Labor management: Investing in human capital

Without an educated and motivated workforce, labor management systems and tools will take you only so far.
By John M. Hill, Director, St. Onge Company
August 18, 2010 - MMH Editorial

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. 



About the Author

John M. Hill
Director, St. Onge Company

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!

Recent Entries

While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years. That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics Report at last week’s CSCMP Annual Conference in San Antonio.

Matching last week, the average price per gallon of diesel gasoline dropped 2.3 cents, bringing the average price per gallon to $3.755 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

A number of key topics impacting the freight transportation and logistics marketplace were front and center at a panel at the Council of Supply Chain Management Annual Conference in San Antonio last week.

The relationships between third-party logistics (3PL) service providers and shippers are seeing ongoing developments due in large part to the continuing emergence and sophistication of omni-channel retailing. That was one of the key findings of The 19th Annual Third-Party Logistics Study, which was released by consultancy Capgemini Group, Penn State University, and Korn/Ferry International, a global talent advisory firm.

Optimism in the form of increasing profits was a key takeaway in the Annual Survey of Third-Party Logistics (3PL) CEOs, released earlier this week at the Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Antonio.

Comments

Post a comment
Commenting is not available in this channel entry.