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Why growth won’t go – the warehouse performance plateau

Article by Megan Gee

Is the warehouse performance plateau really that big a problem? Why can’t you just grow your business past it? Why isn’t this kind of stagnation just temporary? If you can make your business big enough, by profits or premises, surely you can get back to growth once more?

This is a tempting idea, especially since it tracks with most business’s past experiences. However, it is an unappreciated truth that past performance is not necessarily a predictor of future results. At a certain point, the difficulties and problems that were once just the ‘cost of doing business’ in matters of expansion, are no longer countered by further growth’s benefits.

You cannot expand your way out of the warehouse performance plateau. There is no more mountain to climb. Your business needs to think of other options. Read on to find out why.

The seasonal space situation

Increasing orders is a natural part of a business’s growth. What will likely grow also is the disparity between different weeks, months, and seasons. Some businesses can see upwards of 80% of all their orders crammed into a two-month window, creating immense logistical challenges.

Bottlenecks and overfill cause slowdowns, which make expansion seem like the answer. Except facilities that are bustling at peak season will be dusty the rest of the year. How slow will ROI be for warehouse space left underutilised for 10 out of 12 months? Space that must be heated, cleaned and kept safe to work in, even when there is no one there to make full use of it.

Warehouses can’t simply change shape to keep pace with different seasons generates huge waste the rest of the year. Expanding your operation is not the answer to the warehouse performance plateau.

The seasonal staff non-solution

A tempting alternative idea to expanding the warehouse might be to expand the workforce. With more people, more tasks get finished, and growth will surely resume. Furthermore, to counter the effects of the seasonal squeeze, you can only hire seasonal staff. Working on temporary or even zero-hours contracts, your new employees can help bring about growth, without spending the rest of the year without enough work.

In theory, this sounds like a good solution. In practice, it generally causes many more problems than it solves.

Staff cost spikes

In 2021 market for temporary warehouse picking staff is ever more competitive than ever. Even Amazon was only able to hire half the number of people they needed and wanted in 2020. With more companies needing more pickers, it is increasingly turning into a seller’s market, with the fees charged by temporary staff agencies climbing higher and higher.

While post-pandemic this is likely to slow somewhat, the reality is that it will not stop. Ecommerce demand was growing rapidly even before COVID-19, and the current situation appears to only be an exacerbation of an existing trend. While more sales is obviously not a problem, hiring more staff to deal with this is more expensive than ever, especially during peak season. As time progresses, relying on temporary staff to help you pass the warehouse performance plateau will become an exponentially more expensive strategy.

Troublesome temporary staff

Turnover rates for pickers have always been high. For temporary staff, they will be higher still. While some staff will return to your same warehouse year after year, many others will be new every peak season. These will be staff unfamiliar with picking in general, inexperienced with your picking processes in particular, and thus highly prone to error.

Hiring temporary staff to solve the problem of peak season is the opposite of killing two birds with one stone. Solving the problem of processing orders at normal speed with more inexperienced workers. This will result in increased errors, which in turn can damage customer service, generating cost in terms of money, time, and reputation. Your solution has caused many more problems than it ever solved.

HR headaches

Even if you can find experienced pickers whose pay isn’t too demanding and who come back every peak season, hiring temporary workers is always difficult. As your business expands, the paperwork means that more and more of your admin staff’s time will need to be dedicated to finding, processing, hiring, and dismissing an ever-growing body of staff.

Since this only happens at specific times of year, you may find that the seasonal staffing situation could start to spread. You could start needing temporary office staff to process the gargantuan volume of associated admin around all the short term picking staff who will temporarily increase your warehouse productivity every year.

Furthermore, recruitment processes only cover a small slice of what your HR team will need to be doing. There’s training talks, health and safety issues, holiday protocols, national insurance processing, tax compliance, disciplinary processes, and everything else that goes into hiring a picker, even if only briefly. As evermore temporary staff are required, these costs will balloon. At a certain point, combined with all the other problems mentioned, they will start to eclipse the overall advantage that temporary hiring is supposed to offer. An alternative will need to be sought.

Growth is not the answer

Business growth is always a challenge. Both making it happen and dealing with its consequences afterwards. Neither of these things makes executives pack up their bags and go home. However, the warehouse performance plateau is different. It isn’t a normal growth-related problem, and the old ways of approaching it simply won’t work here

This would be like arguing that it would be cheaper to go to the moon by launching your rockets from the uppermost peak of Mount Everest. Yes, the spaceships have a smaller distance to travel when heading moon-wards, but tracking all your fuel, your rockets, and lunar module up the Himalayas is beyond difficult. This is why NASA is quite happy in Cape Canaveral.

In theory, a bigger business should surge upwards and soar onwards through the sludge of stagnation. In practice, the solutions involved in growing will just end up causing more problems. To bypass the warehouse performance plateau takes a new kind of thinking. One that you can’t reach by continuing old patterns with more intensity.

Diagnosis – Under-automation

Are you experiencing these problems? Has the thought of expanding your warehouse capacity been tempered by dramatically rising costs? Is the shrinking of available space undermining your long term goals? Do salary spikes, turnover troubles, and HR headaches make the thought of having to hire more staff positively painful?

If you’re experiencing some, or more likely all, of these symptoms, the underlying cause is clear. Under-automation.

Come to see Wise Robotics for yourself and discover what your business can do with flexible automation. A system that scales simply, makes the most of any warehouse workspace and will get the best from your workforce. Speak to OW Robotics today to learn more about how the next generation of warehouse automation can push you past the limits imposed by the warehouse performance plateau

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