Labor management systems to improve efficiency

Labor cost is almost always the highest expense item in a distribution center’s (DC) budget. To control and manage this cost, visionary managers often rely on comprehensive labor management programs that promote and measure efficient methods for performing tasks. To achieve this goal, managers tie various software tools, such as labor management systems (LMS), together with strategies to monitor, report, and reward actual performance against established expectations. 

These programs certainly aren’t new, and their ability to increase productivity by providing continuous feedback on worker performance is well documented. Don Cook, president of New Jersey-based labor management consulting firm Cook & Associates, sums it up this way: “With a good labor management program, organizations can reduce costs and ensure that merchandise is processed correctly, all while improving processing timeliness.” 

According to Cook, users who are able to tie a program together with the appropriate measurement software typically report a 20 percent increase in productivity along with increases in work quality and reductions in service times. Cook adds that many organizations achieve payback on their investment within nine to 16 months.

Tom Kozenski, vice president of product strategy for RedPrairie—a provider of both warehouse management systems (WMS) and LMS—also points to a big modeling advantage, or the ability to test scenarios on the computer before trying it for real on the warehouse floor. “Our software can do ‘what-if’ analyses of an operation on the computer and anticipate results, rather than going on the floor and trying to do ‘what-ifs’ on the fly with 100 people.”

For example, what if you consider going from picking with paper pick lists to picking with radio frequency (RF) terminals, or from RF to voice-directed systems? You can model each alternative on your LMS and predict which one delivers the most productivity improvements before purchasing a single piece of equipment.

Other labor management solutions, such as those from Kronos, have also automated workforce-related processes such as hiring, time and attendance, and employee scheduling. Malysa O’Connor, director of Kronos’ logistics practice group, says that by automating, you gain real time visibility into critical labor data for accurate cost accounting by customer, by order, or by task. 

Even more benefits are reported when the program incorporates a gain-sharing, incentive-paying component. “Good workers want what they do to be acknowledged,” says Matt Kulp, director of distribution and fulfillment projects for St. Onge Company, a supply chain consulting company.  “When incentive programs are done right, good workers are going to want to stay onboard.”

If you’re contemplating such a program for your organization, your timing couldn’t be better. The real-time interface of LMS with more robust WMS is giving these programs a new edge. In addition, better software, more widespread use of RF technology, and new warehouse mapping capabilities have reduced much of the manual effort involved in the work measurement component of the program, also increasing its accuracy. 

Over the next few pages, we’ll look at labor management programs and how they span well beyond the mere installation of software. We’ll also take a closer look at what’s involved during implementation and how a leading bridal products retailer is using labor management as a tool for continuous process improvements.