IT and labor

March 12, 2009
“In today’s economic environment it is more important than ever to align your labor costs with your company's revenue goals.” –Eddie Capel, executive vice president-global operations for software provider Manhattan Associates. Let me stress out ...

In today’s economic environment it is more important than ever to align your labor costs with your company's revenue goals.” –Eddie Capel, executive vice president-global operations for software provider Manhattan Associates.

Let me stress out the outset here: this post isn’t about information technology (IT) replacing OR eliminating people in today’s trucking and logistics workforce – no way, no how. Neither is it about removing people from the communication channel with customers.

Loyal reader Steve Myers from Moser Ford out in Berne, IN, made that oh-so-valid point in a comment on one of my IT posts the others day. "People buy from people, and establishing relationships is as important as any IT improvement,” he stressed to me. “I’d much rather talk to a receptionist than a ‘dial 1 for sales’ any day.”

With that in mind, though, here’s why the “labor schedule optimization” IT package from supply chain software provider Manhattan Associates got my attention. It’s simple, really – using IT to perform the mundane, tedious, time-consuming schedule planning so managers and workers can focus on more important things.

Nothing’s worse than being hunched over a spread sheet for hours, trying to figure out who should work what shift while accounting for the overall number of workers, skill levels, individual performance levels, length of shifts, overall workload, break times, seniority, and hourly rates – just to name a few. That’s just a waste of time for everyone – time better spent building those person-to-person relationships Myers talked about earlier.

"Our customer research and long experience working with distribution companies has shown that creating the optimal balance among scheduled labor resources, workloads, service level commitments and costs for a typical distribution center requires considering more than 80 million variables,” noted Eddie Capel, executive vice president-global operations for software provider Manhattan Associates. “That can substantially affect bottom-line labor improvements."

[Here’s a video clip describing how Manhattan’s IT package works – sure beats reading about it!]

Manhattan’s research indicates just getting a handle on all the boring intricacies of labor scheduling can save distribution centers (DCs) a lot of money – a savings of 6 to 9 percent with its labor optimization system alone, which is in addition to the 15 to 20 percent of savings the company said can be achieved by adopting its core “labor management” solution.

That’s a big deal because warehousing companies – like truckers – are under an amazing amount of economic stress right now, according to Brad Wyland, a senior research analyst with consulting firm Aberdeen Group. “With budgets getting tighter and executives being more methodical in their investment and allocation of funds for improvement projects, many organizations are taking a closer look at supply chain operations to identify strategic drivers that can have immediate impact,” he noted.

In a new study by Aberdeen entitled Five Key Steps to Optimizing Warehouse Management, the firm found the adoption of warehouse management systems (WMS) and peripheral IT applications is one way companies are achieving superior performance despite having less manpower and resources.

"The pressure mounting on today's warehouse managers isn't that different than yesterday, but the speed at which change is occurring is increasing and the time to adjust to those changes is shrinking," noted Wyland. "By automating many of the manual procedures necessary to process and distribute activities throughout the warehouse, today's warehouse managers can focus their labor force on improving operations and managing exceptions, versus spending countless hours managing paper trails."

An important caveat to all of this: it can’t be achieved without “buy in” from the front-line workers. Manhattan stressed this very point in a white paper it published called “Delivering Labor Excellence.”

“Too many software companies assert that their software is the answer to improved productivity. But, if a company does not take the time to ensure it has established best practices, all any software will do is monitor existing unproductive work habits,” Manhattan noted in its paper. “Even worse, it might give a false impression of success when performance levels are measured against historical units per hours (UPH) standards that are themselves flawed.”

It’s getting the support of front-line workers, though, that changes all of that. “Just as improvement is critical for defining the best way to perform each job, communication is crucial in creating a workforce that is willing and able to adapt to the new job methods,” Manhattan contends.

“Employee buy-in is absolutely essential to the success of a productivity program. Employees that don’t know what is expected of them, don’t know how to do their jobs or don’t care will ‘submarine’ the success of any project,” Manhattan continued. “Translating the executive vision for productivity improvement to the shop floor is about effective change management. A clear, well-executed communication strategy will ensure that all employees understand why changes are being made and how their individual performance impacts the overall operation.”

And even though this discussion is centered around the DC and warehouse world of work, truckers can glean some useful insights from these thoughts. Because at the end of the day, it’s all about becoming more productive with the resources at hand, while gaining time to make more personal connections with your customers. That’s what will sustain your business through these tough times, I think.

About the Author

Sean Kilcarr 1 | Senior Editor

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