Calculating the True Cost of Labor

Regardless of where a manufacturing or distribution facility is located within the U.S., labor is widely accepted to be one of the biggest operational costs—anywhere from 50 to 70%.

With the onslaught of the coronavirus, labor will remain a top challenge. Compelled by continued labor challenges and the need to implement social distaining protocols per the CDC, many manufacturing and distribution operations are considering dynamic, automated storage and retrieval systems to boost operational productivity while prioritizing worker health and safety. These technologies replace standard, static shelving and rack used to hold and handle products in cases or as single item eaches.

Not only do these systems maximize storage density, they also provide workers more distance from one another by eliminating pickers walking up and down aisles to and search for stored items—an activity that can waste as much as 60% of their productive time.Automation keeps workers safety within their assigned workstation, less fatigued and more productive. Installing one of these systems can cut labor requirements by as much as 66%, enabling current employees to be reassigned to more value-added work while easing hiring pressures and labor expenses.

In addition to providing a great social distancing solution, automated storage and retrieval systems can reduce overall labor costs and provide a great ROI. This white paper demonstrates two calculations that contribute to calculating the true cost of productivity within a manufacturing or distribution facility—labor costs and throughput—and details the potential costs of worker liability insurance and downtime.