Today’s supply chain is more event and customer driven than ever before. New pressures have resulted in more real-time, event driven processes and omni-channel fulfillment within the warehouse, the store, and the extended supply chain. This blog will define the latest trends and advancements in event-driven real-time labor management to compare and discuss engineered standards for direct labor, workforce management, and reasonable expectancies for support and/or store-level activities.
A central concern of operations managers within warehouses and retail stores, across all ranges of industries, geographies, or footprints, is the efficiency and productivity of labor management. In the recent study on labor management, adopting more efficient warehouse processes was the most-cited pressure (70% overall) for managers looking to address the reduction of operating expenses.
Figure 1: Strategic Actions Under eCommerce B2B/B2C Fulfillment
The overwhelming majority of the top 20% of companies, the Best-in-Class, are focusing on integrating eCommerce order and fulfillment flows (Figure 1). To do so, up to 63% of these leaders are improving throughput capacity, and 50% of all companies on average seek to “improve labor efficiency and workforce productivity by reassessing management software”.
Labor management software solutions are designed to establish benchmarks for tasks and individual performance. A labor standard is the amount of time required by a fully trained associate, working at a reasonable effort level, under normal operating conditions to complete a task. Labor productivity is measured as the ratio of actual time to complete the tasks to accumulated standard time for each task or element. Often 100 (or 100%) productivity is considered a full and fair day’s work across accumulated tasks. If an associate has worked fewer than 100, they have not worked up to the standard. If they score over 100, they have exceeded the standard for that day.
There are two basic types of labor and two types of labor standards defined as follows:
- Direct Touch Labor and Engineered Predetermined Standards – In touch labor functions like warehousing and store receiving, direct touch labor can be estimated or even predetermined based on the task, such as the typical time associated with the picking and packing of products into an order carton. Direct labor productivity can be predetermined with high levels of accuracy and labor standards, and if properly developed, are often the key defense provided under union labor disputes. Through time and motion study tables of Master Standard Data (MSD), task times can be calculated and measured. Predetermined productivity standards can be calculated in terms of items or products picked per hour, cartons shipped per hour, and eventually orders shipped or received per man hour.
- Indirect or Support Labor and Reasonable Expectancies – Tasks such as inventory control, selling activities, and stocking are examples of support tasks where the work volume is highly variable and not always constant. Because of the variability in work volumes and task requirements, standards cannot always be predetermined, and averages or reasonable expectancies in terms of sales quotas and minimum support workforce coverage levels are established instead. Historical averages and bracketed productivity targets are often budgeted to establish productivity. These target productivity levels may have elements that are validated via time and motion studies, but they are not as precise as the engineered standards associated with direct labor. These support standards are largely used for workforce scheduling and balancing as a means of measuring average staff productivity within each job class.
In a series of blogs that follows, we will further discuss best practices and solutions for enterprise-wide labor and workforce management (LMS/WFM).
If you would like to learn more, please register for our upcoming webinar featuring Aberdeen and DSC Logistics.