Do you know if your organization is running on all cylinders?

Many distribution organizations manage their operations using historical data and key business drivers that can distort reality and hinder the ability to maximize productivity.  Improving operations by a few percentage points against last year’s budget might be sufficient to keep your job in the short term; however, you might be limiting your potential for future growth. How can you be sure that your operations are truly optimized? 

We often hear the phrase “you can’t manage what you don’t measure”. This rings especially true for a supply chain facing intense competition. Having visibility and tangible insight into your direct labor functions is one of the best ways to measure the true success of your operations. A workforce management solution anchored on engineered labor standards provides visibility on various direct labor functions such as receiving, picking, loading, and delivery.  This visibility translates into the intelligence needed to manage your organization.  The more discrete and accurate the system is, the easier it will be for management and employees to accept the calculated productivity expectations.

A discrete labor measurement system or LMS delivers both clear expectations and fair work standards. This approach adds consistency and accounts for fluctuations in business volume, order types, or days of the week.  The LMS can also provide valuable information for planning future labor requirements or managing the reallocation of current resources to balance the throughput among different activities.  For example, a LMS provides the ability to properly forecast manpower prior to the start of each shift. Some LMS solutions also provide simulation capabilities that enhance the analysis of envisioned changes (e.g. layout, equipment, process) to the operations, consequently avoiding bad decisions and providing clear justification for future capital investment. Additionally, companies can predict changes in operating costs that may occur as a result of volume fluctuations.

By implementing a LMS, an agriculture cooperative increased the productivity of its order selectors by 20 percent. The LMS also improved on-time departure of customer orders, optimized the selection path and balanced the throughput across all sectors of the distribution facility. 

In order to develop and implement labor standards, you must:

  • Review, improve, and standardize key processes
  • Validate the integrity of the warehouse management system and of the time and attendance systems
  • Develop standards using pre-determined motion time systems and/or time studies
  • Calibrate the material handling equipment
  • Assess the congestion and gather all relevant data
  • Configure the LMS to input all developed standards and other elements required for computing standards
  • Validate the LMS through direct observations
  • Train supervisors and others to use the LMS
  • Document the job specifications and distribute clear operating procedures
  • Communicate results and feedback through a labor standards committee comprised of project managers, supervisors, and employee/union representatives

Organizations that have successfully implemented a workforce management solution have not only maximized the productivity of the direct labor workforce, but also optimized the use of fixed assets.  This convergence of technology and methodology allows businesses to operate more efficiently, more safely and, ultimately, more profitably—with less waste.

For more information about West Monroe’s LEAN to MEAN transformation, please don't hesitate to reach out.