techwatch
For best results, add carrot
DOES YOUR WAREHOUSE MANAGEMENT SYSTEM OFFER
your workers “carrots” for stellar performance?
In a bid to track DC productivity, many companies have
started deploying the labor management software that often
comes as an add-on module for a warehouse management system (WMS). But before committing to a particular labor management package, they should make sure it offers the capability
to set up a performance incentive program for DC workers.
Many top WMS vendors—RedPrairie and Manhattan, to name
a couple—and consulting firms such as TZA include some way
of calculating incentives in their labor solutions.
Under these programs, warehouse workers are offered incentives for meeting pre-established unit-based performance
goals—like picking or putting away X number of items or cases
per hour. By the way, all labor management software is predicated on companies’ using bar codes, radiofrequency identification, or voice technology.
The software uses these systems as the basis
for tracking. For example, every time a warehouse worker scans a bar code or verbally
confirms that he or she has completed a task,
that action gets time-stamped. The software
notes all of those time stamps and then creates a record of activity for that worker on a
given day.
Although some labor management systems use historical averages to set general
benchmarks for tasks such as picking or
putaway, that practice has attracted criticism. Consultant Phil Obal, for one, argues
that this approach is “inherently unfair to
employees and reduces the pay-for-performance benefits of
incentive systems.” The problem, he explains, is that no two
warehouse operations are alike. There are bound to be differences in, say, warehouse layout from one operation to the next,
which means travel distances for workers retrieving or putting
away items can vary all over the map. A system based on historical averages provides no way to take those differences into
account, making equitable comparisons difficult, if not
impossible.
Establishing goals that are fair, accurate, and effective will like-
ly require the development of engineered standards. Basically, an
industrial engineer comes in and determines how much time it
takes for a high-performing worker to complete a task and then
uses that data to set a performance baseline
for each warehouse activity. Obal advises
warehouse managers to give some thought
in advance regarding the depth of detail
they want in their standards. “The challenge
with engineered labor standards is how
detailed do you want to be,” says Obal, who
is president of Industrial Data &
Information Inc. (IDII) in Tulsa, Okla. “For
every vehicle such as a forklift, do you have
to know its speed, how fast it accelerates,
and how fast it decelerates?”
Once the goals for worker performance
are set, the incentive module then automat-
ically calculates employee pay. Obal notes
that the better labor
management systems
will not only keep track
of output but also moni-
tor accuracy. If it’s later
determined that the
wrong item was picked,
for instance, the worker’s
score can be recalculated
to reflect the error. “You
don’t want the guy to be
sloppy,” says Obal. “You
want the guy to be accu-
rate both at a slow rate
and a fast rate. When
there are errors because
the guy has picked the wrong item, you
have to ding him.”
At the end of the week, the incentive
module automatically calculates the work-
er’s pay based on his or her performance
during the reporting period. Although
incentives are generally monetary, some
companies reward outstanding perform-
ance with perks like additional vacation
time or a meal on the company. “Some peo-
ple want gift cards or time off,” says Obal.
“With the recession, though, many just
want the money.” ;
