Every year, without fail, the holiday season causes a surge in demand for retailers all across the continental United States. This increase in sales is a welcome change to most, but the increased throughput can stress warehouse labor management systems (LMS) if not addressed in advance.
The spike in demand and shorter delivery timelines present retailers with several challenges, including longer vendor lead times, a shortage of warehouse space, and most importantly, a labor shortage.
Effective warehouse labor management during the holiday season can help businesses overcome many of the challenges with order fulfillment. In this blog, we will discuss how to optimize workforce utilization during the holiday season to accommodate seasonal peaks and spikes in demand.
Challenges in Warehouse Labor Management During Holiday Season
For warehouses in the United States, it’s a continuous balancing act between labor laws, workforce allocation costs, morale, and efficiency during the holiday season. Let’s discuss some primary challenges in effective warehouse labor management during this period.
Legal Aspect
In recent years, legislative changes at both the federal and state levels have significantly impacted warehouse labor management during the peak season.
Several states, including California and New York, have progressively raised their minimum wage thresholds. Employers must ensure compliance with the prevailing wage laws to avoid legal issues.
The Fair Labor Standards Act (FLSA) dictates rules regarding overtime pay. Any non-exempt employee working over 40 hours a week is entitled to overtime pay at least one and a half times their regular pay rate.
Recent legislations have reinforced worker's rights, granting them enhanced protections and imposing stricter regulations on employers regarding working conditions and benefits. It is vital to keep abreast of these laws to prevent inadvertent violations.
Even though the holiday season mandates an increase in labor allocation, warehouses must comply with relevant labor laws when hiring temporary workers and paying for overtime hours.
Impact on Costs
The holiday season can be a double-edged sword for most e-commerce warehouses. The demand spike often increases warehouse operating costs without appropriate warehouse labor management.
To attract and retain talent during this critical period, warehouses sometimes have to raise hourly wages significantly. Hiring new workers, even temporarily, requires an investment in training them to understand the specific requirements and workflows in a warehouse setting.
The rush to meet increased demand can sometimes lead to operational inefficiencies, inadvertently elevating costs.
Morale and Retention
Managing logistics during the holiday season puts e-commerce warehouses through the grinder. The high volumes and a fast-paced work environment can take a toll on worker morale and retention.
Long shifts can lead to employee burnout, adversely affecting their health and morale. Subsequently, poor morale can make it harder to retain skilled workers. The increased workload might motivate them to look for better opportunities elsewhere, given the high demand during the season.
Encouraging team spirit and recognizing individual efforts can go a long way in keeping morale high during stressful periods.
Preventing Strikes and Downtimes
There have been instances where overworked employees resorted to strikes, leading to significant downtimes. For example, Amazon workers raised concerns about grueling work schedules, inadequate breaks, and unrealistic productivity targets, which heightened during the holiday rush.
Amazon, FedEx, and UPS have faced strikes and protests in crucial sales periods because of inadequate safety measures, short staffing, and improper warehouse labor management solutions. The increased pace of work during the holiday season can lead to fatigue, burnout, and a higher rate of accidents, leading to further downtime.
Prioritizing worker safety and establishing transparent communication channels can help address grievances promptly and effectively. Proper planning and shift management can ensure every employee is well-rested, reducing the chances of strikes and other disruptions.
How to Determine the Right Workforce Levels
Determining the right workforce levels during the holiday season involves a deep understanding of your specific operational dynamics and wider economic and market trends.
Step 1: Analyze Your Operational Scale
1.1 Activity Analysis
Begin with a detailed analysis of the range and volume of activities performed per hour or day in your warehouse. Understand the throughput requirements and assess how many workers are needed to efficiently handle receiving, picking, packing, and shipping workloads.
1.2 Skill Set Analysis
Identify the different skill sets required to perform various tasks and ensure that you have the right mix of skill sets in your workforce to cater to the diversified task list during the peak season.
This includes the technical skillset required to operate the WMS and handle warehouse machinery and equipment, organizational skills, and labor-intensive skills like loading and unloading heavy goods.
Step 2: Leverage Historical Data
2.1 Past Trends
Analyze the data from previous years to understand the spikes in activities during the holiday seasons. Understanding past patterns, like dates and days of the week with the highest shipping volumes, will offer insights into predicting potential future spike.
2.2 Product Demand Trends
Use data analytics to pinpoint the products that usually see a rise in demand during the holidays. Ensure you have enough human resources to handle the increased volume of these specific products.
Step 3: Understand Macro Trends for 2023
3.1 Economic State
Take into account the current state of the economy. Given the economic rebound post-pandemic, there is an anticipation of a surge in consumer spending during the 2023 holiday season. Insider Intelligence forecasts holiday retail sales to grow by 4.5% for the 2023 holiday season. Align your workforce strategy to cater to this surge.
3.2 Consumer Spending Trends
Understanding consumer spending trends will help you forecast the high-demand products, allowing you to allocate your workforce more effectively. If there are any shipping commitments during the holiday season, identify the median time for order fulfillment to calculate the optimal number of workers needed to meet the increased demand.
3.3 Holiday Forecasts
Consider the forecasts for e-commerce in the 2023 holiday season. Early indicators suggest a significant increase in online shopping, steering towards a need for more labor, especially in the e-commerce fulfillment sectors.
3.4 Labor Dynamics and Availability
Heading into 2023, the market for warehouse workers is expected to impact company finances. These alterations significantly affect the availability of labor. According to WSJ, the average hourly wage for a warehouse worker in the U.S. was $23.71 in April, up about 8% as compared to May 2020.
While there plenty of good and skilled workers available to meet spikes in demand during the holiday season, it can become cost-intensive to heavily depend on seasonal workers. The emphasis thus moves to creating more sustainable and automated workflows to lessen the dependency on a large workforce while still meeting high demand during the peak season.
Step 4: Implementing a Robust Strategy
4.1 Cross-Training
Cross-train your employees to handle a variety of tasks. This would enable greater flexibility in assigning roles and ensure that every area is adequately staffed.
4.2 Contingency Planning
Develop contingency plans to manage unforeseen spikes in demand, including having a ready pool of temporary workers to call upon if needed.
4.3 Flexible Shifts
Introduce flexible shifts that allow warehouse managers to adjust workforce levels based on demand fluctuations during the holiday season.
4.4 Use a WMS to Automate Tasks
A warehouse labor management solution can automate repetitive tasks efficiently, freeing your workforce to focus on more complex activities. It can also function as a digital communication platform to facilitate smooth communication during periods of high demand.
4.5 Emergency Staffing
Have a pool of trained emergency staff that can be called in to manage unexpected spikes in demand or cover for absent employees.
4.6 Continuous Improvement
Establish feedback loops to gather input from employees on the warehouse floor, leveraging their insights to identify areas for improvement in the present warehouse LMS. Adopt a culture of continuous improvement, where strategies are regularly reviewed and adjusted based on performance feedback.
E-commerce warehouses have unique dynamics regarding order fulfillment process flow, and leveraging historical data and keeping up-to-date with macro trends for 2023 is pivotal to determining the right workforce levels for the upcoming holiday season. A prepared warehouse labor management system is critical to a productive warehouse.
Attracting Talent and Optimizing Recruitment for the Holiday Season
If you want to ramp up productivity to meet this increased demand of the holiday season, your warehouse needs to be capable of attracting skilled talent.
Define Policies and Pay Structures
- Competitive Wages: Offering competitive wages is the first step to attracting talent. Amazon, for instance, raised its minimum wage to $15 per hour in 2018, setting a benchmark in the industry at that time. A survey by Logistics Management revealed supply chain and logistics professionals are earning an estimated $126,215 annually, but even the high wages aren’t enough to fill the gap in open positions and candidates that can fill them.
- Bonus and Incentive Schemes: Roll out lucrative bonus schemes for workers who stay through the peak season. For example, FedEx offers sign-on bonuses to new hires to improve retention rates and maintain sufficient staff for the holiday season.
- Flexible Working Hours: Flexible working hours can be an attractive proposition for many potential employees. Companies have been experimenting with four-day work weeks or extended breaks to reduce burnout and attract talent. An integrated WMS can help warehouses balance wages, incentive schemes, and working hours with business outcomes for a positive ROI over the holiday season.
Leveraging Seasonal Gig Work Platforms
- Partnering with Gig Marketplaces: Platforms such as Veryable, Instawork, and others offer a ready pool of workers to tap into. These platforms provide on-demand labor, helping companies swiftly ramp up their workforce during peak seasons without long-term commitments.
- Short-term Contracts: While supply chain and logistics companies are cutting down on the number of permanent employees to combat inflationary pressures, the holiday season can create a vacuum for talent. Logistics operators in the United States have cut almost 17,000 jobs in response to shifting market trends. These gig platforms allow warehouses to retain workers on short-term contracts, providing flexibility to workers and employers.
Building an Employer Brand
- Employee Retention: Building a strong employer brand that emphasizes worker welfare and safety will find it easier to retain and find new workers during the holiday seasonal peaks. According to a survey by Instawork, offering flexible schedule and increasing pay are still some of the most effective retention tools in 2023.
- Engagement and Growth: Showcasing opportunities for engagement and growth within the company can be a significant draw for prospective employees. A clear path to progression within the company can attract skilled and ambitious talent.
Onboarding and Training
During peak season, every minute counts. Improving the onboarding and training processes ensures your workforce, both permanent and temporary, is not just well-prepared but also operating at peak efficiency.
Creating Standardized SOPs (Standard Operating Procedures)
Standardizing SOPs for inbound, outbound, and returns ensures that seasonal workers align with the company's processes regardless of their experience or background. NRF expects retail operators will need to hire approximately 450,000 to 600,000 seasonal workers during the holiday season. This uniformity guarantees seasonal workers can execute their tasks effectively through predictable and efficient workflows.
A warehouse labor management solution can establish standardized procedures to train new hires rapidly. They don’t have to navigate multiple methods, leading to a productive and enhanced worker experience.
Equipping Workers with the Right Software and Hardware
Modern warehouse labor management systems are intuitive and user-friendly. When equipped with the right labor management solutions, new hires can get up to speed faster, becoming more productive. Proper hardware, like handheld scanners or wearable tech, gives workers immediate access to data, reducing manual checks and speeding up tasks like inventory checks or order verifications.
System-Guided Processes and Automatic Task Allocation
A system-guided process means workers don't rely on memory or handwritten notes. Precise, real-time instructions reduce the chances of errors. Automated task allocation ensures that workers are always assigned tasks that match their skill sets and are prioritized based on urgency, leading to better workforce utilization.
Simplifying Hand-Shake Between Workers, Devices, and Software
When devices and software are in sync, technical hitches are minimized. This reduces downtime and ensures the workforce isn't idle due to technical issues. A seamless integration between devices and WMS means that workers can collaborate more easily, updating each other in real-time and avoiding redundant tasks.
Improve Worker Experience and Retention
Simplified processes mean complicated procedures or recurring errors don't bog down workers. This enhances their productivity and, in turn, their morale. A streamlined onboarding process significantly reduces the chances of errors. Fewer errors mean happier customers and less time spent on rectifications.
A positive work environment and efficient processes result in higher worker retention. This is especially valuable in the warehousing industry, where retaining skilled labor can be challenging. Reduced errors, faster processes, and a content workforce ensure better financial performance and enhance brand perceptions.
Analyzing Performance Metrics
A data-driven approach can improve workforce performance, particularly during the high-pressure holiday season. Use a warehouse labor management system to regularly monitor productivity metrics and create a more productive and satisfying work environment to maintain high morale and talent retention. Moreover, analyzing this data over time can aid in predicting trends and making informed strategic decisions, paving the way for smoother operations each successive season.
Key Metrics to Track
- Order Picking Accuracy: It refers to the percentage of orders picked without errors. Keeping this number high ensures customer satisfaction and reduces returns and re-shipments.
- Cycle Time: This measures the time taken to complete a specific task or a set of tasks. Reducing cycle time can enhance productivity significantly.
- Order Accuracy: It is crucial to track the accuracy of orders fulfilled. High order accuracy rates mean less wasted time on returns and a better reputation with customers.
- Inventory Accuracy: Maintaining an accurate inventory helps in planning and reduces the chances of overstocking or understocking, saving costs and ensuring product availability.
Integrated warehouse management systems can automate monitoring, gather data, and generate real-time reports. You can implement regular feedback sessions and surveys to collect qualitative data on workforce performance and address any and all potential issues in the workflow.
This proactive and informed approach to labor management improves performance and creates a culture of efficiency and satisfaction. Accurate warehouse metrics allow for recognizing and rewarding high-performing workers during the holiday season. Establish a feedback loop where employees can report issues and suggest improvements, fostering a positive workplace environment.
Warehouse managers can leverage warehouse labor management systems analytics to identify workers who need additional training and pinpoint bottlenecks. Use a balanced scorecard approach to have a holistic view of the performance, focusing not only on financial metrics but also on learning and growth.
Role of WMS in Better Labor Management
A integrated warehouse management system brings a holistic approach to improving the efficiency and productivity of warehouse processes. The right technology provides the visibility necessary to streamline workforce management and improve performance metrics during seasonal peaks like the holiday season.
System-guided Learning: Warehouse LMS provides intuitive user interfaces that simplify the learning process, reducing the time required for new hires to become proficient in the necessary skills. You can ensure uniform and consistent employee training through intelligent and guided workflows.
Automation of Manual Actions: Eliminating manual actions like data entry reduces the time taken to complete tasks, enhancing overall efficiency. It reduces the scope for human error, ensuring more accurate task completion, which is vital during the high-pressure holiday season.
Performance Tracking: A WMS allows you to create customized reports, prioritizing metrics most relevant to order fulfillment during the holiday season. This analytical drill-down provides the insights necessary to make informed decisions, enabling warehouse managers to identify potential areas of improvement with great precision.
Warehouse labor management systems can also retain and analyze historical data to predict future trends. Predictive analytics support strategic planning and help warehouses prepare for the demands of the holiday season.
Equip your Warehouse Workforce with the Right Productivity System
Hopstack is built to excel in high-volume fulfillment environments where productivity is key and accuracy, or lack thereof, determines the overall success. So when the holiday season comes around, you can rest assured that your workforce has the right companion to survive and thrive during this period.
Hopstack’s core objective is to maximize your workforce productivity by providing system recommendations and eliminating the need for manual recordkeeping. With built-in checks and balances, the system ensures that your activities are not subject to any human error. Schedule a demo to learn more about how the Hopstack WMS serves as a companion to your workforce to excel during the peak season.
Next Steps
The holiday season can be highly chaotic, especially for e-commerce warehouses, if you are unsure what to expect. The workforce is the backbone of a well-prepared warehouse, especially during seasonal spikes, and proper labor management can help your warehouse stay productive. An integraeted warehouse management system provides the oversight necessary to continuously manage and improve warehouse processes, leading to a profitable holiday season where workers and customers are equally satisfied.
