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Focus: Distribution/Materials Handling

Feature Article from Our Distribution and Materials Handling Subject Area - See All

From SCDigest's On-Target E-Magazine

- July 14, 2014 -


Logistics News: Somewhat Quietly, Labor Management Systems for Distribution Continue to Drive Big Operational Improvements

Cloud based LMS and Systems that Also Consider Material Handling are Two New Trends


 SCDigest Editorial Staff


Labor Management Systems - a combination of engineered standards and software to track an individual's productivity in the DC - have not been much in the news of late, but continue to drive value and cost savings at dozens of new DCs every year.

SCDigest Says:

Productivity improvements in areas such as order picking can be as high as 30%, meaning, for example, that at the start of a program workers may be operating at 70% of standard, and rise over coming months to near 100% for a given task type.
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At times, stories on LMS have been popular in the trade journals, but it seems not so much recently. It also doesn't seem like there have there been that many marketing programs by providers focused just on LMS of late, so its profile in the market seems to have decreased over the past few years.

"I think with the market for WMS still fairly strong and all the focus on omni-channel and eFulfillment, LMS just isn't at the top of the priority for some of the vendors right now," says SCDigest editor Dan Gilmore.

But experts tell SCDigest that doesn't mean labor management isn't still growing strong, and delivering big benefits to companies that adopt LMS.

For example, Tom Stretar, who heads the labor management practice at consulting firm enVista, noted that the unit had record results in Q1 this year, bringing in more than $1.5 million in revenue from services related to LMS - certainly some indication that the LMS market is healthy.

"The labor market is strong right now, especially in retail distribution, e-Commerce fulfillment, and food manufacturing environments investing in large LMS rollouts," Stretar told SCDigest.

Labor management programs in general combine three major elements:

1. Determination of the "best method" to do each task, from order picking to truck loading, in a DC

2. Development of discrete engineered standards for these tasks, taking into account all the physical moves required for each piece of work.

3. Software that can use those standards to develop dynamic goal times for the specific of each piece of work and then report on performance against those standards at an individual level. That means, for example, that the goal time for a pick on the bottom level will be somewhat longer than the standard for a pick at the chest-high golden zone. Workers (and teams) can therefore be evaluated on performance as a "percent of standard."

There are other aspects to LMS as well. Today's better LMS software systems now include powerful labor planning capabilities, support "coaching" and other management practices, enable incentive pay programs and more. And as the consultants will all tell you, the "change management" aspect is critical to having a successful LMS implementation.

(Distribution/Materials Handling Story Continues Below )


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Productivity improvements in areas such as order picking can be as high as 30%, meaning, for example, that at the start of a program workers may be operating at 70% of standard, and rise over coming months to near 100% for a given task type.


It is common to see overall productivity gains in the mid-single digits for the entire facility. In addition to productivity gains in direct tasks such as picking and replenishment, DCs implementing LMS usually see a sharp drop in "indirect time," meaning unproductive minutes spent not working on a specific task.

Nafe Hagen, an LMS expert at JDA Software, says that "The labor market is steady right now."

He also sees an important trend:

"Most propsective customers are looking past the basics of labor, capabilities which are just assumed must be there," Hagen told SCDigest. "Most customers are interested in how to be better at the overall labor picture versus just using the labor reporting."

He says this includes the planning of labor requirements, scheduling of tasks and hours, the ability to perform trend analysis and most importantly to look for where additional gains can be achieved beyond those that come from basic labor reporting.

enVista's Stretar also says he see Cloud-based LMS software starting to gain some traction.

"With LMS not being a mission critical system and a low-risk application as compared to a WMS, LMS software vendors that are leveraging cloud computing as their deployment offering are gaining some marketplace traction," Stretar says.

Dinesh Dongre, a Vice President at supply chain software provider Softeon, says another LMS trend is growing interest by companies in including DC resources - primarily various kinds of lift trucks - in the planning process."


"Companies not only want to know what kind and number of associates they'll need by are throughout the day, but also what kind of equipment will be required," Dongre told SCDigest. "They also want to constrain work released to the floor not only by labor capacity but also by equipment capacity."

One important question for many companies adopting a new WMS is whether to implement labor at the same time, or as a phase two of the project after the WMS has been up and running successfully for awhile.

Most - but not all - choose the latter approach. We'll discuss both sides of this issue next week.

Are you bullish on labor management? Why or why not? Let us know your thoughts at the Feedback button (email) or section (web form) below.

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