productivity gains without (labor) pain

Would you like to see a double-digit increase in productivity in your warehouse or distribution center? That's what you can expect if you implement engineered labor standards in those facilities. Engineered standards establish the most efficient way to perform individual tasks, and they provide a basis for measuring productivity and identifying inefficiencies.

Sounds great, you say, but there's just one problem: The employees in your facilities are unionized, and they're not about to let management tell them exactly how to do their jobs or measure their individual performance.

That's the conventional wisdom, but it isn't necessarily true. Engineered labor standards have in fact been successfully implemented in many unionized warehouses and DCs. The key to getting labor on board with engineered standards, experts say, is to be consistent, maintain clear and honest communication, and respect both rules and people.

BYO engineer
Engineered labor standards specify productivity expectations for specific tasks. Typically developed by industrial engineers, they are based on a combination of on-site observations, software calculations, benchmarking, and validations through actual practice. The most common standards are for order picking and selection, followed by fork-truck operations, putaway and replenishment, and receiving and loading, says Charles Zosel, vice president, optimized labor performance for the consulting firm TZA.

The first consideration for anyone who plans to implement engineered standards in a union warehouse is what, if anything, the union contract says on the subject, says Zosel. Some contracts prohibit the use of engineered standards, while others allow them but contain provisions regarding how standards may be implemented and what rights the union has to contest or influence them.

Many times, unions will want to send their own industrial engineers to monitor an implementation. "Typically, union engineers communicate with local union representatives and companies during the development of labor standards," said Denny Toland, lead industrial engineer for the International Brotherhood of Teamsters Warehouse Division, in an e-mail. When requested by a local union representative, union engineers will perform an audit of a labor standard to determine whether the measured requirement is reasonable, he said.

If your business is specialized, you may need to explain what's unique or different about it to union engineers. "It can be difficult if they don't have a good understanding of your particular operation," says Ed Borger, vice president of operations for VWR Scientific Products, a distributor of laboratory chemicals and equipment. In-house industrial engineers developed VWR's labor standards; the company also uses labor management software from Manhattan Associates to measure performance against those standards.

Because some of VWR's products are hazardous, special training is required for warehouse employees, including members of the International Brotherhood of Teamsters who work at three of the company's five distribution centers. An in-house environmental health and safety team trains them and other workers in the proper handling of hazardous materials. Meanwhile, Borger works with the union to be sure the complex program conforms with contracts and agreements.

Play it straight
Unions are not opposed to engineered labor standards in principle. "We understand that management utilizes labor standards as a means to optimize efficiencies and cost control, and will work with the company to ensure that acceptable and reasonable standards are adopted," Toland said, adding that union members take pride in being highly productive.

Nevertheless, standards may initially be met with suspicion. That's entirely understandable, says Borger of VWR. "You have the same people often doing the same thing for years. They are very close to the work, and they think they are doing it the best possible way until you come in with a new process. It's difficult to accept that there's a better way of doing your job."

What can you do, then, to ensure that a union work force will accept and even embrace engineered standards? "Communication between the union and management is key to the successful implementation of labor standards," said Toland. "When all views are considered— from the union members and management representatives—it allows everyone to be part of the process. This typically leads to broader acceptance of the resulting labor standards by both parties." He notes that creating production committees that include representatives of both labor and management can be an effective means of fostering communication.

Zosel sums up the communication mantra this way: Be open, honest, truthful, straightforward, and transparent. Meet early and often, give the union updates on where things stand, and be open about the difficulties you're experiencing."Say exactly what you're going to do, follow through, and be consistent," he adds.

But communication alone doesn't guarantee success. It's equally important to involve employees and their union reps in developing, testing, and validating the standards. That collaborative approach raises the chances that employees or union engineers will find any problems or mistakes so they can be corrected. "The goal is to have a productivity target that's right and fair," Zosel says. "If they find something that's not right, we need to get it fixed. They understand that we want them to find things that are not right."

Even when all parties are working well together, managers may encounter some resistance. Borger has found that the more variable the task, the more difficult it is to gain acceptance for the associated standard. For example, it has not been easy to develop standards for receiving VWR's tens of thousands of items, which arrive in some 90 different units of measure in a wide range of pallet configurations and product mixes.

A common source of tension is applying identical standards and measurements to every site. There are a lot of subtleties when engineered standards are involved, Borger says. "Don't assume that the people will react the same way or the process will be better because it's your second or third [standards implementation]," he warns. "Start new at each location."

Zosel cautions against making assumptions about what will work simply on the basis of whether the work force is unionized or not. He cites the example of posting performance results: Do you do that publicly on a bulletin board, or do you report performance privately to each employee? "Some union and non-union facilities don't post, and some union and non-union sites do. It's more a matter of the company culture or the union culture," he says.

Clarity and consistency
Although engineered labor standards may initially be greeted with skepticism, a well-designed system will produce benefits for both labor and management. "One of the biggest benefits of fair and accurate standards is that they not only define what management can expect of labor, they also define what workers can expect of management," says Zosel.

That approach has paid off for VWR, which reports 25- to 30-percent productivity improvements in the DCs where the company applies engineered labor standards. Borger sees more opportunities for improvement, thanks to the information he now has about the labor costs associated with particular products. He expects the union will continue to work with VWR to find further efficiencies.

"Unions have the same issues as management in terms of performance," he says. "When you agree and align around what's expected, you get clarity and consistency. You get both sides on the same page, and you take a lot of 'noise' out of the system."