News and updates about the Supply Chain Suite for Dynamics AX, a collection of advanced supply chain management solutions developed that extend the base functionality of Microsoft’s powerful Dynamics AX ERP system.
In my last post about Labor Management, I indicated there were three cornerstones to the program – Planning, Monitoring and Measuring. This is nothing new to those who are familiar with Labor Management and engineered labor standards. For those who are still not sure how Labor Management and a discrete engineered standards program can help improve productivity with minimum capital investment, let’s look at why Labor Management continues to be a topic of discussion.
Labor Management for distribution centers is a continual topic about supply chain journals, market analysts, and presentations at every trade show. Why does this program seem to continue to have such media coverage but the embracement by companies is still not as mature as things such as warehouse management (WMS), automation (MHE) and other technologies? Particularly when the benefits of a Labor Management implementation are presented at 15-30+% – sometimes as high as 45% – without major process changes?
To answer this, let’s address where the ROI really is in a Labor Management implementation, how you can avoid the common pitfalls, and most importantly how you can achieve sustainable success that is promised from engineered standard measurements, real-time monitoring and labor planning.
If you think you don’t need Labor Management because you already have Units Per Hour (UPH) and complex WMS reports that show key metrics by department or even individual, think again. Remember, you cannot manage what you do not measure! If you are only measuring the units per hour by function, than that is all you can manage to. And the variation is orders and products is enough to make this an inconsistent measurement. (Okay, if all you pick is one item of the same size in the same quantity from the same location – then yes, UPH is fine.)
Regardless of the economy, companies always need to know what it costs to run their business. Labor is one of the largest costs and Labor Management is designed to help you manage it. Additionally, Labor Management has evolved to provide real-time planning, quality monitoring, and dashboards that make it easier for managers and supervisors to know where the opportunities lie for improvement.
For those still unsure of if Labor Management is a priority, or for those that have already dismissed the benefits as being realistic, let’s debunk the myths.
In order to achieve these savings and not approach the common pitfalls, it’s important that companies focus on the fundamentals. While this list of 4 items does not encompass an complete implementation plan, these are definitely the foundation to success:
Hopefully this has given you a solid starting point for considering Labor Management as your next initiative. In my next series, we will look at a roadmap of 7 key habits to instill into your operations management team to exceed the expectations and become a true learning organization on continuous improvement.
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