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Warehouse & DC Management: Labor Management gets managers beyond the punch clock

While adoption remains low, savvy managers are putting engineered labor standards and related labor management systems to work to jumpstart productivity and gain a new level of operational visibility. Here’s how they’re getting it done.
By Maida Napolitano, Contributing Editor
August 01, 2012

Integration with warehouse management systems (WMS)…check. Integration with time and attendance, radio frequency (RF), and voice systems….check. Smart phone and tablet support…check. Web interface and access to cloud computing and storage….check. 

Clearly, today’s top labor management systems (LMS) are keeping up with the times, evolving from basic standalone systems into sophisticated, packaged WMS-LMS solutions geared towards offering real-time visibility of tasks occurring within the four walls of a warehouse or distribution center (DC). In fact, all of these functionalities have been developed just to make it easier for logistics professionals to manage one of the most complex components of the supply chain: its workforce. 

As such, Tom Stretar, practice leader for enVista, a supply chain consulting firm and LMS integrator, sees labor management as only growing in importance primarily because of how it improves overall performance. He speculates that operations that not using any form of LMS are only operating at 60 percent to 75 percent of their capabilities. Depending on how far you want to go with your standards and incentives, you can get upwards of 115 percent to 120 percent.”

Given the costs of labor, Larry Parker, principal for Aries Consulting LLC, another LMS firm specializing in the development and maintenance of engineered labor standards, concurs that LMS adoption will only increase. He cites organizations that support Lean and Six Sigma initiatives as other drivers of the technology.

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With such promising potential, it’s surprising that LMS hasn’t penetrated a larger part of the market—reportedly only 20 percent, if that. Crystal Welker, director of solutions design and continuous improvement for leading third party logistics provider GENCO ATC, says that in the fifty sites that she oversees in her business unit, there are probably 30 percent where LMS would actually not make sense. 

“Those specific sites are simply too small, and it’s relatively expensive to install,” says Welker. “You have to identify all the interfaces and configure it, and you need to do the engineering standards, which take time.” She adds that the company typically doesn’t implement LMS at a site unless the team can realize a two-year or less return on investment.

To achieve that, they generally need to have a minimum of 30 to 35 variable employees at the site.

However, our experts agree that LMS is jumpstarting productivity when it’s put to its fullest potential, going beyond punch clocks and engineered labor standards to track overall performance. Over the next few pages we’ll take a closer look at how savvy managers are now using the systems to achieve operational visibility, shrink unproductive time, employ incentive programs, plan workforce levels, develop true activity-based costs, and simulate what-if scenarios.

Achieving real-time visibility
Previous systems operated in batch mode, with supervisors going over performance reports at the end of the day, or even at the end of the week. Today’s LMS providers have risen to the occasion, providing web-based dashboard technology to users in real time on their smart phones and tablets.

These dashboards display information regarding labor performance on a single screen and direct the supervisors and managers to where they need to focus their attention. Configurable reports may include the complete listing of tasks along with a measure of the utilization and efficiency of each worker.

If performance isn’t up to par, the system can alert supervisors immediately with a text or email so they can initiate action. “We’re moving from ‘we didn’t do so well this week; we need to pick it up next week’ to ‘we’re not doing well right this moment; let’s try and identify why’” adds Stretar.

This detail provides a critical layer of transparency to the DC, allowing proactive managers to avoid any dips in productivity. So, what’s the challenge? Some host WMS have difficulty processing data in a near-real-time environment, preventing potential corrective actions to be addressed immediately.

About the Author

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Maida Napolitano
Contributing Editor

Maida Napolitano has worked as a Senior Engineer for various consulting companies specializing in supply chain, logistics, and physical distribution since 1990. She’s is the principal author for the following publications: Using Modeling to Solve Warehousing Problems (WERC); Making the Move to Cross Docking (WERC); The Time, Space & Cost Guide to Better Warehouse Design (Distribution Group); and Pick This! A Compendium of Piece-Pick Process Alternatives (WERC). She has worked for clients in the food, health care, retail, chemical, manufacturing and cosmetics industries, primarily in the field of facility layout and planning, simulation, ergonomics, and statistic analysis. She holds BS and MS degrees in Industrial Engineering from the University of the Philippines and the New Jersey Institute of Technology, respectively. She can be reached at .(JavaScript must be enabled to view this email address).


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