How to Reduce Fulfillment Center Costs Without Major Automation

January 14, 2021 by Amware Fulfillment

There once as a young fulfillment professional - let’s call her Leah - who decided her current warehousing job wasn’t making her happy. So she found another one instead.

No big deal, right?

Actually it is, and if you don’t think so, your company could be missing out on an easy way to trim one of your largest areas of fulfillment center costs – labor.That’s just one of the key takeaways from Amware’s recent eBook , How To Reduce eCommerce Fulfillment Center Costs Without Major Capital Investments.

Fulfillment-Center-CostsWhile the book acknowledges that employee turnover in fulfillment centers is extremely common (possibly as high as 41% according supply chain consultants Bricz) it also recognizes that it’s hugely expensive.

It can take at least four weeks for new hires to match the productivity levels of their predecessors, depending on the complexity of the tasks. During that time, you’ll require more workers for the same output, a phenomenon that will cause your fulfillment center costs to rise.

And that’s not all. Each employee departure also results in:

  • Increased recruitment costs
  • Additional training and onboarding expenses
  • Increased mistakes and the related return and re-shipment costs while new hires are getting up to speed
  • Reduced employee morale and overall productivity

In fact, based on Amware’s 30+ years of experience running fulfillment warehouses, we estimate the total cost of losing a productive associate to be $7,500 per departure.    

That’s the bad news.

The good news is many of these expenses are avoidable.

Download the Free eBook, How to  Reduce eCommerce Fulfillment Center Costs

 

A Gallup poll found that 52% of associates who leave say that the company could have done something to prevent their departure.

That means that one of your company’s smartest New Year’s resolutions might be engaging in better employee relations practices like the following:

  • Listen. Don’t guess at the things that will reduce attrition; go to the source and learn what really matters. Take the time to formally survey and/or informally speak to your associates to uncover any concerns or ideas – because chances are good they’ll tell you at least one or two things you might not have imagined. In addition, invest time to conduct cordial exit interviews, too, because if you get to the heart of why one Leah is leaving, you may be able to correct the issue and prevent several more from following her out the door.
  • Show appreciation. Being recognized and appreciated for work makes associates happier and more apt to stay. (Just ask Leah, whose new employer has already welcomed her with a first-day-of-work kit and a modest Christmas gift card – a marked contrast to her old employer, which didn’t do anything.) It’s a simple strategy that costs little to nothing to implement. And the ways that you can show appreciation are almost endless, including saying thanks in person, sending a personal note, and providing a gift card or other incentive for a job well done.
  • Engage your employees. Associates always appreciate knowing that they’re part of a bigger picture, including understanding how their performance impacts a company’s overall success. Here at Amware, we’re huge advocates of frequently sharing clients’ KPI goals and updates with our associates. 

Will these practices require your company to put in a little more time and effort? Of course. But if they’re well-implemented, the reduction in attrition could generate six- or seven-figure fulfillment center cost savings, depending on the size of your organization.

For more warehouse labor retention and cost-cutting ideas, we encourage you to read the eBook. Better yet, why not consider coming straight to the source and contacting Amware about your fulfillment center costs and challenges? We’d love to discuss how you can improve your warehousing and parcel shipping efficiency, while also improving order accuracy and customer satisfaction.

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Filed Under: Fulfillment Operations