You just received the recent SLA report and noticed a few things you don’t like. The order accuracy doesn’t look great. On-time fulfillment has slipped again. And now the client is asking questions.
You need to get to the bottom of this, so you dig into the data. And what do you discover? You’ve seen it before: Mistakes always seem to happen when you’re short-staffed and need people to work overtime.
It isn’t all that surprising, given that tired people are prone to making mistakes. But what can you do to align staffing and SLA compliance?
What SLA Performance Actually Requires
SLA (Service Level Agreement) compliance in warehousing requires meeting specific metrics for factors, such as on-time delivery and order accuracy. Ideally, you want every order to include the correct items and quantities. Just as importantly, you want your team to process the order on time and include the proper documentation.
The specific targets that you need to meet will depend on your SLA. Typically, you need at least 85% of your orders to be perfect. A best-in-class warehouse needs to hit 97% to 98%. When it comes to on-time shipping, 95% to 98% is usually acceptable, though best-in-class providers aim for 99.5% to 99.8%.
Some people assume gaps between their warehouse’s performance and SLA requirements come from technological problems. Looking at your data, though, you can see that it’s largely a problem with workforce consistency.
What Fatigue Does to the Pick
Fatigue has a negative impact on employees regardless of the tasks they perform. Since order picking is a manual, repetitive, and physically demanding job, fatigue has an even bigger impact on performance. When workers are tired, it’s easy for them to make small mistakes that add up quickly.
You’re asking tired people to move fast and think fast. Errors are bound to happen, and that’s not speculation. Detailed research shows that fatigue has a direct, measurable influence on picking speed and error rates.
Overtime hours give you diminishing returns. After 50 hours in one week, productivity falls sharply. When someone crosses the 55-hour line, their productivity falls so much that they’re barely accomplishing anything. You’re paying overtime rates, but you’re getting next to nothing for the money.
The fact of the matter is that overtime hours are rarely worth the expense. And falling short of SLA metrics could jeopardize your relationship with valuable clients. The obvious solution is to reduce warehouse overtime.
The Turnover Multiplier
Maybe you’re not convinced that you need to take a different approach to warehousing labor management. Maybe you still think that overtime gets “good enough” results.
Unfortunately, the problem becomes even more concerning when you consider the influence overtime has on turnover. Requiring occasional overtime won’t hurt your employees, and some of them will even appreciate the extra pay. It’s chronic overtime that takes a toll on your staff.
Warehouses already have high turnover rates. When employees work a lot of overtime, the rate gets even higher. It doesn’t take long before people start to feel so burned out that they can’t tolerate the idea of working another hour. Eventually, those burned-out employees will leave, and you will have to replace them.
Replacing an experienced employee takes a lot of time and money. It can easily cost more than $50,000 to recruit and train the right person. And while you’re focused on hiring a replacement, the rest of your staff members get even more burned out because they have to fill the gap.
It’s time to recognize that overtime doesn’t solve staffing problems. It makes existing issues worse and makes it even harder for you to meet SLAs.
What a Flexible Staffing Model Offers
You don’t need to eliminate all overtime, but you do need to adopt a flexible staffing model that limits overtime hours. With a flexible staffing model, your staff size can grow or shrink as your needs evolve. Instead of forcing employees into overtime, you bring in a pre-vetted person who can help meet SLA metrics. You end up protecting your relationship with clients and retaining more of your top employees.
The success of a flexible model depends on partnering with a reliable staffing agency. Snelling maintains a vast network of experienced warehouse workers who can help your company meet SLA objectives. Connect with a Snelling office near you to learn more.
