Labour Productivity measures how efficiently warehouse staff complete tasks relative to the time and resources available. It is typically assessed by tracking outputs such as orders picked, packed, or shipped per hour or employee. Monitoring labour productivity helps optimise staffing, identify training needs, and improve warehouse efficiency.

It's the difference between running a tight operation and burning money on wasted time.

Why Labour Productivity Matters

Labour typically represents 50-70% of warehouse operating costs. Small productivity improvements create massive savings.

Example: A warehouse with 20 pickers averaging 100 units per hour processes 16,000 units daily (8-hour shifts).

Improve productivity by just 10% to 110 units per hour. The same staff now processes 17,600 units daily; an extra 1,600 units without additional labour costs. Or maintain 16,000 units with 18 pickers instead of 20. That's £60,000+ annual savings from two fewer positions. 10% productivity improvement doesn't sound dramatic. But at scale, it transforms your bottom line.

How to Measure Labour Productivity

Basic Calculation

Labour Productivity = Total Output ÷ Total Labour Hours

Example:

• Team picked 8,000 units

• 10 pickers worked 8 hours each = 80 labour hours

• Productivity: 8,000 ÷ 80 = 100 units per hour

Simple, but context matters.

Segmented Measurement

Don't lump everything together. Segment by:

Task type:

• Picking productivity

• Packing productivity

• Put-away productivity

• Returns processing productivity

Different tasks have different benchmarks.

Product type: Picking small electronics differs from picking furniture. Create separate targets for different product categories.

Shift and time: The morning shift often outperforms the afternoon shift (fatigue factor). Peak season differs from quiet periods.

Experience level: New staff won't match the experienced picker's productivity. Set appropriate expectations.

Factors Affecting Labour Productivity

Physical Layout

Warehouse design massively impacts productivity.

Poor layout symptoms:

• Excessive walking distances

• Awkward locations for fast-moving items

• Congested aisles

• Inefficient pick paths

A picker walking 12km daily versus 6km daily because of the layout loses 45 minutes of picking time.

Solution: Layout optimisation based on ABC analysis. Fast-moving products in easily accessible locations.

Technology and Tools

Equipment quality matters:

• Functioning scanners (no constant retries)

• Reliable printers (no jams)

• Good trolleys and picking equipment

• Adequate lighting

One faulty scanner causing 10 10-second delay per pick costs 83 minutes daily for a picker completing 500 picks.

Warehouse management systems dramatically improve productivity through:

• Optimised pick paths

• Real-time task allocation

• Automatic prioritisation

• Error prevention

Training and Knowledge

Experienced staff outperform new staff significantly. Not because they work harder; they work smarter.

They know:

• Fastest routes through the warehouse

• Where awkward items hide

• How to handle exceptions

• Tricks for efficiency

Solution: Structured onboarding, documented processes, and shadowing with top performers.

Process Standardisation

If everyone picks differently, you can't identify the best practice.

System-directed picking creates consistency. Everyone follows optimal paths, reducing variability.

Order Characteristics

Not all orders are equal.

High productivity orders:

• Single SKU, multiple units

• Batch picking multiple orders simultaneously

• Items from the same zone

Low productivity orders:

• Multi-SKU orders across the warehouse

• Fragile or awkward items

• Special handling requirements

Account for this in your productivity targets.

Time of Day and Shift

Morning shifts typically outperform afternoon shifts by 10-15%. Fresh staff work faster than tired staff.

Peak season brings temporary workers with lower productivity than experienced staff.

These factors are normal. Adjust expectations accordingly.

Common Productivity Killers

Poor Inventory Accuracy

If inventory accuracy is 90%, pickers waste 10% of their time searching for items that aren't where the system says.

Fix inventory accuracy before obsessing over pick rates.

System Downtime

WMS or scanning systems crashing destroys productivity. Staff sit idle or resort to inefficient manual processes.

Reliable technology is non-negotiable.

Unclear Processes

"Figure it out as you go" breeds inconsistency and confusion.

Document standard operating procedures. Train thoroughly. Remove ambiguity.

Micromanagement

Watching every move, criticising constantly, creating a fear-based environment, tanks productivity.

Staff spend energy avoiding blame rather than working efficiently.

Inadequate Breaks

Pushing staff without proper breaks reduces productivity. Tired people make mistakes, work more slowly, and get injured.

Proper break schedules maintain consistent performance.

Balancing Productivity and Quality

High productivity means nothing if order accuracy suffers.

Wrong approach: "Pick 200 units per hour, no matter what." Result: Lots of errors, returns, and customer complaints.

Right approach: "Pick 180 units per hour with 99.5% accuracy." Result: Sustainable productivity with quality.

Quality metrics should accompany productivity metrics. If accuracy drops when speed increases, you've pushed too hard.

Technology Solutions

Modern warehouse management systems track labour productivity automatically:

Real-time dashboards: See current performance as work happens. Spot issues immediately.

Individual tracking: Understand who's performing well and who needs support.

Historical analysis: Identify trends, seasonal patterns, and improvement opportunities.

Task management: Automated work allocation optimises labour utilisation.

Exception reporting: Alerts when productivity drops below thresholds.

This data transforms productivity management from guesswork to precision.

The Human Element

Remember: you're managing people, not machines.

Good days and bad days happen. Personal issues affect performance. Someone struggling might need help, not criticism.

The best productivity improvements come from:

• Removing obstacles that slow staff down

• Providing tools that work properly

• Creating clear, logical processes

• Training thoroughly

• Recognising effort

• Building a culture of continuous improvement

High productivity isn't about squeezing every second from exhausted staff. It's about creating an environment where people can work efficiently without unnecessary barriers.

When staff feel supported, have proper tools, understand expectations, and see results from their efforts, productivity naturally improves.

That's sustainable improvement. Not short-term gains that burn people out.

Getting Started

1. Establish baseline: Measure current productivity for 2-4 weeks.

2. Identify quick wins: Layout issues? Equipment problems? Process confusion?

3. Set realistic targets: Based on data, not wishful thinking.

4. Implement changes: Start with high-impact, low-cost improvements.

5. Track progress: Weekly reviews showing improvement trends.

6. Refine continuously: Productivity management is ongoing, not one-time.

Labour productivity improvements directly impact profitability. Every percentage point gained flows straight to your bottom line.

Done well, you'll process more orders with the same staff, reduce costs, improve customer satisfaction through faster fulfilment, and create a better working environment.