How to Cut Logistics Costs Inside the Warehouse: Picking, Bonuses, and Stock Hygiene

In this episode of Rozmowy Logistyków, Piotr Skobało and Adam Sobolewski discuss how to improve logistics costs through operations inside the warehouse. Drawing on their own experience, they pick out practices that raise productivity without investing in automation.

SLOT GOODS BY PICK FREQUENCY, NOT SALES VALUE

The basic optimization is placing the fastest-turning products as close as possible to the picking zone — but a key caveat: this is about pick frequency (XYZ classification), not sales value or volume (ABC). A big challenge is promotions: a product moved closer because of a temporary spike in turnover during a promotional campaign stays there after it ends, disrupting the layout's logic — good practice requires both filtering out historical promotions from the analysis and factoring in upcoming marketing activity in advance (which is why close cooperation with S&OP matters). A regular review of product placement (quarterly, or even monthly in dynamic environments) can deliver a 10-15% improvement in put-away and picking efficiency.

THE ORDER UNIT AS AN OPTIMIZATION TOOL

Setting a minimum order unit (carton, layer, pallet) instead of an arbitrary loose-piece count optimizes not just picking time, but also reduces transport damage — an example from practice: shampoo bottles with a weak cap seal would pop open during loose transport, and the problem disappeared once shipping in full cartons was enforced. This optimization works in both directions of the chain: negotiating with suppliers on how inbound goods are packed, and encouraging your own customers (with a discount for larger orders) to order in bigger units.

A BONUS SYSTEM BASED ON INDIVIDUAL RESULTS

Switching from bonusing the whole team (several hundred people accounted for collectively) to bonusing individual productivity managed to raise the whole facility's productivity by a double-digit percentage in the first month alone — and it kept growing. The reverse experiment (simplifying from an individual system back to a collective one, to reduce pressure on employees) at another organization dropped results by 8-14%. The key condition for success is involving the team in building the system — including rewarding employees who point out gaps in the mechanism instead of quietly exploiting them.

TECHNOLOGY AS THE ANTIDOTE TO "TRIBAL KNOWLEDGE"

Scanners today read locations from a dozen to several dozen meters away, and augmented-reality solutions (AR glasses) can guide a worker step by step to the right shelf. Even simple, low-tech improvements help: color-coded zones (blue zone = blue labels on the racking) make orientation easier, because different workers remember things differently — one will remember the zone letter, another the color. The overarching goal: make productivity independent of the "tribal knowledge" of a single experienced worker who remembers where a given product sits — in a well-designed warehouse, a new hire reaches full productivity within weeks, not months.

FLEXIBLE STAFFING FOR HIGH SEASONALITY

Jumping from 4,000 to 9,000 labor hours a month between quarters makes it impossible to keep the same fixed team. Solutions: balancing working time across an annual cycle (an intense Q4, a lighter start to the year), temporary staff for specific months, or flexible hourly staffing through apps (the "uberization" of warehouse work). The condition for new employees to reach productivity quickly (before their short employment period ends) is exactly the standardization and warehouse signage described above.

INVENTORY HYGIENE DETERMINES PICKING EFFECTIVENESS

A real test from a warehouse: out of a sample of 10 random orders (30-odd products), stock was missing from its declared location four times. Without cyclic stocktaking (e.g. a full review twice a year, plus more frequent checks of selected zones), the picking process will never be optimal — because the cost doesn't end with time spent searching in the warehouse, it drags on further through customer service having to explain the missing stock. A key management rule: all "hygiene" tasks (stocktaking, improving product placement) should be done outside the order peak, so picking during peak hours can focus purely on itself, without disruption.