Labor Management Systems: Optimizing Worker Productivity While Reducing Labor Costs

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Labor management systems (LMSs) are used primarily as a way for distribution operations to manage and track its labor activities. This includes real-time interaction with warehouse management and warehouse control systems in order to collect data on what workers are doing, how many locations they have visited, what inventory they have handled, what equipment they have used, and what paths they have traveled.

Most often used within the supply chain, an LMS helps a distribution operation improve worker productivity by providing the ability to

•    report on all labor activity;
•    compare labor activity to historical data; and
•    report labor activity against established labor standards.

According to an article by Modern Materials Handling, LMS sales are on the rise—it’s one of the fastest growing segments in the supply chain software market today.

How Can an LMS Benefit my Distribution Organization?

An LMS enables distribution managers to forecast the number of workers required to perform estimated work down to the day, shift, and job level. It works by storing the established standards for each and every key task performed within the distribution center in a database. Managers can then determine—for each worker—the actual time it takes to perform a specific task. Actual time can then be compared to the standards that have been established for that task. With this information, workers receive immediate feedback on their performance.

Having access to this invaluable information helps managers facilitate the

•    completion of performance reviews;
•    creation of performance targets;
•    measurement of actual productivity against expected performance;
•    calculation of incentive and compensation rates;
•    creation of productivity reports;
•    forecasting of staffing requirements;
•    tracking of worker’s time; and
•    simulation of the changes to material handling procedures and processes.

In essence, an LMS allows distribution organizations to

•    improve labor planning;
•    determine “cost to serve” by specific customer or order or market segment;
•    involve workers in the development of processes and standards;
•    increase worker productivity;
•    decrease employee turnover;
•    reduce asset costs;
•    enhance customer service; and
•    reduce warehouse labor resource costs.

Labor Management: Providing the Proper Tools and Training for Distribution Workers

In a recent study, The Supply Chain Consortium found that the average temporary distribution worker requires between 20 and 96 hours of training. It goes onto say that when managers can see and predict incoming work, they can plan their labor needs in advance—ensuring that their workforce has the training it requires to be productive, without blowing the warehouse’s labor budget.

The success of any labor management program relies on whether workers have the proper tools to accomplish their goals. It’s a distribution manager’s job to provide these tools, which include

•    proper training;
•    a method for tracking workers’ progress;
•    a method for providing feedback to workers about their performance; and
•    an incentive program for rewarding high performance.

Some Players in the Field of Labor Management

An LMS typically interfaces with existing warehouse management systems (WMSs) but can be implemented in other ways as well. For example, if your organization is already using an enterprise resource planning (ERP) system with warehouse management functionality, then the addition of an LMS just might be the stepping stone you need toward better managing your labor force’s productivity. Just because you have a WMS doesn’t necessarily mean you have LMS functionality.

Here is a small (and certainly not an exhaustive) list of vendors that focus on LMS:

Manhattan Associates, Inc.
was one of the first to release a labor forecast/optimization application designed specifically for the needs of distribution managers. Manhattan Associates' labor forecast/optimization functionality, embedded in the industry-leading Labor Management Solution.

Infor’s labor management system helps its clients to reduce their labor costs. Its solution provides workforce planning, staffing, and execution capabilities, along with the ability to monitor direct and indirect labor and provide feedback to workers and supervisors as picking, packing, and shipping activities are completed.

Workplace Systems - Workforce Management Solutions address all areas of staff planning and staff tracking together with all aspects of planning and tracking of the work done by staff including resources required. These standard products address all market sectors but, additionally, specialized vertical market solutions are available which address the particular requirements of retail, hospitality, emergency services, utilities and telecommunications, aviation and rail, manufacturing, and healthcare.

Before choosing your LMS…

Every distribution organization out there strives to find better ways to optimize worker performance and reduce labor costs, however; there are some key factors they must consider before purchasing an LMS. A very comprehensive list of key considerations can be found at SupplyChain Digest.

1. Labor Management Systems
2. Labor Management: Optimize the Warehouse Workforce
3. Labor Management: Don’t Forget the People
4. Logistics News: Selecting Labor Management Solutions – What Are the Key LMS Software Differentiators
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