Warehouse Cost Reduction: How to Yield Immediate Results

The next step is to begin monitoring actual individual performance of day by activity or at least by core activity — the point at which the employee spends the most time working. Use the same type of spreadsheet and begin posting actual performance man-hours and units to standard or reasonable expectations. One to three weeks accumulation of data clearly will identify who is and who’s not performing up to expectation, as well as confirming if your standard is valid or if it requires review and adjustment.

Your first obligation to underperforming employees is to determine if they’ve been properly trained to perform their job effectively. Once assured they are, you can assert management control within your company policies and guidelines to either improve their performance or replace them.

With performance measurement and planning tools in place, you’re ready to address the most immediate return to labor management — eliminate or reduce overtime or premium labor hours. Premium labor hours are a crutch for poor performance.

We’ve found the best method to reducing overtime operationally is to simply bite the bullet and advise your team there will be no overtime unless you personally approve it, and you don’t plan to do so. Typically within a week or two following this direction, you’ll find the same work is being done with fewer man-hours, and you’ll realize immediate savings. The downside to prepare for is that during those two weeks, customer service will slip until all realize you’re serious and pick up the pace. The key to success in managing overtime is not to waver during those two weeks by approving exceptions to your rule.

Gary Conrad is a vice president at F. Curtis Barry & Co., a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory and benchmarking. For information, go to www.fcbco.com.