Warehouse picking and packing processes: how much labor do you need?

Warehousing can be one of the most labor-intensive parts of running a business. In fact, a warehouse’s largest operating expense is labor costs, according to the International Logistics and Manufacturing magazine. It can actually consume 70% of the average company’s warehousing budget!

Reducing labor costs is therefore one of the most essential tasks a business owner has when managing their warehouse. The process, however, takes a lot of warehouse labor planning and balancing your efficiency with maintaining a high level of customer service.

So, why make labor planning in your warehouse a priority?

Running an inefficient warehouse means that bottlenecks in different processes, such as receipt, picking, and packing, can occur. In fact, an inefficiently planned warehouse can result in workers walking miles per day - sometimes over ten miles! This makes it more important than ever to identify the roadblocks that exist in your warehouse and plan for change.

Warehouse labor planning greatly reduces the time it takes your workers to pick and pack all your orders, and makes the shipment process incredibly efficient. By conducting a labor planning analysis, you can not only speed up your business, but increase your customer satisfaction rates as well.

Usually, the biggest bottleneck in a retail warehouse is the picking and packing process. Here at Logiwa, we often analyze warehouses to help provide the most efficient path to customer success. The following is a step-by-step empirical analysis of a sample warehouse, with hypothetical sample figures and scenarios comprised of averages from our customer data.  There are also templates available to help ease this process, one of which is linked at the end of this article.

Elements of warehouse labor planning

Let's assume that our warehouse has two different types of orders: Single item orders and multi-item orders. Remember that single item orders have only one SKU, whereas multi-item orders have multiple SKUs. In our sample warehouse, we will feature the picking process followed by the packing process. Keep in mind that shipping labels are printed during the packing process.

Single item order picking

In this scenario, single item orders are picked in a batch of 100 orders at a time into a picking cart. The batch size can differ from one warehouse to other. The reason we chose batch picking is because this method reduces the number of locations your worker needs to walk to for a picking trip. Your warehouse management system should consolidate the same SKUs in a batch to reduce the number of visits to the locations.

Multi-item order picking

There are several options for multi-item order picking, but for the sake of efficiency we will choose cluster based batch picking for this scenario. The trolleys for the cluster picking include 12 bins or totes, and the batch size is 12. Keep in mind that the picking batch size may differ from one warehouse to other.

Find WMS with the picking features you need with this free WMS comparison tool

Three points to consider when deciding your picking batch size

• Consider the size of the picking cart (or container) and the products in the batch. One batch is assigned to a single employee and one employee can drive one cart at a time. That’s why we should have one picking cart (container) for a batch.
• Consider the total duration to fully pick your items in a batch. The total duration for a batch should not be more than an hour.
• Small products can be picked on carts with small cells whereas picking large items would require a pallet or a trolley. That’s why it is always better to create a separate batch for large and small products.

Defining the input parameters for labor planning

Infographic showing labor planning perameters and how to define them

Why make a warehouse labor plan?

Making a warehouse labor plan is like laying out a blueprint of how you want your warehouse to run. This helps you understand how everything in the picking and packing process can affect speed and efficiency, from the setup time to the time it takes to pick a batch.

As you’ll see when we explain the process below, every second counts!

Order picking

• Step 1: start by estimating an average “Setup Time” to start the next task ( picking the next job, picking the trolley, etc.) and to finalize the batch ( Moving the trolley to the packing station, etc. )
• Step 2: estimate your parameters for the picking process.

Average unique items in a single item order batch: to explain the parameter, lets use a sample. Assume that we have 5 single item orders. The order and SKU combination is shown below.

Avg. number of consolidated item quantity for a single item picking job is calculated as below

#Avg. Unique Items in a Single Item Order Batch= number of Orders / number of distinct SKUs

Which is 5 / 3 = 1.67.

 This parameter is an estimation based on number of active SKUs in the warehouse. If you have 100 active SKUs in the warehouse, the parameter could be 10 (It is not “1” , because the distribution of the SKUs will follow a normal distribution and your warehouse management system will try to consolidate similar SKUs into the same batch). If you have more SKUs, like 1000, then the value may be be smaller.

#Avg unique items in a multi item order batch: We can use the same formula which we explained in the “#Avg. Unique Items in a Single Item Order Batch”. Usually this parameter depends on the size of the picking batch and number of active SKUs. You can test different values to estimate your average value.

Total seconds to pick from a location: these parameters may differ from one warehouse to another. It indicates the  total time to walk between warehouse locations and to pick the products from the location. When a picker arrives a location which is suggested by the warehouse management software,  the user stops by and picks the products from the location. In this sample, the walking time from one location to another one is included in the parameter.

Calculated values for order picking

These values are calculated automatically to estimate the duration for the order picking process.

Total time to complete a single item batch: this value shows the total time required to execute a single item batch. The formula is below:

Total Time = Setup time + (#Avg. Unique Items * Total Seconds To Pick From a Location)

Order packing

Setup time to start packing a new order: the parameter indicates the time that is required to start next packing task.  

Total time to select and prepare a shipment box type for an order (seconds): The parameter indicates the time that is required to check the products and select a suitable box type for shipment.

Time to scan an item and put into the box: The parameter indicates the time that is required to pick an item from the tote, scan the barcode, and put it in the shipment box.

Total time to wrap, print and stick shipment label for an order :  The parameter indicates the time required to wrap the box, print a shipment label, and stick the label on the shipment box.

Calculated values for order packing

These values are formulated to estimate the packing process.

• ST: Setup Time to Start Packing a New Order
• TTSB : Total Time to Select and Prepare a Shipment Box Type for an Order
• TTWP : Total Time to Wrap, Print and Stick Shipment Label for an Order
• TTSI : Time to Scan an Item and Put into the Box
• MIL : #Multi-Item Order Lines
• SIL : #Single-Item Order Lines

Total packing time for single item orders: This value shows the total time required to pack all the orders in a single item batch. The result is a function of setup time to start, box selection, product scanning, shipment labelling and wrapping.

Total Packing Time for Single - Item Order = ST + TTSB + TTWB + (TTSI * SIL)

Total packing time for multi item orders: this value shows the total time required to pack all the orders in a multi item batch. The result is a function of setup time to start, box selection, product scanning, shipment labelling and wrapping.

Total Packing Time for Multi - Item Order = ST + TTSB + TTWB + (TTSI * MIL)

Results for the order picking process

Let's break down what the above numbers mean:

• Number of single item batch picking jobs: this value shows the number of single item order batches according to your daily shipment orders. We used the single item order percentage and the single item batch size to calculate number of batches.
• Number of multi item batch picking jobs: this value shows the number of multi item order batches according to your daily shipment orders. We used the multi-item order percentage( 100- Single Item Order percentage)  and the multi item batch size to calculate number of batches.
• Total time to execute single item batch picking jobs: this value shows the total hours to complete all the single item batch orders.
• Total time to execute multi item batch picking jobs: this value shows the total hours to complete all the multi item batch orders.
• Number of pickers: this value shows the estimated number of pickers to pick the given shipment orders. The formula uses daily shift hours to estimate the total pickers. Make sure not to round the numbers in order to give yourself enough buffer room for productivity in the warehouse.

Results for order packing process

Here is a summary of the estimated results for the packing process outlined above

• Total time to pack all single item orders: this value shows the total hours to complete all the single item packing tasks.
• Total time to pack all multi-item orders: this value shows the total hours to complete all the multi item packing tasks.
• Number of packers: this value shows the estimated number of packers to pack the given shipment orders. The formula uses daily shift hours to estimate the total packers. I did not round the numbers to give enough room for productivity in the warehouse. Usually, we round up the numbers.

Amount of estimated labor

Finally, you can take the number of estimated packers and the number of estimated pickers and add them to find the total number of employees needed for picking and packing all orders that are processed in a warehouse.

As you can see, labor planning in a warehouse is a lot of intensive work and a lot of crunching numbers. However, having this blueprint laid out for you before going into managing a warehouse is essential, especially if you don’t want to be blindsided by problems like overstocked items or missing inventory. If you don’t want to manually crunch the numbers, never fear! We have a spreadsheet ready for you for your convenience.