Faced with swiftly changing business conditions, logistics professionals are finding creative new uses for their labor management systems (LMS), in addition to their core application of tracking labor performance in order to identify workers in need of remedial training and offer bonus incentives to high-performers.
Under pressure from economic trends such as omnichannel fulfillment, demand for next-day shipping, and warehouse labor shortages, companies are using data generated by their LMS to help solve a wide array of logistics challenges. Today's LMS platforms allow DC supervisors to quickly adjust to changing market conditions, provide real-time feedback and coaching to employees, and boost efficiency in smaller facilities and retail stores.
Although the specifics will vary from one operation to the next, all of these applications can save users time and money. What follows are five ways companies are wringing extra value from their labor management systems:
1. To provide mobility for managers. "LMS platforms have come a long way in the last five to 10 years," says Bradley Gillette, director of supply chain excellence at Ryder System Inc., the Miami-based third-party logistics service provider. Ryder works with a variety of LMS systems in its operations, including commercial and in-house platforms on both its own and its clients' networks.
One of the most visible of those changes is mobility, Gillette says. Software developers now offer labor management systems that can run on mobile computing platforms, such as tablets and smartphones. This allows warehouse supervisors to walk the floors of their facilities and provide on-the-spot coaching to their workers, instead of sitting alone at their desks pulling clerical reports, he says.
Coaching workers based on real-time feedback can help boost efficiency and safety, improve teamwork, and enhance training efforts. Access to LMS data also allows warehouse managers to adapt to new work flows, such as the addition of tasks like each-picking, light assembly, returns, or kitting.
2. To provide real-time performance feedback. Operating under the assumption that an informed worker is a productive worker, some DCs have set up their operations so that LMS-generated performance data can be seen in every corner of the warehouse. Using large dashboard displays, many warehouse managers post real-time performance updates so workers can measure their progress against pre-set goals.
"An LMS can be used to track, reward, benefit, and incent," says Jason Franklin, product manager for labor and business intelligence at Intelligrated Software. "Workers like friendly competition—to be judged and to see who won."
In addition to motivating workers to work more efficiently, sharing performance data in a public space can build employees' trust in the overall incentive system, Franklin says. By offering a transparent picture of performance, managers encourage workers to compare themselves with their peers as they all work toward long-term goals.
Despite these benefits, some experts warn that displaying LMS data on public dashboards can distract some warehouse workers from their primary jobs—particularly if they're constantly checking the scoreboard. There's also the risk that they'll cut corners on safety if they're running behind, or slack off after a busy morning when they see they'll easily make their daily quota.
"We have found that when we put that information on display, people who were performing well above average ended up going slower, just to fill up the allotted time," reports Jon Kuerschner, vice president for supply chain solutions at HighJump Software Inc. "They were normalizing their behavior to meet the expectation."
Managers don't have to turn off dashboards entirely to avoid these outcomes, Kuerschner says. They can provide LMS data only for certain workers, aggregate the data for a team of employees, or provide incentive-based pay that's based on a combination of individual and team performance.
3. To boost worker retention. In addition to helping boost worker efficiency on the warehouse floor, LMS platforms can be effective tools for retaining current employees and even recruiting new workers, says Gary Allen, Ryder's vice president for supply chain excellence.
By linking LMS metrics to employees' paychecks, a company can reward its best workers with higher compensation. And the rewards don't have to be monetary. Some operations link workers' performance to nonfinancial incentives. For instance, in some DCs, workers who hit their targets can earn extra vacation hours, prizes, or a chance to attend a weekly pizza party.
While linking performance to rewards can be a strong incentive, some managers warn that it can be a tough sell initially. That's because employees often need time to adjust to the idea that their daily performance is an open book. Their reluctance tends to diminish as workers see the benefits of greater transparency in their compensation structure.
Not all employees are averse to the idea, however. Workers from the millennial generation, who are accustomed to living in a digital world, tend to embrace the concept, experts say.
"As opposed to saying 'The LMS can track everything; Big Brother's watching,' the new workers we're hiring are used to new technologies," Allen says. "It encourages their competitive nature. People like to hear feedback—both qualitative and quantitative. It helps them understand how they're contributing to the whole organization."
That transparency has been helpful both in recruiting new warehouse employees and in retaining existing workers, experts say. That is especially important in an increasingly tight labor market, where warehouses must compete with industries like construction and plumbing for help.
"One of the shifts we're seeing in the work force is that millennials want to know they're in an organization they have a future with," Allen says. Not only are they eager for tips and advice, he says, but they also want a career path set out for them that they can expect to follow if they continue to perform well.
4. To rev up fulfillment operations in small DCs and retail stores. Many LMS providers promise that the software can deliver a 10- to 30-percent improvement in worker efficiency. A boost of that magnitude makes it easy to justify the software's cost, since those efficiencies add up fast in a warehouse with several hundred workers.
Calculating the return on investment (ROI) gets much harder for smaller facilities with just a few dozen workers, however. So in recent years, some users have begun using a simplified version, sometimes called "LMS light," in small fulfillment centers and even retail stores.
With a smaller price tag, these versions usually forgo certain features of a full-blown LMS, such as employee coaching, customized goals, and interoperability with the warehouse management system (WMS). But a scaled-back version of an LMS with a simple dashboard can still deliver performance gains of nearly 10 percent, proponents say.
"If you look at a large home improvement store or sporting goods retailer, the store is basically a warehouse with customers in it some of the time," says Intelligrated's Franklin. "But in the store environment, we have no idea how long it should take to receive and scan items, or do break-out and put-away by aisle," he says. "So how can we hold individuals accountable?"
One answer is to use a stripped-down LMS system to develop a baseline for time needed to perform various tasks.
This approach can be especially valuable in the age of omnichannel fulfillment, as stores struggle to master new tasks like filling e-commerce orders from retail shelves or meeting deadlines for buy-online-pick-up-in-store orders, Franklin says. Using an LMS to, say, batch orders so that an employee can retrieve three items at once instead of making three trips can help stores run more efficiently.
5. To generate data for high-level decision-making. Another way companies are wringing extra value from an LMS is to leverage the data it generates for corporate-level scenario modeling and strategic decision-making.
By applying business analytics tools to LMS-generated data on receiving, put-away, picking, value-added services, and shipping, users can calculate the best way to respond to market shifts like variations in seasonal demand, the introduction of new product lines, or a changeover from pallet picking to piece picking.
Managers can also use LMS-generated data in activity-based costing, a method of estimating the cost of completing a job by adding up the costs of all of its constituent activities, says HighJump's Kuerschner. That can be crucial when a DC is trying to decide whether it would be profitable to bring on a new customer who demands complex kitting or assembly tasks, instead of just basic loading and shipping.
Taken together, these five creative applications of a standard labor management platform are helping DC managers find solutions to 21st century logistics challenges. Whether an operation is looking to adapt its operations to meet the demands of omnichannel order fulfillment or the changing demographics of the next-generation labor force, the humble LMS may hold the answer.