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- July 16, 2007 -

 
   

Sara Lee Foods Finds LMS Value

 
 

Labor Management Drives Savings, as the Company Standardizes Distribution Processes, and Finds a Way to Achieve Continuous Improvement

 
 

 

SCDigest Editorial Staff

For Sara Lee Foods, as with a growing number of companies, labor management was the logical next step for driving continuous operational improvement.

SCDigest Says:
A key trend also seems to be that companies are turning to labor management after a series of other supply chain improvements (Warehouse Management, network redesign, improved warehouse layout, etc.) that have delivered results but are starting to plateau.

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“We asked: ‘What’s the next level we can take our supply chain to?’” said Mike McGee, Director of Logistics and Supply Chain Strategy. “For us, labor management was part of that answer.”

Sara Lee Foods is a multi-billion manufacturer and distributor of many well-known household brands, including Sara Lee, Jimmy Dean, Ball Park, Hillshire Farms and others.

Labor management has significant value and benefits on its own. But a key trend also seems to be that companies are turning to labor management after a series of other supply chain improvements (Warehouse Management, network redesign, improved warehouse layout, etc.) that have delivered results but are starting to plateau. With most companies pushing strongly from the top for continuous improvement, labor becomes an obvious potential next phase strategy.

“We always ask how we can continue to drive value into our business and help the customer drive value into theirs,” McGee added.

Sara Lee recently executed a successful supply chain network redesign strategy, moving to a network of “mixing centers” that could ship a full or near full line of product across brands to its retail customers. Part of that effort also involved strong process standardization across the mixing center DCs, as well as a new warehouse management system (Manhattan Associates).

In deciding to adopt Labor Management software (also from Manhattan), Sara Lee took what it calls an “Integrated Engineering Approach.” Key elements of this strategy included:

  • Discrete standards at the individual operator level across facilities, while accommodating the nuances of each distribution center layout and operation.
  • Use of “Endorsed Methods” for tasks to leverage best practice.
  • Development of common practices across the network for the human resources component of labor management (e.g., coaching, counseling).
  • Labor management software that provides a platform for building a common set of fair and equitable metrics across each DC in the network.

Sara Lee Sara Lee Foods has now implemented Labor in two sites, one of which is managed by a 3PL, with a further roll out across eight more sites planned. At each site, approximately 10 areas and functions are put on standards. Consistent with so many other companies that implement LMS, when Sara Lee “turned on” a new area, especially those that are labor intensive such as order picking, McGee said they would find operators were working at just about 70% of standard. Within approximately 10 weeks, most operators would be working at near 100% - a significant gain.

“Early on, the gain is about 5% per week,” McGee said. Although he declined to offer a specific total labor cost savings, McGee did say Sara Lee was achieving cost reductions “within the typical estimates of 5-15%.” One thing that was a bit surprising to Sara Lee was the ability LMS gave them to better understand, control, and reduce indirect time in the DC – time not specifically associated with defined tasks like putaway or picking.“We found there is a lot of opportunity in indirect labor,” said McGee. McGee also emphasized the importance of installing operator confidence in the system, and used the analogy of bar code scanning. Operators trust that when they scan a bar code with an RF terminal, that transaction is being accurately recorded, he said. It’s just as important to show operators how the labor data will be collected, often using these same bar code scans, and how that data is used to calculate performance.

Additional LMS Benefits

In addition to the overall labor cost savings, Sara Lee has found the following benefits from Labor Management:

  • Improved accuracy
  • Improved throughput
  • Additional capacity in each facility
  • Reduction in temporary workers and over time hours
  • Reduced turnover
  • Improved employee morale
  • Better ability to understand performance of each facility in the network, and to do root cause analysis to drive improvement in under performing areas.

“Labor Management is enabling us to solve problems and find opportunities,” McGee concluded.

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