How to Increase Warehouse Productivity and Efficiency in 2025

The global rise of e-commerce, same-day shipping demands, and increasingly complex supply chains have put pressure on warehouses to run faster and more efficiently. These productivity expectations have increased due to tight margins forcing companies to handle more orders in less time, often without an equivalent increase in resources.

While these inefficiencies are significant, the good news is that modern technology, data-driven insights, and reimagined workflows can drastically increase warehouse productivity and transform operations in the coming years.

In this article, we’ll explore how to measure warehouse productivity, identify common issues hampering warehouse efficiency, and provide actionable strategies for improvement.

We will also discuss how advanced technological offerings such as Powerfleet’s Warehouse Solutions can help organizations achieve new levels of speed, accuracy, and cost-effectiveness.

How Is Warehouse Productivity Measured?

Measuring warehouse productivity accurately is the foundation for meaningful improvements. Without clear metrics, decision-makers can’t identify where bottlenecks occur or determine if new initiatives are delivering results.

Across all these metrics, the overarching goal is to link measured performance to specific warehouse activities, ultimately pinpointing opportunities to improve warehouse productivity.

Below are some core productivity measures and how to calculate them.

1. Order Pick Rate (Lines per Hour or Orders per Hour)

This is the number of order lines or orders an operator completes in one hour.

Calculation: Order Pick Rate = Total Labor Hours / Total Lines Picked

Use Case: This metric highlights how effectively pickers move through the warehouse to retrieve items. If the pick rate is lower than industry benchmarks, it could signal inefficient routing, poor layout, or outdated picking methods.

1. Labor Utilization (Warehouse Labor Productivity)
   This is the ratio of productive hours to total labor hours.

In other words, how much of an employee’s time is spent on direct, value-adding tasks (like picking, packing, or replenishment) versus indirect tasks (like walking, waiting, or idle time).

Calculation: Labor Utilization (%) = (Total Labor Hours/ Direct Labor Hours) ×100

Use Case: Monitoring warehouse labor productivity helps managers spot inefficiencies such as overly complex processes or misaligned staffing levels, which can then be addressed through better planning or automation.

1. Inventory Turnover
   This is how many times your warehouse sells and replaces its entire inventory over a given period.
   Calculation: Inventory Turnover = Average Inventory Value / Cost of Goods Sold (COGS)
   Use Case: A higher turnover typically indicates better warehouse efficiency and productivity, with less capital tied up in storage. Low turnover often means excess stock and wasted space.
2. Cycle Time (Receiving-to-Shipment Time)
   This is the average duration between receiving an item at the dock and shipping it out to the end customer (or transferring it to another facility).
   Calculation: Cycle Time = (Shipping Time – Receiving Time) / Total Shipments
   Use Case: Shorter cycle times reflect a more streamlined warehouse workflow. If it takes too long to process goods, you may have process bottlenecks or insufficient resource allocation.
3. Picking Accuracy
   This is the percentage of orders or order lines picked correctly without error.
   Calculation: Picking Accuracy (%)= (Total Correct Picks / Total Picks) × 100
   Use Case: Errors in picking directly lower customer satisfaction and increase return handling costs. High accuracy rates lead to better labor efficiency (fewer re-picks) and a stronger customer experience.

What Are Common Issues in Warehouse Productivity?

Although every operation is unique, there are several overarching issues that often limit warehouse productivity improvement efforts.

By recognizing these pitfalls, you can take steps to address them.

Poor Layout and Space Utilization

A warehouse layout that forces pickers to travel long distances, wind through cluttered aisles, or search for items out of place causes inefficiency. In fact, studies have shown that 50% of an order picker’s time is spent on “travel” over other tasks.

Sub-issues include:

• Unclear Aisle Markings: Without clear signage, workers can get lost or inadvertently place items in incorrect racks.
• Improper Slotting: Fast-moving items stored too high or too far from shipping/packing stations leads to excessive travel time.
• Underutilized Vertical Space: Many facilities have high ceilings but fail to leverage vertical storage solutions or mezzanines.

A disorganized layout also affects safety, as cluttered or narrow aisles raise the risk of forklift collisions or inventory damage. Ensuring a neat, well-planned design can boost warehouse efficiency and productivity..

Labor Challenges and High Turnover

In many regions, warehousing faces a labor shortage and high employee turnover. Research from the US Bureau of Labor Statistics indicates that the warehousing and logistics sector consistently has higher turnover rates than other industries.

Repeatedly hiring and training new staff drains time and money while also reducing overall performance.

Common labor-related obstacles include:

• Insufficient Training: Relying on untrained or under-trained workers increases errors and accidents.
• High Overtime: With a lean staff, businesses often resort to costly overtime that may not be sustainable.
• Employee Burnout: Overworked employees can suffer morale issues, making them less productive and more likely to quit.

Addressing labor concerns requires both short-term solutions (like cross-training and robust onboarding) and longer-term strategies such as introducing automation, which can reduce reliance on repetitive manual tasks.

Inaccurate Inventory Data and Inefficient Processes

Outdated or paper-based systems make it extremely difficult to maintain accurate inventory data. One report found that inventory inaccuracies can cost facilities up to 10% of their annual revenue due to stockouts, overstocks, and mispicks.

In many cases, adopting a robust Warehouse Management System (WMS) or integrating automation and barcoding can resolve these process inefficiencies. This would need to go hand in hand with optimized workflows and standardized best practices across teams.

How Can You Increase Warehouse Productivity?

Improving warehouse productivity metrics requires a strategic blend of people, processes, and technology.

On the technology point, Powerfleet’s In Warehouse Solution is an integrated solution that enhances warehouse operations by integrating real-time monitoring, safety features such as access control, speed management and predictive maintenance. This helps to improve safety, ensure compliance, and boost productivity within the warehouse.

Key features include:

• Forklift Gateway: Monitors vehicle health and performance, automates pre-use inspections, and integrates additional sensors and cameras to ensure optimal operation.
• Forklift Speed Manager: Automatically reduces forklift speed during risky conditions to minimize accidents while maintaining productivity.
• Pedestrian Proximity Detection: Utilizes AI-powered vision systems to detect pedestrians and industrial vehicles, alerting operators to potential hazards without the need for wearable tags.
• Event-triggered Digital Video Recorder: Captures real-time video during incidents, providing comprehensive records to aid in safety training and liability resolution.
• Unity Data Intelligence Platform: Integrates IoT devices and third-party systems, offering a 360-degree view of warehouse-to-road operations for improved decision-making.

Here are other ways to improve warehouse performance:

Embrace Automation and Robotics

Automation can help reduce labor costs and enhance accuracy.

Popular warehouse automation technologies include:

1. Conveyor Systems and Automated Sorters: These handle repetitive movements of goods, which reduces travel time for human workers.
2. Autonomous Mobile Robots (AMRs): AMRs can transport items around the warehouse, assist with picking tasks, and even adjust routes on the fly based on real-time demands.
3. Automated Storage and Retrieval Systems (AS/RS): These high-density systems store products in a compact footprint and automatically deliver items to picking stations.

By assigning repetitive or high-volume tasks to machines, staff can focus on complex, value-adding activities that require human judgment. Automation not only addresses labor shortages but also boosts consistency.

Optimize Layout and Workflow

To improve warehouse productivity, reevaluate your facility’s layout:

• ABC Slotting Strategy: Store the “A” items (highest velocity) in the most accessible zones near the packing/shipping area, “B” items in middle-range zones, and “C” items (lowest velocity) farthest away or on higher racks.
• Zone Picking: Divide the warehouse into zones assigned to specialized teams or individuals. This structure can minimize operator travel and help them become experts in specific areas, reducing pick errors and cycle time.
• Cross-Docking Opportunities: If inbound items can go straight to outbound staging without extended storage, it shortens cycle times and frees up space.

Leverage Real-Time Data and Analytics

Relying on end-of-day or weekly reports to measure performance may be too slow for modern, fast-moving operations. Real-time visibility into warehouse activities enables managers to spot bottlenecks and reallocate resources proactively.

Warehouse Management Systems (WMS) and IoT Sensors: Provide real-time tracking of inventory levels, enabling accurate updates whenever an item is moved or picked.

• Wearable Devices or Voice-Picking Systems: Guide employees through tasks step by step, reducing error rates while capturing live productivity data.
• Analytics Dashboards: Aggregate KPIs (order lines per hour, labor utilization, etc.) for management to review at a glance. When a slowdown appears in a specific area, supervisors can step in immediately.

Armed with real-time information, managers can coordinate shift overlaps, redirect staff from idle zones to high-demand areas, or adjust pick routes to accommodate urgent orders. This dynamic approach significantly helps in improving warehouse productivity.

Real-Time In-Warehouse Fleet Tracking

Managing forklifts and other equipment is a massive challenge for warehouses handling thousands of SKUs. Powerfleet provides real-time tracking of every vehicle in your facility, monitoring factors such as:

• Location and movement: Ensure drivers follow optimal routes and adhere to speed limits.
• Utilization metrics: Spot underused equipment or identify if an area is bottlenecking.
• Operator performance: Collect data on driver efficiency and safety compliance for tailored coaching and rewards.

By knowing exactly where each forklift is at any given time, and how it’s being used, you can make immediate adjustments (e.g., reassign a forklift to a backlog zone).

This enhances warehouse labor productivity by cutting down idle time and guaranteeing assets are deployed where they’re needed most.

Automated Maintenance and Safety Checks

One of the biggest disruptors to warehouse productivity improvement is unexpected equipment downtime. Forklift Gateway, one of the Powerfleet’s In-Warehouse solutions features, helps automate inspection checklists, ensuring vehicles are serviced at the proper intervals:

• Pre-Shift Digital Checklists: Operators must complete a quick but thorough condition and safety check before starting work. If a critical issue is flagged, the system can lock out the forklift to prevent unsafe operation.
• Scheduled Maintenance Alerts: Based on usage data (engine hours, forklift travel distance, or last service date), the system can automatically prompt upcoming maintenance, avoiding breakdowns during peak demand.
• Event-Triggered Notifications: If a forklift hits a rack or experiences a near-miss, managers instantly receive alerts and video footage (if integrated with an event-triggered DVR), allowing them to intervene and reduce future incidents.

By ensuring every forklift is in prime condition and drivers follow best practices, you avoid the productivity-killing chain reaction that a breakdown or accident can spark.

Optimized Warehouse Layout Through Data

Powerfleet’s analytics dashboards let you visualize travel paths, dwell times, and congestion areas in your facility.

Over time, aggregated data highlights hot spots where forklifts spend the most time waiting for zones that are frequently overcrowded. This knowledge can guide re-slotting strategies, revised pick paths, or adjustments in aisle design to improve flow.

AI-Driven Monitoring and Safety Enhancements

Keeping employees safe while pushing for higher throughput is a balancing act. However, Powerfleet’s AI-driven tools (like Pedestrian Proximity Detection) help you manage safety more proactively.

Cameras and sensors on forklifts can identify pedestrians or objects in real time – alerting drivers and triggering slow-down or stop commands if a collision risk arises. This protects employees while also speeding up operations, since drivers can trust their vehicles to warn them of hidden dangers.

In a busy warehouse environment, avoiding collisions and other safety incidents translates to fewer disruptions, injuries, and downtime. Safe, confident operators also tend to be more productive.