How the Productivity Pay Model Helps Supply a Demand-Driven Warehouse Workforce

Warehousing is an industry on the brink of transformation. Customer demand now lies at the center of labor decisions as many warehouses shift to demand-driven workforces to reduce labor costs and optimize employee productivity. Warehouse temp services are flexible, making them a great solution during fluctuating business cycles. But while temp workers save the day and come with the prospects of lower costs, the benefit of hiring warehouse temp services is only justifiable if your temp staff meet or exceed your productivity, safety, and quality standards.

Read on to learn about the concept behind demand-driven workers and how you can use the productivity pay model to reduce labor costs and increase productivity. 

Who are the Contingent or Demand-Driven Workers?

A contingent or on-demand worker is one who you hire on a temporary, fixed-term, or as-needed basis for a specific project. Contingent workers are handy when you need flexibility or specialist skills. 

Hiring contingent workers comes with two major benefits:

• You get to manage your overall costs since warehouse temp services are cheaper in the long run. This is huge, considering 45% of warehouse managers struggle to control labor costs.
• The capacity to meet customer demand during high-demand seasons. 

Contingent workers for your warehouse can include: 

• Lumper services
• Package handlers
• Order selectors, builders, and checkers
• Inventory organizers 
• Tools and equipment operators
• Material handlers

Hiring contingent workers shouldn't be a random process. It requires prior workforce planning and development. 

What is Workforce / Workday Planning and Development?

Shift work in warehouses has always been the norm. Most operators still use 8- to 12-hour shifts, focusing on creating consistent worker schedules that may not align with general warehouse activities.

The shift work system is largely ineffective as there are times when there's not enough labor to get everything done or there's excess labor and little work. The solution? Workforce planning and development.

Workforce planning is about creating an intelligent feedback system that shows your current and future business and employee needs. It aligns your business needs and your people strategy so you have the right number of people, with the right skills, in the right place, at the right time, and for the right cost. It involves:

• Analyzing your current workforce
• Determining your future workforce needs based on factors like market trends and internal factors like headcount actions
• Identifying workforce gaps
• Implementing workforce solutions to help you achieve your goals

Workforce planning gives you visibility into all the variables that affect your workforce needs. Workforce planning helps you: 

• Align your workforce to your operational requirements: Front-line workers are often in high demand and continue to be. Prior planning and insights on future needs can help you create a forecast that can serve as a basis for future hiring. 
• Improve workforce flexibility and productivity: Workforce planning inspires better, more optimized schedules that consider employee needs and preferences and prevent burnout. Precise labor forecasting leads to predictable work schedules, fewer last-minute calls, and greater job satisfaction which improves productivity.
• Better financial performance as your workforce aligns with business goals: Maintaining an optimal staff level ensures that you are maximizing your warehouse resources for sustained operations and growth. The flip side would be to make annual financial forecasts based on your initial number of employees which can lead to wasted resources. 

Headcount / Personnel Planning and Forecasting

Failure to have the right number of employees or skills supporting your business can make or break warehouse efficiency and customer satisfaction. With 73% of warehouse operators offering general warehouse solutions unable to meet their labor needs, headcount planning helps you avoid future shortage challenges. 

Headcount forecasting is part of workforce planning. It involves creating a plan detailing the number of staff you need to meet your supply chain staffing needs. You have to look at both the demand and supply sides of the equation as follows:

• Headcount Demand Forecasting: This involves predicting how many employees you will require in the future. Estimates will depend on various factors including internal factors like hours required and production levels and external factors like tech changes and economic climate.
• Headcount Supply Forecasting: This involves estimating labor supply based on factors like availability and external supply.

Your company's headcount planning process should get you the right number of people with relevant skills to execute your strategy while keeping your costs low.

Using The Productivity Pay Model To Get The Most Out Of Your Workforce

Most temp staff get paid per hour and not per output. Paying staff by the hour no longer cuts it, since there may not be enough revenue to justify some of the labor costs. For instance, you still have to pay hourly wages even on less busy days when your staff is idle for the most part. 

The productivity or cost-per-unit (CPU) model provides a better way of paying staff — according to their output and productivity. The CPU model gets your employees to do more with the motivation of an increased hourly rate, which creates a win-win situation for everyone —- your employees get better pay and enjoy more flexible hours while your labor costs remain static and you get to enjoy higher productivity. 

Change The Way You Hire Workers With a More Productive Managed Cost Per Unit Program

There is no shortage of industrial staffing agencies that can help you hire qualified staff for your warehouse. One of the benefits of using warehouse staffing agencies is that you get access to a large pool of staff with the skills and experience you need. But there is no guarantee of increased productivity as long as you're using the traditional pay model.

Eclipse IA differentiates itself from other light industrial staffing agencies by providing you with a Managed Cost Per Unit Workforce. We give you access to teams so you can harness the power of teamwork to meet your requirements. Our model has seen our customers grow their hourly pay by 35% through greater productivity while offering real-time labor expense visibility.

Our team of employees has extensive experience in the supply chain sector and the light industrial market. Contact us to learn more about why you should choose Eclipse IA today.