Cliff Holste
Materials Handling Editor
| SCDigest Says: |
 The current economic situation has companies scrambling to reduce costs with a greater sense of urgency that perhaps ever before.
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Labor Management Systems, which combine labor planning and reporting software with engineered standards and “best methods” for doing each task in a distribution center, have grown tremendously in popularity over the past several years. In that time, adoption of LMS has rapidly moved from its primary roots in the grocery and food service industries first to other segments of retail, and then also to 3PLs, consumer goods manufacturers, parts distribution, and many more industries.
LMS typically delivers a solid and very consistent increase in DC productivity and corresponding reduction in DC labors costs – sometimes as much as 30% at the high end, and commonly in the 10-20% improvement range.
Several factors in the current environment are making the opportunity to adopt labor management even more attractive than the usual benefits. These include:
Extreme Pressure to Reduce Logistics Costs: While that cost-reduction pressure is always there at some level, the current economic situation has companies scrambling to reduce costs with a greater sense of urgency than perhaps ever before. Labor management can deliver costs savings quickly and predictably.
DC Consolidation: Many companies have reacted to the slowdown by consolidating distribution facilities, often resulting in bigger operations and, in some cases, creating a level of operational confusion. The consolidation may push the size of the DC workforce above the level where LMS usually makes sense (from as low as 30 to almost 100, depending on whom you ask), and labor management can actually help bring order to a somewhat chaotic operation.
Potential Card Check Legislation: The strong likelihood that some form of so-called “card check” law that would make it much easier for distribution center employees to unionize has companies looking at a variety of strategies to potentially stopping a union from forming in the first place, or minimizing the impact on costs and throughput if it does. (See Is Your Distribution Management Team Preparing for Card Check Law Potential?)
Labor management can play a key role in either scenario.
“By putting in a labor management system now, particularly one that includes incentive pay, associates may be much less interested in organizing,” said John Pearce, a consultant at Cornerstone Solutions, on a recent videocast from Supply Chain Digest and The Supply Chain Television Channel. “They may be concerned that if they decide to unionize, they may risk losing that incentive pay.” (To view the complete broadcast, please go to: The Time is Right for Labor Management Systems.)
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