As distribution center operations continually look to streamline operations and gain efficiencies, especially when they’re in growth mode, a labor management system inevitably becomes part of the conversation. In a nutshell, it helps managers and supervisors track and manage the performance of DC personnel based on key indicators.
So the question becomes: when does investment in an LMS make sense for my operations? And what are the main criteria to consider in making this important decision?
Anthony Boatwright, senior manager at logistics consultancy The Progress Group, said the first order of business is getting an organization to look at labor as whole, putting metrics in place that track KPIs down to the department and individual level.
“The whole intent of an LMS is to provide additional visibility into performance management by doing comparisons of departments and employees,” Boatwright said. “But if you’re not even looking at labor in terms of putting basic KPIs in place, don’t bother considering an LMS. Once you start reporting and tracking those metrics, and communicating them to the department level, you’re ready for the next step.”
Another prerequisite before considering an LMS, Boatwright said, is establishing standardized processes for DC operations. It’s important, for example, to have standards for things like picking procedures that all pickers adhere to. “You should also have standards for training – who gets trained, by whom, the frequency of training and the certification of trainers,” he said.
There are a range of LMS options available, from best-of-breed enterprise solutions – best for heavily automated situations with high numbers of employees – with a vast array of capabilities like automated workforce planning and scheduling and incentive calculation, to tier 2 systems that provide template-based reports without the bells and whistles, to basic standalone or bolt-on solutions.
Jason Franklin, director of sales engineering for material handling solution provider Intelligrated, said when a merchant moves up to ecommerce or omnichannel operations is often a point at which an LMS investment enters the equation.
“It gets to the point where the overhead required for entering performance data manually becomes cost prohibitive,” Franklin said. “With the performance management capabilities of an LMS, resources are freed up to do things like coaching and identifying what’s working and what isn’t. You can use your time more wisely to influence the type of performance you’re getting.”
Boatwright said once a decision is made to purchase an LMS, it’s important to have two discrete cross-functional teams for both integration and implementation in order to ensure success. “Unfortunately most of the team focus is on integration, and implementation often gets short shrift,” he said. “People like to interchange those words but they have very unique definitions.”
The “people side” of LMS implementation is another critical step impacting performance and results, Boatwright said.
“Companies tend to underestimate the level of effort required at this stage,” he said. “In a lot of cases this represents a paradigm shift from a change management perspective. The fact is that none of us enjoys having every minute of every day tracked by a software program. Being able to communicate upfront the impact to your associates and team with complete transparency into why you’re implementing this system will provide tremendous benefit to the company and its employees.”