E-commerce Fulfillment Center Labor Costs

Currently, there are four trends circling around e-commerce fulfillment centers. Not only are they making it difficult to hire employees, but equally expensive prior to the holiday season.

 As of April 2019, the Bureau of Labor Statistics reported an unemployment rate of 3.6%. With many labor markets even having rates that are lower than the national average.

 Many states have begun to increase the minimum wage on an annual basis.

 According to the Labor Force Participation Rate, only 62.8% were sitting on the wayside in April.

 Employment in the gig economy makes up 31% of the workforce. This means that many have full-time jobs with regular pay and benefits.

Effectively Managing Labor

With the rapid change of omnichannel and e-commerce, no one seems to have the talent, money, or time to achieve full efficiency. The main culprit is our inability to quickly innovate our operations to achieve lower costs but maintaining excellent customer service. Without knowing if we have enough
time or budget, here are three projects to offset e-commerce fulfillment center labor costs:

Project 1

Reporting productivity by the employee and subsequent department
Objective: Departmental hours and labor costs to be reported. Include all hours worked into the
research phase. Log all employees’ daily work activity.
Benefits achieved: Report only actual costs for packages, units, and orders that are shipped out weekly. Report goals so labor and budget can be better managed.

Project 2

Conduct feasibility studies to determine if improved fulfillment is necessary.
Objective: OMS remains as-is.
Benefits Achieved: Operation maintains better inventory and labor costs are easily tracked. Other modules like inbound/outbound TMS, and labor management can be added.

Project 3

Line manager responsibilities extended throughout the fulfillment center.
Objectives: Must be able to recognize line manager’s needs. Design improvement plan for each line manager. Share potential job-related educational programs currently available. Design and integrate courses that last one or two days and have them present it. Collect budget estimates, potential results
and time frames.

Benefits Achieved: Error s and labor costs are reduced. Improved nurturing and direction of employees is provided resulting in fewer amount of absenteeism.

Encourage your employees to make money so they see how they are benefiting directly. Educating them about why investment is critical lets them know that their future is important.

While most e-commerce fulfillment operations benefit from projects like these, many don’t realize the potential for financial gain until it is too late.

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