Labour productivity

How labour productivity is worked out

The sum is the work shipped in a period, divided by all the labour hours paid for in that period. Work is usually counted in order lines; units and orders are both used too, and each one flatters a different kind of warehouse, so write down which one the report means.

The denominator is where this figure earns its keep. It takes every paid hour: picking, packing, goods-in, put-away, replenishment, returns, loading, supervision, the morning briefing and the half hour at the end of a slow Friday when there was nothing left to do. That is the difference from picks per hour, which only counts the hours spent picking. One measures an activity, the other measures the building.

There is a warehouse labour calculator on this site for working it out against your own hours.

There is no good number

A warehouse shipping pallets of bottled water and a warehouse shipping single pieces of jewellery do not belong on the same axis. Nor do two sites with the same products but different automation. What the figure is for is your own trend line, and the comparison between your own shifts, days of the week and sites.

One comparison inside your own numbers is worth more than any benchmark: the ratio between picks per hour and labour productivity. If pickers are doing 90 picks an hour and the building is doing 60 lines per paid hour, then two thirds of the paid hours are picking and a third is everything else. If that third grows while nothing else changed, something has moved into the overhead, and the figure will not tell you what. It will tell you to go and look.

In practice

The warehouse pays 6,500 hours in the month: 4,300 on picking, 900 on packing, 700 on goods-in and put-away, 350 on returns, 250 on supervision. It ships 390,000 lines. 390,000 divided by 6,500 is 60 lines per paid hour.

The following month it ships 390,000 lines again, but pays 7,100 hours, because a supplier delivered badly labelled pallets and goods-in needed 1,300 hours instead of 700. Labour productivity falls to 55 lines per paid hour. Nobody in the picking aisles got slower. The figures here are an illustration, not measurements from a real warehouse.

What moves the figure

• The share of direct hours. Every hour that is not productive work still sits in the denominator. Planning that matches staff to volume moves this figure more reliably than speeding anyone up.
• What arrives at the inbound door. Mislabelled pallets, mixed cartons and deliveries without a booking slot turn into hours. See dock-to-stock time.
• Returns volume. Returns handling is labour with no shipped line against it, so a rising return rate drags this figure down even when outbound is running well.
• Agency mix. A high share of temporary staff costs hours twice: the learning curve, and the supervision they need.
• Layout and storage decisions. Replenishment hours are invisible in picks per hour and very visible here. Deeper pick faces cut them.
• Automation. It shows up immediately, and it is the only figure that catches the saved hours quietly reappearing elsewhere.