Labor management: Investing in human capital

Without an educated and motivated workforce, labor management systems and tools will take you only so far.

By ·

During the past year, the potential of labor and workforce management systems using engineered standards for warehouse productivity improvement has been widely heralded in the press and on the Web. New tools focus on integrating these systems with demand-based planning, scheduling and warehouse management systems (WMS) to improve customer service by better matching the workload to predictable workforce capacity. 

In classic economics, three factors are traditionally cited as being critical to goods-producing enterprises – land (or natural resources), capital (or the means of production) and labor.  Codified by Adam Smith in 1776, Karl Marx referred to them as “the holy trinity” of political economics.  The variable in the equation toughest to manage, of course, has been labor (or as many call it “human capital,” although there is a world of difference between the two terms).  With equivalent “land” and “capital,” why is it that some companies so dramatically outperform others – even when using the latest tools for performance management?  I think that the answer boils down to management’s understanding of the distinction between labor and “human capital” and its willingness to make the investments necessary to turn the former into the latter.

Years ago, I took a summer job as a night shift turret lathe operator in a well-equipped automotive feeder plant.  Paid by the piece and trying to put away enough money for my sophomore year at college, I didn’t need rocket science to figure out how to set up a pair of lathes and nearly double my output.  Within a few weeks, I had three lathes going and was earning twice as much as my peers.  And then, the roof fell in!  As opposed to taking my offer to show them how to set up the line to match my performance, my fellow workers found my Beetle in the parking lot, slashed the tires and sunroof, and smashed the windshield.  The following day, I put on a white shirt and tie and reported to work as the newly appointed assistant supervisor of inventory control – and production numbers returned to status quo levels.

In my example, the company had the land, the capital and the labor, but had not made the investment in education, training and motivation necessary to convert that labor into “human capital”, an asset that differentiates the winners from the also-ran’s.  The point is that tools and systems alone will not get the job done – indeed, they should be enablers that allow an engaged, motivated and well-managed workforce to meet or exceed collaboratively established performance targets. 


Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

All Topics
Latest Whitepaper
eBook: Why Multi-Tier Supplier Collaboration is More Important Now
Explore the benefits of supplier collaboration including sharing demand forecasts, faster reactions to demand or capacity changes and well-coordinated product launches.
Download Today!
From the September 2017 Logistics Management Magazine Issue
While Amazon’s recent bid to purchase Whole Foods made mainstream headlines, the e-commerce giant will still need to adhere to time-tested realities. Any way you slice it, the integrated U.S. cold chain requires optimized service from existing ports, 3PLs, cold storage warehousing, transportation providers and high-value vendors.
Improving 3PL Management: Glanbia Adds Muscle to Logistics
Why Retail Supply Chain Transformations Fail - and how to get it right
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
EDITORS' PICKS
26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...

2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...