Feedback is coming in at a rate greater than we can publish it – thanks for your response.

We received a number of letters on our First Thoughts piece a few weeks ago on logistics labor management systems, and the death of engineered standards and labor management pioneer Gene Gagnon. Our feedback of the week comes all the way from New Zealand, with a great letter from Courtney Manaia of Foodstuffs, commenting on both labor management and task interleaving. There are also two nice comments from readers remembering Gene Gagnon. We’d love some more.

Keep the dialog going! Give us your thoughts on this week’s Supply Chain topics.

FEEDBACK OF THE WEEK - On "Labor Management"

We've been using the Labor (Engineered Standards) Module for approximately eight years now. Our Labor module was purchased soon after we installed our WMS. I understand that the Labor Module was one of the main reasons why we chose our WMS provider. We use the Labor Module to ensure our pickers and forklifts achieve productive work rates per week. We pay bonuses for a performance exceeding 101% to a maximum of 110% plus we review employees who fall short of 95%. Our picker and replenishment/putaway forks work under the Labor Module.

One of the main reasons that the penetration of labor management systems is not higher is that there tends to be a "soft" patch amongst some management. This means that certain Supervisors, Line Managers and even DC Managers are reluctant to enforce or make tough decisions when it comes to poor performance. Another reason is that the Labor Module (through the staff working under it) will quickly show poor inventory data such as product measurement plus it will also show poor DC layout, i.e., pick paths, etc.

Poor inventory management can be easily hidden but a Labor Module soon bring these anomalies to the surface. One of the biggest challenges facing DCs today is persuading all levels of management to come out "of their comfort zone " and make tough decisions. I have been involved with our Labor Management Module since it was installed. Probably the single most important thing that I have learned since we have had the Labor Module installed, is that whenever making changes in the DC, whether it be product re-slotting or changes to storage or pick locations, consideration must be given to the Labor Module. Otherwise, the WMS data becomes inaccurate and the results become corrupted thus affecting the overall performance of the DC.

It is interesting that you chose this subject. It is talked about a lot, but not understood that well. There are not that many vendors out there either! We have had two audits done since we have had the Labor Module. These external audits are to ensure the data in our WMS is accurate and working properly.

On another note, your previous newsletter mentioned Task Interleaving. Our WMS had this functionality built into our vendor could not get it to work. We were going to use it for our forks. We wanted our putaway forks to do replenishments on the way back to the Inwards dock. It is a shame as Task Interleaving would have been a very useful tool for us.

I am a Team Manager (formerly Warehouse Manager until restructuring) for Foodstuffs Cooperative Society, Palmerston North, New Zealand. We operate a 17000sqm DC picking grocery lines (13000sku's) for our member supermarkets. We currently operate three DCs in the lower North Island of NZ. Our turnover is NZ$1.7 billion per annum plus we enjoy a market share of 60+%. We do full case and split case picking via RF handheld units. Our DC's are not big by your standards but our turnover more than makes up for it.

Courtney Manaia
Foodstuffs
New Zealand

On remembering Gene Gagnon:

My association with Gene Gagnon and his firm begin when I was SVP at a building materials/home supply retailer. Gene and his team delivered stunning improvement for a large, automated DC�more than he promised. Gene was one of the supply chain pioneers, using engineered labor standards geared to fairness and software to produce individual associate metrics. His accomplishments are embedded in today�s labor management systems�with benefits for any DC environment having more than 100 employees.

Your brief description of labor standards omitted two important elements�required management use of observations for associate coaching and management accountability for results and actions. Gene Gagnon included these vital, on-going processes-- from the floor supervision to the facility general manager.

Labor standards are becoming increasing important for WMS providers, as a key differentiating factor. However, there remains resistance some unions or from ill-informed human resources management, who view the concept as intrusive �big brother is watching.� Just as productivity gains continue for transportation routing coupled with real time GPS, knowledgeable managers will push for labor standards based on return on investment and fairness for associates.

For new facilities, the ideal blend is DC design coupled with WMS startup that includes engineered labor standards implementation (shortly after facility startup). For existing buildings, a careful labor standards implementation provides extremely high return on investment�such as 50% from improved industrial engineering (e.g. order selection path) and 50% from improvement for those associates with lower productivity.

Engineered labor standards will become more pervasive for DC�s in the next decade�thanks to the groundwork by Gene Gagnon.

John White

White Supply Chain and Operations