SUPPLY CHAIN MANAGEMENT

BASICS:LABOR

MANAGEMENT & SLOTTING

BY: ANGELA CARVER

Why is Labor Such a Large Focus?• Labor is reportedly the largest cost center in any supply

chain facility. For this reason it also provides the largest opportunity for cost savings.

• Bad working habits, manual workarounds and errors in reporting are just some of the day-to-day labor challenges increasing supply chain labor costs.

What is Labor Management?• Labor management is the constant evaluation,

measurement and adaptation of day-to-day labor with the goal of achieving the highest level of productivity and cost savings possible.

• In a recent SupplyChain247 article it was noted that the average number of employees in the distribution center increased to 278 people, up from 236 four years prior.

What is Slotting?• Slotting is the process of determining the best place to

store each SKU in a facility based on a variety of factors specific to each operation. The objective of slotting, or re-slotting, is to reduce travel time, increase picking accuracy and increase asset utilization of both labor and warehouse space.

• MMH quoted TZA Consulting saying that strategic slotting can average an 8% to 15% improvement in picking and replenishment labor. For some of their larger companies this equates to up to $500,000 annually.

Factors Considered in Slotting• Slotting processes should take into consideration a

variety of operational factors. Some of the top considerations should include:

– Unit and slot characteristics– Replenishment requirements– Families of items– Velocity of movement– Storage capabilities

• Slotting should be regularly evaluated to meet changes in seasonal demand.

Slotting and LMS Working Together

Slotting and LMS Working Together• These systems, when directly integrated and working in

unison perform two key functions for supply chain operations:

– Labor metrics recorded can help determine if a reslot is necessary

– LMS may be used to test the cost and benefits of a reslot plan

WMS with Labor Management/Slotting• Not all WMS software is created equally. Some systems

have built in labor management functionality while others simply integrate with third-party LMS systems.

• Selecting a warehouse management software suite with a built-in LMS can allow your warehouse team to:

– Easily pull data from one solution to another with little to no manual data entry

– Test slotting plans more easily while receiving more measurable results

Overcome Top LMS Myths1. If I have a WMS, I am getting full Labor

Management functionality

As mentioned earlier, not all WMS are created equal, which means that not all of their LMS functionality are the same. It is critical to evaluate whether they offer only traditional labor productivity tracking or more robust features and reporting capabilities.

Overcome Top LMS Myths2. Employee morale will be negatively

impacted

Many management teams are often concerned that the implementation of LMS will be poorly accepted by staff, but the added tracking capabilities provide the capacity to implement incentive programs. This not only encourages staff to work harder, but also can help to identify those that already do and felt as if it was not previously appreciated.

Overcome Top LMS Myths3. LMS implementation will require a lot of IT

resources

Selecting a WMS with a built in labor management system can help to reduce the IT resources required to implement a traditional LMS software suite. A project of this type often requires little to no implementation hours and limits IT resources to simply the ongoing maintenance of the LMS system.

Overcome Top LMS Myths4. Labor management is primarily for retail-

related DCs

Labor management, while rooted in the retail distribution industry, has proven to be a useful tool for many other business sectors such as consumer packaged goods, third-party logistics and industrial manufacturing. These facilities are often just as complex and have as many, if not more employees, making LMS a valuable cost savings tool.

Overcome Top LMS Myths5. LMS results are over rated

Companies often think that reported or “promised” improvements are not realistic or achievable in their operation, but productivity gains of even 20% can result in significant dollar savings that would not be possible otherwise.

Top Functions of LMS/Slotting Software• Planning and scheduling

– With the implementation of LMS warehouse managers have had a more granular view of their labor. Productivity measures can now be broken down by department, zone or employee.

– This more granular view helps to answer not only how productive the workforce is, but how many people are needed at any given time throughout the day.

– Functionally robust labor management software can evaluate a variety of variables to identify what workforce mix is the most efficient and cost effective.

Top Functions of LMS/Slotting Software• Multi-task interleaving

– With staff spending nearly 50% of their day travelling throughout your facility, significant labor resources can be wasted. Multi-task interleaving directs users to perform multiple tasks in order to make the most of each trip.

– The LMS will assign tasks based on operations in the warehouse as a whole, task proximity and task priority. The software should adjust task assignments as priorities and conditions change to avoid bottlenecks due to congestion.

Top Functions of LMS/Slotting Software• Multi-task interleaving

Top Functions of LMS/Slotting Software• Intra-day labor adjustments

– While a best-fit labor management solution will help your operation to forecast labor needs and develop the best schedule to fit your needs, it must also address these factors as your daily operations progress.

– Identification of bottlenecks and areas in distress can help your management team to shift staff throughout the facility to ensure delivery deadlines are met.

Top Functions of LMS/Slotting Software• Connecting the store to the DC for omni-channel

fulfillment

– As more retailers adopt omni-channel strategies, more responsibility is being shifted from the traditional distribution center environment and into the brick and mortar stores.

– Having the ability to track in-store employee performance is a must for these operations in order to determine what fulfillment method is the fastest and cheapest.

Benefits of LMS/Slotting Implementation• Workforce Visibility:

– Provides real time data to better manage and monitor your workforce– Enables tracking and monitoring of each warehouse worker

• Labor Cost and Time Savings:– Can help to reduce labor costs– Saves processing and response time– Helps to reduce wasted time and “deadheads”

• Improve Workforce Productivity:– Helps to maximize the productivity of each warehouse worker– Can help to identify productivity gaps, including those for workers whose

effort involves multiple steps– Streamline operations by automatically assigning tasks to mobile (RF)

users

* https://www.datexcorp.com/solutions/wms/labor-management-system

Benefits of LMS/Slotting Implementation• Make Better Decisions:

– Use real time data for improved decision-making– Identify key trends so that you can plan and react accordingly

• Measure Workforce Performance:– Objectively measures the performance of each warehouse worker– Can help identify underperforming shifts or workers

• Plan and react effectively:– Helps you to plan your workload– Provides alerts and notifications enable you to react more quickly– Enables you to identify, identify and react to trends

* https://www.datexcorp.com/solutions/wms/labor-management-system

Conclusion• Labor management software is often overlooked as many

warehouse operators think their team is running at peak performance. What they do not realize is that manual optimization can only do so much and automation technology can evaluate a significantly higher quantity of variables and make necessary adjustments.

• While a 20% workforce productivity improvement may not sound impressive, when this is spread across all staff throughout the entire supply chain this can result in hundreds of thousands of dollars saved each year.

http://www.mmh.com/article/labor_management_systems_the_very_near_future_of_lmshttp://www.inboundlogistics.com/cms/article/putting-labor-management-systems-to-work/http://www.scdigest.com/ONTARGET/12-01-25-4_LMS_Myths.php?cid=5431&ctype=contenthttp://www.mmh.com/article/resolve_to_reslot_your_warehousehttp://www.supplychain247.com/article/double_up_on_labor_efficiencies/news

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