In today's highly competitive distribution environment, an effective labor management system has become necessary. We have learned from hundreds of implementations that seven critical factors exist for a successful labor management program (LMS). They are as follows:
Track 100% of Time When managing a labor force, it is essential to track the entirety of an employee's time - not just what your Warehouse Management System (WMS) tracks. The WMS only accounts for up to 60% of total time spent, which can often be significantly less. If your labor management system does not capture 100% of an employee's time, you will not have accurate data on the productivity gains achieved in tracked time and those increases will be masked by any rate of indirect time and missing time. Aim to ensure that as many of your employees are engaging in direct labor as possible in order to maximize the value your business yields. Invest in a quality labor management system today to unlock the insight needed to stay ahead of your competition.
Fair and Consistent Labor Standards Efficiency and productivity are two key aspects of any successful business. The ability to get the most out of each employee is essential. Hence, why we recommend implementing robust labor standards in your organization. By having clear goals for each position, you can ensure that your employees are performing at their highest level and that tasks are being completed as efficiently as possible. With industrially engineered labor standards or data-driven standards, you can create a framework to measure results and hold your team accountable. Get the most out of every minute with fair and consistent labor standards. Learn how to build them today by reading our blog post.
Timely Reporting and Feedback It is critical that employees and management receive timely performance feedback. At the very least, performance reporting for the previous day should be provided. It should ideally be provided in near real time. We frequently see homegrown labor management with a week or more of reporting delay. It is difficult to remember what you did the day before, let alone a week ago, in the fast-paced world of distribution. Timely feedback is critical for both increasing employee engagement and allowing management to address performance issues effectively.
Management Buy-In If your management team is not fully committed to the labor management program, making the necessary changes will be difficult. When we implemented a system and a pay-for-performance program for a local company, we discovered this to be true. Most supervisors agreed, and the productivity of their teams increased from 80% to more than 120%. However, one supervisor did not embrace the new system, and her team's productivity suffered. She supported the changes after receiving an ultimatum, and her team's performance improved. A thriving labor management program requires full management buy-in.
Proactive Change Management Too often, management ignores weak performers. The LMS shows problems clearly, but it is up to leadership to actually act on the data and coach individuals to success. Change will not come until you enable it—focusing on coaching the weak performers is the key to unlocking your organization's potential. Pay close attention to what your LMS reveals and address issues head-on with the help of our change management blog post. Make your LMS insights count, which brings us to the next critical problem.
Praise in Public and Counsel in Private They taught us at the US Naval Academy that you should praise in public and reprimand in private. Calling someone out in public for superior performance is a fantastic way to boost morale and motivation while also providing positive reinforcement for the system. However, addressing inferior performance should be done in private rather than calling out that person in front of everyone. Embarrassment is a poor motivator that breeds resentment.
Cost to Serve The ultimate metric for measuring your organization's performance is the cost to serve. It is not enough to just rely on labor standards - you must consider the entire picture. If your productivity is consistently increasing yet your cost to serve continues to rise, this should be seen as a warning sign. It is imperative to evaluate all the aspects that contribute to your labor standards: your work mix, process improvements and more.
Labor Management is an effective tool for transforming your business. The seven key factors listed above will assist you in designing and sustaining a successful program.
