Like most warehouses, you may be relying heavily on simplified labor standards like cases, picks, lines, or units per hour metric to measure productivity. Ask yourself: How insightful is your WMS’ simplified labor standard, given the constant state of flux and variance in the workflow in a typical warehouse? Are you able to draw valuable “so what’s” from cases/hour, or do you often find yourself excusing your productivity results away?
The simple cases/hour average comes with a serious set of limitations, to the point of being irrelevant as a day-to-day management tool. The dynamic, daily changes within the 4 walls of a warehouse cannot possibly be captured by such a simple productivity measure like cases per hour. The main concern? Cases per hour is a static measure – and does not take variance into account nor provide insights into why variances occur.
A great example is an order for 20 cases that required the Picker to go to 20 different locations from across the warehouse floor. The Picker who processed this order would have a much lower cases/hr productivity score than a Picker who was given an order to pick 20 cases from a single location. The metrics would make the first Picker appear to be lazy while the second Picker would look like a superhero! In situations like this, Supervisors tend to ignore the results because they know there are other factors that are impacting those high and low scores. Therefore variability tends to make single metric labor standards an ineffective and unfair management tool.
Implementing a Labor Management tool provides additional metrics to supplement the traditional cases/hour measure that a WMS provides – and filling the gap for explaining the “WHY” around the variance. In addition to making the productivity scores more accurate and fair, Labor Management provides management with additional insight into an Operation’s performance:
Measuring effectiveness is usually not included in a WMS, but is truly the basis for insightful takeaways regarding warehouse productivity. Effectiveness looks at both an employee’s productivity on direct processes and the non-productive time spent throughout the day. When low effectiveness scores are identified, managers can drill down into the specific factors to determine what corrective action is required. For example, is a Supervisor’s team experiencing a low effectiveness score because a few employees are unproductive while doing Putaway, or is the main factor excessive non-productive time spent in meetings and on error resolution. An Effectiveness Score can be provided at the facility, shift, Supervisor or employee-level, creating opportunities for comparisons and dynamic trending.
2. Indirect Labor (percent and absolute costs):
Capturing indirect labor is another opportunity to identify potential cost savings within a warehouse operation, but again is not captured in most WMS packages. Most operations spend more on indirect costs than they realize or budgeted for. By identifying where these labor hours are being allocated and which employees are involved, a Labor Management system can help managers bring these costs back within goal.
3. Cost to Serve:
What is the TOTAL cost for processing a unit within my warehouse – by customer? Sounds simple enough, but a traditional WMS misses several key components of cost-to-serve. In these cases, cost-to-serve is a partial and incomplete view. With labor management, the cost-to-serve will include bonuses, burden costs, and other costs that would otherwise not be captured. So your sales team will know how to right-price every unit you process.
Capturing more insightful metrics, typically with a Labor Management tool, can take a warehouse operation from a static reporting environment to identifying dynamic, actionable takeaways to improve productivity.