, it’s also possible to transition to a completely robotic picking process by leveraging robotic arms. These arms can be integrated with AMRs, AS/RS, sorters, and virtually any other automated equipment you might be considering creating a range of semi- or fully-automated solutions.

5. Sortation

Automated sortation solutions (think: sliding shoe sorters, Bombay sorters, tilt-tray sorters, crossbelt sorters, robotic sorters, etc.) can be leveraged throughout your facility for a variety of purposes, from return processing to putaway to cross docking, picking and packing, shipping, and more. The result is less travel time, faster order processing, and overall, more effective use of your labor.

6. A-Frame Dispenser

An A-Frame automatic dispenser can be leveraged for high-speed order fulfillment. It works by essentially automating your picking processes. A-Frames come in three main types (workstation A-Frame, portable A-Frame, and universal A-Frame), each of which is better suited to a particular order and product profile. An A-Frame can complete up to 4,200 orders per hour (not lines per hour but completed orders). This can be a game changer when looking at your labor requirements and its difficulties.

Making the Right Choice

If you are currently struggling with labor challenges and constraints in your warehouse or distribution center and are looking for solutions to free you from the unreliable labor pool, you can rest assured in the knowledge that automation can help you reach your goals.

Which solutions make the most sense for your operation, however, will depend on a variety of factors, including your floorspace, your throughput and ROI requirements, the type of products to be handled, your deployment schedule, and more. A trusted systems integrator can help you determine your best path forward. Contact us today to schedule a consultation with a member of the Conveyco Team.