Grocers throughout North America are implementing productivity standards for lift-truck drivers, and they're seeing some impressive results.

Take Sobeys Inc. of Stellarton, Nova Scotia, for instance. Over the past three or four years, the second-largest Canadian grocer has put productivity standards into effect in a third of its 26 distribution centers. Thanks to the resulting increase in forklift operators' productivity, Sobey's has been able to boost throughput and handle growing sales volume at those warehouses.

Sobeys' experience is not unusual in the grocery industry, which has begun deploying forklift driver standards in an effort to improve productivity in this thin-margin business. "All the grocery guys are doing it," says Richard Kochersperger, a logistics and food industry consultant from Philadelphia. "If they don't have forklift standards in place, they are working on it."

The grocery industry's success with productivity standards is leading other industries such as retailing and consumer goods manufacturing to adopt them as well. That's because they have similar characteristics to those of the grocery industry: high volumes, lots of case picks, and thin operating margins, notes Dan Gilmore, marketing and strategy results leader at software vendor Red Prairie in Waukesha, Wis. "You make it or break it on the effectiveness of your distribution operations in those industries," he observes.

For the grocery industry and others like it, lift-truck productivity standards can have a significant impact on the bottom line. With labor unions beginning to question their fairness, however, it's uncertain how quickly the use of such standards will spread.

A decade ago, productivity standards for forklift operators were nonexistent. Most warehouses did not keep tabs on drivers' activities. The few that did so relied on the recollections of supervisors, so that even the best information available wasn't very good, recalls M. Geoffrey Sisko, a senior vice president with consultants Gross & Associates of Woodbridge, N.J. "You had clerks logging it on a piece of paper," he says.

Industry consultants Gene Gagnon and Eric Baum set out to change that situation. They began developing standards for warehouse operations, and their work eventually led to the development of software for measuring warehouse labor productivity that could be "bolted on" to a warehouse management system (WMS). The introduction of radio frequency (RF) systems and bar codes made it possible for warehouse operators to accurately track work activities. "As soon as they put RF terminals on forklifts, it became easy to implement standards," says software consultant Thomas K. Ryan of Chicago. "It's a matter of measuring the move as it's being made."

For example, when a forklift driver picks up a load at a dock, he or she scans the bar code on the pallet. The RF terminal transmits the barcode data via radio waves to a computer system. The computer then records the exact moment that the forklift operator picked up the load—in effect, placing a digital "time stamp" on the electronic record of pallet retrieval and ascribing it to an individual driver. When the lift-truck operator transports the pallet and puts it away in a rack, the bar code at the putaway location is scanned. That activity is time-stamped as well.

The software compiles a database of time-stamped tasks completed by individual workers. Warehouses can gather data on such activities as pallets moved per hour, putaways per hour, or letdowns per hour. Let-downs are when a forklift driver brings down a pallet that is located high up in a rack and places it in another location that's within easy reach of order pickers.

Implementing lift-truck productivity standards can lead to big improvements, as Toronto-based Sysco Serca Food Service Inc. found out not long ago. Sysco was able to implement forklift standards in 12 of its warehouses after installing an RF system, says Hisham Nourin, the company's national manager of engineered labor standards. "Prior to putting in standards and an RF system, we would do 15.2 pallet moves per hour," he says. "After standards, we're getting 22 pallet moves per hour."

That kind of improvement is typical for warehouses that implement forklift productivity standards. Dan Coyle, manager of industrial engineering for warehouse software vendor OMI International of Schaumburg, Ill., says his company has seen forklift drivers' productivity rise by 15 to 30 percent after the introduction of standards. (See chart below.)

The growing use of labor standards has created some friction with workers, particularly in union environments, since a more efficient warehouse operation could result in the elimination of jobs. Last fall, an official of the International Brotherhood of Teamsters told attendees at the Food Industry Productivity Convention that the union would begin taking a harder look at productivity standards for forklift operators. Union counsel Mark Costello also said that future contracts negotiated by local unions would be submitted to the Teamsters' warehouse division for scrutiny, and that the union was developing contract language to cover such issues as rest breaks, allowances, downtime, and discipline standards.

Industry experts and consultants agree that warehouses must adopt fair labor standards for forklift drivers if they are to be effective. In his experience, Gilmore says, unions are open to standards that are "fair and equitable," particularly if the employees are engaged in their development. "The vast majority of operators want a fair measure of their jobs," he says. If a worker is disciplined or penalized for failing to meet standards or if the standards are believed to be too onerous, though, the union will be there to challenge them, Gilmore says.

The Teamsters union in fact employs an industrial engineer to perform its own time-and-motion studies to corroborate the accuracy of company-set standards, says Jack Barnard of the Teamsters' warehouse division. If standards for a lift-truck operator differ by five percentage points or more from the Teamsters' own analysis, then the union will submit a report with proposed changes to the employer. "The key is a check-and-balance system to make sure that the standards are right," Barnard explains.

No Silver Bullet

Industry experts caution that companies must do their homework before introducing labor standards into a warehouse operation. They recommend laying the groundwork by retaining a qualified industrial engineer to analyze forklift drivers' activities. Typically, this involves conducting ergonomic, labor, and time-and-motion studies of routine tasks such as pallet put-away and retrieval. "It takes six months after you implement everything in a WMS before you can entertain using a labor standard," says Shimon Abouzaglo, a senior vice president at Dallas-based EXE Technologies, a provider of warehouse management software.

Experts caution that labor standards are not the only way to improve lift truck operators' productivity. How much of an improvement a warehouse operator is likely to achieve, though, also depends on the facility's layout, the nature of the operation, and other factors that influence productivity, says OMI's Coyle. "Labor standards are not a silver bullet," agrees Abouzaglo. "You [still] need to slot and position your products in the most appropriate location based on rules like ergonomics and velocity to enable your folks to become more productive."

Once standards are in place, they can improve throughput and ensure that all employees are treated equally. "By having standards, everyone is putting in an honest day's work," says Sysco's Nourin. Abouzaglo notes that although standards can be used to discipline workers who "goof off" or fail to meet targets, they also should form the basis of an incentive or reward program to motivate workers. "If there are not incentive or penalty programs, a standard becomes ineffective," he says.