Warehousing today revolves around three relentless pressures: reducing costs, increasing throughput, and retaining talent. These forces don’t operate in isolation and trying to manage them separately is a costly mistake.

In fact, labor typically accounts for 55–70% of total warehouse operating costs—making it the largest single cost driver in most facilities.

Too often though, labor is seen as just another cost to minimize, and that mindset backfires. Labor management should not be just about cutting hours. It is more than that. It should be about empowering your employees, the driving force of your warehouse, by creating a more productive and sustainable operation. Your WMS can and should be a key driver of this.

What Effective Labor Management Should Look Like

You can build a culture of accountability and appreciation with labor management. It is more than just surveillance monitoring. Use it to foster encouragement along with clear expectations. This can aid faster onboarding and training (hello, money savings) and result in happier and more productive teams. This can look like:

• Task allocation based on skill, proximity, and workload
• Real-time visibility into who's doing what, where, and how well
• Performance metrics that fuel recognition, not just reprimand
• Supportive tools like mobile apps, scanning, guided workflows
• Fairness and transparency that reduce burnout and turnover

Unfortunately, this ideal scenario falls apart when labor is left out of your WMS strategy...or worse, managed with guesswork.

The Cost of Ignoring Labor Management in your WMS

When you aren’t able to measure or manage labor effectively, you end up guessing. And guessing can get expensive. Neglecting labor management comes with real-world consequences. A benchmarking study found that direct and indirect labor make up 60–65% of backend fulfillment costs.

Letting that much cost go unmanaged or under-optimized leads to...

• Inefficiency and waste: Workers wait for assignments or do tasks that could’ve been automated or better assigned
• Overburdened high performers: No visibility means the same few people get pushed too hard
• Low morale and high turnover: No feedback, no growth path, just pressure
• Inaccurate labor forecasting: You overstaff or understaff because there’s no data
• Poor customer outcomes: Slower throughput and inconsistent performance hit SLAs

How your WMS can be a Labor Managment Engine

So how does your WMS come into play? More than you might think. The real magic starts when you unlock the data your WMS is already collecting (warehouse activity, date/time stamps, user information) and combine that with planning you are already doing (scheduling, time clock entries, time off tracking). Now you are able to start making proactive decisions with real-time information.

• Data-driven decisions about shift planning and staffing
• Fair task assignment and real-time reallocation to reduce idle time
• KPI dashboards that help managers coach, not micromanage
• Worker empowerment through clarity, recognition, and performance visibility

Support People AND Performance

When executed correctly, labor management isn’t about squeezing more out of people. It’s about giving them tools, structure, and visibility to do their best work... without burning out. By building a supportive labor management system with data directly from your WMS, you can create an environment where people are seen, supported, and productive. And let’s be honest, when you can use positive incentives to motivate your team, everyone wins.

Conclusion

Bottom line: If you aren’t using your WMS to manage labor, you’re missing out on the point. You already track inventory with precision. Why not apply that same visibility to the workforce that drives it, especially when labor accounts for over half of your operational costs? Labor is your most valuable (and expensive) asset. It is time to let your WMS support your workforce and not just monitor it. At the end of the day when your people are thriving, their performance follows.