LMS systems can be either reactive, which tells managers how their workforce has performed - but only after the fact - or predictive, which can capture data in real time and immediately inform management or other end users on needed courses of action.
Investing in LMS software is hardly a minor undertaking, but the ROI comes in learning how to optimize one’s workforce, says Shane Snyder, president of Barcoding Inc., who spoke with editors of SupplyChainBrain at the recent ProMat show in Chicago.
SCB: Let’s talk about the considerations that have to be top of mind if you’re thinking about implementing a labor management system. How would you describe them?
Snyder: I think the key consideration in making the decision whether to purchase a labor management system or not — it’s really about how you’re going to use that system. So often when we work with organizations, we find that they really are looking at the LMS from the back-office standpoint. And what we’re trying to encourage organizations to do today is to really focus on the end user. How is the manager, that person that’s actually affecting how labor is being used on a more tactical level on a day-to-day basis, going to be impacted. How are they going to use that information? What’s the timing of the information they are going to get? How are we presenting that information in a way that the end-user supervisor can actually have an impact on the labor costs within the organization?
SCB: You speak of the importance of that information, but the threshold question is, where do you get that information in the first place?
Snyder: In a traditional way, people have captured information for LMS-type solutions from their warehouse management systems, their enterprise resource planning systems, their time-and-attendance systems — all great sources of data. We’re encouraging organizations to capture raw data at that initial point of contact, whether through an RF scanner, a voice-picking unit or perhaps off a telematics unit on a vehicle. That way they can capture raw data, which is much more timely.
SCB: The time to report is crucial. Walk us through that.
Snyder: Traditionally, LMS systems present data back to end users kind of on a weekly basis or a biweekly basis. What we’re proposing — and by capturing raw data right at the source — what we’re able to provide is that information to end users during the course of the shift or at worst case, at the end of the shift.
If I’m using an LMS to help me control labor costs within my organization and drive up overall productivity, if I just get a scorecard at the end of a week or at the end of two weeks, it doesn’t help me manage that week or two weeks. But if I get something on, say, Tuesday, I can make an adjustment and actually affect how the end of the week happens. So rather than get a score at the end of the game, we’re keeping score throughout the course of the game.
SCB: You speak of driving productivity up and reducing costs, but I have to convince someone higher up in my organization to make this investment. What specifics can I give them on how an LMS saves money?
Snyder: It saves you money by having more granular data on what’s actually going on within your organization. So if I know at a high level what my overall labor cost is for a DC — that’s good data — but if I know information about how much that labor is being used for productive time versus unproductive time, I can now judge my workforce for my workflows in terms of how profitable I'm going to be.
I can take things out, like housekeeping, I can take things out, like returns, and just focus that information on driving productivity, focus very specifically on productive hours.
I can focus on what are my real utilization rates. You know, what we find in a lot of DCs we work with today, and it’s rampant in the 3PL industry, is that they have multiple customers they serve within the same DC. A labor management system actually allows them to know “what’s my labor customer by customer, not just my overall labor costs or labor cost per unit within there.”
But think about it. I might have one customer that’s costing me 54 cents per unit; I have another that costs me 32 cents a unit. An LMS helps me structure my pricing to those clients, and set those expectations by either driving my price up so I’m making sure I’m making money or driving my cost down so that I’m more competitive in the marketplace.
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