Avoiding the Pitfalls of Labor Forecasting

Today’s operational environment is dynamic, with continually changing product mix and customer requirements. Volume changing inbound and outbound, peak periods, and process variability make it very challenging for operations leaders to accurately know how much labor they need on any particular day, and where in the operation they need that headcount.

Yet getting the right labor forecast is critical to meeting customer requirements. And getting your labor forecast wrong can start a domino effect of negative employee engagement, overspending, unmet customer expectations, and a stressful workplace.

The biggest culprits of a bad labor forecast are:

✔ Underestimating missing and indirect time, and only focusing on direct processes

✔ Using spreadsheets and historic averages to predict the future

✔ Relying too heavily on overtime, which can cause on average, a 9% reduction* in productivity for all hours worked that day

✔ Neglecting product mix and spikes for seasonality

These mistakes can cause your per-unit costs to go up by 23% or more. Overestimating and underestimating due to a bad labor forecast are equally damaging to your bottom line.

Interested in getting an accurate labor forecast in your warehouse or operation? Find out the four critical steps to knowing precisely how much headcount you need by date, shift and process.

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*From actual customer data. Read more about this study in Essentials of Labor Forecasting.