CognitOps Insights

Labor Planning: Your Guide to Optimizing Warehouse Labor Efficiency


  • Brief overview of the importance of labor planning in warehouse operations.

For decades, labor planning has played a crucial role in the efficient operation of warehouses and distribution centers. By accurately forecasting labor needs, scheduling shifts effectively, and ensuring that workers are trained and motivated, warehouses can improve productivity, reduce costs, and enhance overall operational efficiency. However, labor planning can be a complex and challenging task, requiring warehouses to balance operational requirements with employee preferences and regulatory compliance.

In this guide, we’ll explore the evolution of labor planning and key elements of effective labor planning, including forecasting demand, determining staffing requirements, scheduling shifts, and monitoring performance. We’ll also discuss the challenges warehouses face in labor planning, such as labor shortages, seasonal fluctuations, and compliance issues. Additionally, we’ll highlight the technologies available to warehouses to streamline labor planning processes and improve overall efficiency.

By understanding the fundamentals of labor planning and implementing effective strategies, warehouses can optimize their workforce management practices and achieve greater success in their operations.

Understanding Labor Planning

  • Definition of labor planning and its role in optimizing warehouse performance.
  • Explanation of how labor planning impacts productivity, efficiency, and costs.

labor planningLabor planning involves allocating a workforce efficiently to meet the demands of the warehouse operation. The process encompasses tasks including forecasting demand, determining staffing requirements, scheduling shifts, and monitoring performance.

Effective labor planning ensures that the right number of workers with the right skills are in the right place at the right time, leading to improved productivity, reduced costs, and enhanced overall operational efficiency.

By accurately forecasting labor needs, warehouses can ensure that they have the workers with the right skills to meet demand, which can improve productivity by reducing bottlenecks and delays. Effective labor planning also allows warehouses to schedule shifts more efficiently, ensuring that work is evenly distributed and that workers are utilized optimally, which can improve overall efficiency.

Additionally, by matching labor supply with demand, warehouses can avoid overstaffing, which can increase labor costs, or understaffing, which can lead to increased overtime costs and lower employee morale. Overall, effective labor planning is essential for warehouses to operate efficiently and meet customer demands while controlling labor costs.

Evolution of Labor Planning 

Over the last 30 years, the landscape of labor planning has undergone a significant shift, driven largely by changes in the workforce and technological advancements. 

In the past, labor planning was often done manually, with managers relying on paper-based schedules and rudimentary forecasting methods. However, as the workforce became more diverse and dynamic and warehouses grew in size and complexity, manual labor planning became increasingly inefficient and error-prone.

labor planningAs the workforce became more diverse, with employees from different backgrounds, skill levels, and preferences, it became increasingly challenging for managers to create schedules accommodating everyone’s needs. Manual processes, which often relied on simple scheduling algorithms and limited visibility into employee availability and skills, struggled to account for the complexities introduced by this diverse workforce. This could lead to errors in scheduling which in turn could impact productivity and customer service.

Additionally, the increasingly dynamic nature of the workforce, with employees seeking more flexible work arrangements and varying availability, further complicated labor planning. Manual processes designed for a more static workforce, where employees had fixed schedules and roles, struggled to adapt to modern workers’ changing needs and preferences. This could result in last-minute schedule changes, which are disruptive to operations and increase the risk of errors and inefficiencies.

Technology has advanced in an attempt to adapt to these changes. The emergence of warehouse management systems (WMS) and labor management systems (LMS) has revolutionized how warehouses plan and manage their labor force. WMSs have made it easier for warehouses to track inventory levels, order volumes, and workforce performance, providing managers with the data to make informed decisions about labor planning. LMSs help warehouses track labor costs, analyze productivity, and optimize workforce allocation. 

The rise of predictive analytics has enabled warehouses to forecast demand more accurately and identify potential operational bottlenecks. By leveraging historical data and statistical algorithms, warehouses can now predict future trends and behaviors, allowing them to optimize workforce allocation and improve overall efficiency.

These technological advancements have not only made labor more efficient but have also helped warehouses to adapt to an increasingly diverse and technologically savvy workforce.

“Effective labor planning ensures that the right number of workers with the right skills are in the right place at the right time, leading to improved productivity, reduced costs, and enhanced overall operational efficiency.”

5 Key Elements of Effective Labor Planning

The key elements of effective labor planning include:

1) Forecasting Demand

Forecasting demand involves predicting the volume of work that needs to be done over a specific period. Warehouses can use historical data, sales forecasts, and market trends to estimate future demand accurately. By understanding how demand fluctuates, warehouses can adjust their staffing levels accordingly, ensuring they have enough workers during peak periods and avoiding overstaffing during slower times.

2) Staffing Requirements

Determining the optimal number of workers needed for different shifts is crucial. Warehouses need to consider factors such as workload, skills required, and safety regulations. By analyzing these factors, warehouses can ensure they have enough workers to meet their operational goals without incurring unnecessary costs.

3) Scheduling

Scheduling shifts involves assigning workers to specific tasks and times. Effective scheduling ensures that warehouses have enough workers to meet demand while also considering employee preferences and labor laws. By creating flexible schedules and offering part-time options, warehouses can accommodate the needs of their workforce while maintaining operational efficiency.

4) Training and Development

labor planningTraining and development ensure that workers have the skills needed to perform their jobs efficiently. Warehouses should invest in ongoing training programs to keep their workforce up to date with the latest industry trends and technologies. By investing in their employees, warehouses can improve productivity and reduce turnover rates, leading to a more efficient operation.

5) Performance Monitoring

Monitoring workforce performance is critical for evaluating the effectiveness of labor planning strategies. Warehouses can use key performance indicators (KPIs) such as labor costs, productivity levels, and employee satisfaction to track performance and identify areas for improvement. By regularly monitoring performance, warehouses can make informed decisions about their labor planning practices and adjust as needed.

Challenges in Labor Planning

Warehouse labor planning comes with its own set of challenges. Warehouses must navigate labor shortages, seasonal fluctuations, and compliance issues to ensure they have enough workers to meet demand without overspending or violating labor laws.

Labor Shortages

Labor shortages can occur due to shifts in population demographics, economic conditions, and competition for skilled workers. In some cases, industries experiencing rapid growth or technological change may struggle to find workers with the right skills. Additionally, changing attitudes toward work-life balance and job preferences can impact the availability of workers for certain roles.

Labor shortages can lead to increased competition for workers, driving up wages and labor costs. They can also result in understaffing, impacting productivity, customer service, and employee morale. 

labor planning

Seasonal Fluctuations

Factors such as holidays, weather patterns, and economic cycles can cause seasonal fluctuations in demand. Industries such as retail are particularly prone to seasonal fluctuations due to changes in consumer behavior and demand for products and services.

Seasonal fluctuations can lead to challenges in workforce planning, as warehouses may need to ramp up or down their staffing levels quickly to meet changing demand. This can result in inefficiencies, as warehouses may struggle to find temporary workers or adjust their schedules and operations to accommodate fluctuating demand.

Compliance Issues

Compliance issues in labor planning can arise due to changes in labor laws and regulations, as well as oversight or misinterpretation of existing regulations. Factors such as overtime pay, employee classification, and workplace safety can all impact compliance in labor planning.

Non-compliance with labor laws and regulations can result in fines, lawsuits, and reputational damage for warehouses. It can also lead to disruptions in operations, as warehouses may need to make sudden changes to their workforce practices to comply with regulations. Ensuring compliance requires warehouses to stay informed about labor laws and regulations and implement processes to ensure they are followed.

Labor Planning Technologies

Technological advancements have revolutionized warehouse labor planning, making it easier for warehouses to streamline their processes and improve overall efficiency. Some of the key technologies used in labor planning include:

  • Warehouse Management Systems (WMS)

WMS software applications help warehouses manage their operations, including inventory management, order processing, and labor planning. WMSs provide real-time data on inventory levels, order volumes, and workforce performance, allowing warehouses to make informed decisions about labor planning practices.

Example Technology: Manhattan Associates’ Manhattan Warehouse Management System (WMS), HighJump Warehouse Edge (formerly known as Accellos), SAP Extended Warehouse Management (EWM)

  • Labor Management Systems (LMS)

LMS are software applications that help warehouses track labor costs, analyze productivity, and optimize workforce allocation. LMS can help warehouses identify inefficiencies in labor planning practices and make data-driven decisions to improve efficiency.

Example Technology: Kronos Workforce Central, JDA Labor Management, Infor Labor Management, CognitOps

  • Predictive Analytics

Predictive analytics uses historical data and statistical algorithms to predict future trends and behaviors. In labor planning, predictive analytics can help warehouses forecast demand, identify potential bottlenecks, and optimize workforce allocation. By leveraging predictive analytics, warehouses can improve the accuracy of their labor planning and make more informed decisions about their operations.

Example Technology: SAS Predictive Analytics, IBM Watson Analytics, Microsoft Azure Machine Learning, CognitOps

Challenges of Labor Planning with WMS and LMS 

Using Warehouse Management Systems (WMS) or Labor Management Systems (LMS) can improve labor planning in warehouses, but these tools also come with their own challenges and limitations:

  • Complexity: WMS and LMS systems can be complex to implement and maintain, requiring specialized knowledge and expertise. This complexity can make it challenging for warehouses to fully leverage the capabilities of these systems for labor planning.
  • Cost: Implementing and maintaining WMS and LMS systems can be costly, especially for smaller warehouses or those with limited budgets. The initial investment in software, hardware, and training can be from hundreds of thousands to millions of dollars, and ongoing costs for updates and support can add up over time.
  • Integration: Integrating WMS and LMS systems with other systems and processes in the warehouse, such as inventory management and order processing, can be challenging. Poor integration can lead to inefficiencies in labor planning and overall operations.
  • Scalability: WMS and LMS systems may not always be easily scalable to accommodate changes in warehouse size or operational needs. This can be a limitation for warehouses that are growing or experiencing fluctuations in demand.
  • Data Quality: The effectiveness of WMS and LMS systems for labor planning relies heavily on the quality of the data inputted into the system. Inaccurate or incomplete data can lead to inaccurate labor forecasts and inefficient workforce allocation. LMSs, especially, can be time-consuming to update and are often left behind other priorities. 
  • Limited Flexibility: Some WMS and LMS systems may lack the flexibility to adapt to changing labor requirements or unforeseen circumstances. This can make it challenging for warehouses to respond quickly to changes in demand or operational needs.

Labor Planning with CognitOps

CognitOps Align leverages all your warehouse’s untapped data potential to deliver a “labor management system (LMS) lite” experience. You get the value of a traditional LMS with a few essential differences that conquer the challenges above and make labor planning more efficient and effective. 

  • Predictive Analytics: LMSs measure historical performance and give the ability to look back and see who needs coaching. But there’s so much untapped insight in that measurement data. We started with real-time visibility into worker performance and then moved forward in time to predictions and prescriptions (for example, our Performance Pulse for Today metric). We leverage that data to help operate your building in real time and then forecast what will happen in the future.
  • Demand Forecasting: Our machine learning platform tracks what every worker does in the building, automatically analyzes activity by task, and applies that historical insight to predict productivity going forward. We can forecast dropped work for future days more accurately and with finer granularity than our customers can, which allows us to create a staffing plan that better matches workers by performance to the expected composition of work. With our Future Pick Labor Planning feature, warehouse leaders can look up to 7 days out, planning shift by shift to achieve daily goals. 
  • Dynamic Performance-Based Standards: Our standards don’t require an engineer to do a time motion study with a stopwatch; instead, we use ongoing measurements to inform a dynamic standard, albeit not an engineered labor standard. This gives our solution the scalability and flexibility to shift with a changing workforce, labor requirements, seasonality, and productivity demands. 
  • Area- and Zone-Level Performance: We measure at the worker level, and then we roll up to the zone, area, and department. For a specific zone in a building, we can show current productivity and how that compares to the last seven days. We can even roll up to the highest level for a single day. This provides visibility into who is underperforming and where they are underperforming.
  • No Maintenance: CognitOps pulls existing data from installed WMS and order management systems, so no additional data inputs are required and no time-consuming and complex management. 
  • Fast Implementation and ROI: Compared to WMS and LMSs, which can take months or years to implement and start at hundreds of thousands of dollars, CognitOps Align can be up and running in a few weeks and deliver ROI from $700k to $1.2M. 

At least one of our customers using Manhattan Associates was able to deactivate their expensive LMS because of the visibility CognitOps provides. Another chose CognitOps instead of the throng of business analysts they were considering hiring to run their warehouses. CognitOps delivers real-time analytics, predictions, and prescriptions to help optimize your warehouse operations with optimal labor planning every minute of every day. 


Evaluate your labor planning practices and consider implementing new strategies or technologies to optimize your warehouse operations. Investing in labor planning can improve productivity, reduce costs, and enhance overall operational efficiency across your warehouse or distribution network.

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