Disclosure: This is a sponsored post.

Measurement practices have become much more sophisticated in the past two decades unless you consider labor. To a degree, this is understandable, as we tend to gravitate to the “readily quantifiable” when we measure (readily, in this context, meaning data that is easy to obtain, and data that is reliable, objective and complete). Anyone who has used this system will surely tell you that – “’Readily quantifiable’ and ‘labor measurement’ do not go on very well.”

This is also the reason labor management software is immature as compared with inventory management or transportation management software – the other two largest costs in most operations. Highly effective technology solutions for labor management have been widely available for some time and are comparatively inexpensive. Until recently, practical solutions for labor were hard to find at any price. But that has all begun to change as you can now use warehouse management software like EMERGE App.

Similar to bar coding, the grocery industry led the way in implementation of labor productivity improvements decades ago. Today, having a tight labor market, labour software is the focus of software developers, and rising distribution have resulted in greater interest and some significant gains in other industries. Managers are beginning to use tools to optimize labor resources, even in highly dynamic work environments and have the results show for it.

Having a set rule, the organization has different types of objectives for a productivity initiative that might include:

  • Improving productivity through labor measurement
  • Improving labor resource utilization
  • Controlling or reducing payroll expenses

To attain those goals, many companies have turned to an approach found throughout the grocery
industry – engineered standards, combined with sophisticated data capture and reporting technology.

As a strategy, the organization looks to develop a combination of team and individual metrics best suited to each operation. They are applied throughout the system so that all associates are treated fairly and “everyone has an equal chance for the brass ring.” Interfacing the data reporting function to the resident warehouse management software (WMS) permits real-time reporting; this benefits both management and the individual employee. Work plan execution and current performance are then accessible to those most qualified to impact both for the better. In organizations that have multiple locations, each location performance can also be forwarded to the headquarters, giving top management fresh, meaningful information with which to run the business.

Putting the Strategy to Work – Software

The main productivity improvement idea has two major components:

  • engineered standards to establish goals and improve the ability to predict work content
  • labor reporting software to make results available quickly and in the most suitable format for taking action.

The first piece requires industrial engineering experience and strong people skills. The second piece usually appears in the form of commercially available software. Because of the specialized nature of the calculations used and the nature of predicting and tracking labor activity, in-house development of this kind of application is generally not recommended.

Although the picture is changing, few of even the top tier WMS vendors provide solutions that accommodate both engineered standards calculations and highly flexible software tools to report

Labor activity in real time. The functionality is specialized and to date has not warranted much attention from most WMS vendors. The most powerful and capable applications come from other software developers who have focused on the labor aspect of distribution.

Professional educational organizations such as the Council of Logistics Management, WERC or APICS, or consulting firms are usually good resources for locating and recommending software for this purpose. The software tools are a key ingredient. An effective productivity program relies as much on the timely communication of results as it does on establishing goals and calculating performance against those goals. Getting information into the hands of people who can impact the results is essential.

The software gives you the ability to make timely reports of both performance and utilization, assists in balancing labor across all functions in the warehouse, facilitates labor allocation planning, and enables analysis of historical data housed in the database.

“So How Do You Measure Labor Performance Well?”

Standards & People

The heart of the issue is always the establishment of a fair and objective means by which to measure work. It is complicated by the fact that neither the work itself nor the individuals who perform it are the same from instance to instance. And, by the way, neither are the supervisors and managers who are charged with planning and acting on the data produced.

The single most effective process for establishing a reliable, objective metric for performance is the classical engineered standard developed through detailed time study of each task in context.

Best Practices: This approach begins with the identification and implementation of the optimal
methods and procedures for performing the work (put-away, whole or broken case replenishment, case or pallet picking, etc.). There is no point in developing metrics for the inefficient or inconsistent methods – they will not have much value. Rather, you want to train people to do things in the best way and plan that way as well.

Standard Building: After implementing best practice improvements, an engineer then studies the work, breaks each task into its constituent elements and develops an allocation of time for each occurrence of each element in that work. For instance, if an order picking task involves one line and three cases, the unit of work would contain elements and related time for picking up the order, moving to the location, picking each of three cases and moving those cases to outbound staging among other things. Some highly varied tasks may use 30 or 40 elements.

A precise calculation of the total “earned” time for this task presumes that the individual performing the work is using mutually agreed on methods. Management’s expectation should be that a normal person with normal skills can sustain this pace for the duration of their shift (eight or ten hours) without undue fatigue.

For some tasks (loading, pass along picking or unloading a truck), an individual measurement may be especially difficult.

Raviraj Hegde

Raviraj Hegde is the VP of growth at EmergeApp.net. He likes reading fiction and writing essays about his travels.