Labour costs are soaring. Skilled workers are in short supply. And the pressure on distribution centres has never been greater.
Demand fluctuates by the hour, service expectations keep rising, and yet every extra shift or last-minute agency hire chips away at your margins. It’s a daily juggling act – where firefighting becomes the norm and spreadsheets are pushed to their limits.
That’s exactly why we built the Distribution Centre Optimiser: to turn the chaos of daily operations into a single, data-driven staffing plan that strikes the right balance between cost and service. In short, to help you stop firefighting with spreadsheets – and start planning with confidence.
Imagine a typical week in your DC. The inbound team is unloading lorries, pickers are working against the clock, and replenishment staff are scrambling to keep up with demand from retail. When volumes spike unexpectedly, the instinct is familiar: bring in agency workers or reshuffle your permanent staff. But whilst these fixes may work in the moment, they come at a hidden cost – higher hourly rates, retraining delays, coordination overhead, and the risk of overstaffing one area while starving another.
Predyktable’s Optimiser takes a fundamentally different approach. Rather than treating departments in isolation, it views the DC as a connected, dynamic system. Every hour of labour – permanent or temporary – and every interdepartmental shift is converted into a single, unified cost metric. At the same time, each minute of delay incurs a penalty: one that’s modest for small backlogs, but grows steeply if SLAs are at risk.
By integrating your weekly forecasts into this cost-plus-penalty model, the optimiser surfaces the real trade-offs: when it’s worth calling in agency help, when you can safely hold back, and where internal transfers deliver real value. With a few clicks, you move from guesswork to grounded strategy – and from juggling shifts to confidently optimising them.
Why and How We Build the Objective Function
The Core Challenge
At its core, distribution centre (DC) staffing isn’t just a scheduling task – it’s a classic optimisation problem. You’re constantly balancing two competing priorities:
- Keep operating costs as low as possible (wages, transfer costs, temp labour)
- Meet your Service Level Agreements (SLAs) to ensure on-time delivery and avoid downstream penalties
Most operations today still rely on rules of thumb, intuition, or spreadsheets – methods that are often reactive, inconsistent, and brittle under pressure. The result? You either overspend on labour to avoid service disruptions or risk SLA breaches by running lean. These decisions might feel tactical, but they carry real financial consequences.
That’s why you need a more systematic, data-driven approach. You need to evaluate every possible staffing plan – not just one or two scenarios – and understand which one offers the best balance of cost and service.
This is where an optimiser comes in.
What is an Optimiser, Really?
An optimiser is a mathematical engine that explores millions of possible staffing configurations and scores each one using a precise formula called an objective function.
The objective function acts like a universal scoreboard. It quantifies both:
- The total cost of executing a plan (across permanent staff, temps, and inter-department transfers), and
- The penalties associated with delays, backlog, or SLA breaches
Every potential staffing plan is plugged into this function. The optimiser then compares these scores and finds the one that minimises the total value – i.e., the best trade-off between cost and service.
Because it’s built on clear, numerical rules, this approach removes guesswork and lets operations teams plan proactively, not reactively. It’s not about removing human judgment – it’s about giving your team the best plan to judge from.
Breaking Down the Objective Function
Our objective function translates business priorities into a single numerical score, combining detailed cost inputs with a sophisticated penalty structure.
Cost Component
- Permanent-staff baseline
Every full-time shift is translated into a “per-unit processing cost.” We start with each department’s average throughput per staff hour – based on historical productivity rates – and combine that with wage data (including benefits and overhead). The result: a clear cost per unit (pallet moved or order picked). This baseline lets the optimiser know exactly what each permanent staff hour is “worth” in your DC.
- Agency premium
We know temporary labour isn’t free. But rather than charging that rate on every shift, we only kick in the agency cost once your forecasted demand breaches your permanent-staff capacity for the week – including staff that could be transferred in from other departments that have a lighter workload.
- Transfer fees
Moving your own people between departments can be a smart way to plug gap – but it isn’t frictionless. We bake in a modest fixed fee each time a permanent employee switches from, say, inbound to picking. This fee captures retraining time, coordination overhead, and the brief productivity dip while the employee acclimates to a new process.
By summing these three pieces, the optimiser sees a realistic picture of your true labour spend under any staffing configuration.
SLA Penalty Component
Turning Delay into Cost, Intelligently
Not all delays are equal. A delay of a few days might be manageable, but if orders sit unprocessed for multiple days, the consequences compound – customer dissatisfaction, expedited shipping costs, SLA fines, and more. That’s why our optimiser converts delays into cost penalties using a progressive, department-specific structure. Every department is assigned a “permissible delay threshold”, beyond which the cost of delay ramps up exponentially.
- Soft Zone:
Units delayed within the permissible threshold (e.g. 1 day) incur little to no penalty—this is a tolerance zone that buffers against small forecast errors.
- Hard Zone:
Beyond this buffer, the optimiser imposes steep, nonlinear penalties – growing exponentially with each additional day of delay.
This structure mimics the real-world cost of missed SLAs: tolerating small delays avoids overreacting, but once the backlog grows, it becomes more expensive than deploying extra resources.
With costs and penalties combined into one objective score, our solver can evaluate millions of staffing scenarios in minutes, instantly identifying the plan that best balances your budget against your service targets.
Why Operations Teams Love It
Operations leaders are embracing the optimiser because it delivers measurable improvements where it matters most: cost efficiency, service reliability, and workforce stability. Across pilot sites and client implementations, the following benefits consistently emerge:
- Reduced SLA Breaches and Delays
The optimiser anticipates bottlenecks before they occur by simulating daily demand across departments and balancing staffing accordingly. This proactive approach leads to lower average backlog levels and fewer SLA misses – especially under tighter service windows.
- Optimised Cost per Unit Processed
Even as SLAs become more stringent, per-unit labour costs remain stable – or even improve – thanks to intelligent allocation of permanent staff and selective use of agency labour only when truly needed.
- Smarter Use of Temporary Resources
Rather than defaulting to high-cost agency hires, the optimiser evaluates when internal transfers are more cost-effective. It calculates the trade-offs between transfer costs and agency premiums, ensuring that every staffing decision contributes to bottom-line efficiency.
- Cross-Department Coordination
The optimiser facilitates smart resource sharing. Staff are “loaned” dynamically between departments based on real-time needs, helping to flatten workload peaks and reduce both costs and penalties.
In essence, the optimiser transforms reactive staffing fire drills into a steady, optimised rhythm – enabling teams to focus less on firefighting and more on fine-tuning performance.
Ready to Transform Your DC?
If you want to find out more about how we help businesses to transform their DC operations, drop us a line or book a demo.