Changing how people work with labor management

These solutions complement a warehouse management system (WMS) and change the behavior of your workforce.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 1/3/2007

While labor management systems provide information about the performance of employees on the job, the real value is in changing the way people work.

“By combining labor management with engineered labor standards and repeatable tasks, you’re changing the behavior of your labor force,” says John Murphy, a vice president with RedPrairie.

Why are companies looking at labor management? “Many of the companies we’re talking to have already optimized their distribution centers with a warehouse management system (WMS) or other automation tools,” says Dan Hokanson, product manager of labor management for HighJump Software. “But labor continues to account for over 50% of their costs, so they’re looking for the next way to take cost out of their supply chain.”

Facilities that lend themselves to labor management are those that are still labor intensive or perform some labor-intensive distribution practices like value-added services. In fact, some facilities have implemented labor management just in areas like a value-added services area.

Facilities that aren’t well-suited are those that are highly automated or have already reduced the labor component in their facilities.

While labor management is an important tool, there are several best practices associated with getting the most from these systems.

• “The first step is to develop granular labor standards based on time and motion studies or from published standards with which you can compose your own standards,” says Steve Banker, director of supply chain management at ARC Advisory Group. “With standards in place, your workers know what’s expected of them in a measurable way and know that they’ll be held accountable.”

• While workers may initially fear that standards will be held against them, Banker says the best companies mitigate that fear by implementing a bonus program that rewards workers who work above standard, while maintaining quality. “If your workers see that there’s something in the program for them from a labor management system, they’ll buy into it,” says Banker.

• Banker adds that leading companies cap their bonus program at 120% over standard. “They don’t want people working so hard that they become exhausted or dangerous just to get a bonus,” Banker says.