activities such as each-picking, packing individual orders
for parcel shipping, more quality checks on order accuracy,
returns, and value-added services such as gift-wrapping.
All of this requires more labor. Labor management software can be an effective way to drive greater levels of productivity from the work force to improve omnichannel’s
profitability.
“The retail industry has always been a heavy user of LMS
primarily because of the high level of process uniformity
in the distribution center, the high number of employees,
and the reliance on seasonal workers during the holidays,”
says Chuck Fuerst, director of product strategy at software
developer HighJump. “The shift to omnichannel is chang-
ing the reasons why retailers need labor management and
in many cases, magnifying the need for it.”
Retailers that had used rudimentary standards without
the help of an LMS find themselves needing a more formal
program and system. Those companies already using a
sophisticated approach and system for labor management
are realizing the need to change and expand how they use
it. Below are a few examples of how the omnichannel dis-
tribution center concept is changing how retailers use labor
management software:
• Tighter controls on quality and accuracy: Without the
store as a middleman, the omnichannel distribution center
has a bigger role to play in the development and preservation of a retailer’s brand. Thus, quality has joined speed as
an important key performance indicator for retailers. “A
mis-pick or a delayed order has the ability to truly impact
the customer experience,” says Brad Anderson, director
of supply chain services at Fortna, a firm that helps companies improve their distribution operations. “Retailers
that historically focused on labor standards tied to speed
and individual worker productivity are adding standards
to encompass quality and accuracy or using factored performance standards, which deduct from an individual’s
overall productivity score for errors.”
• Shared work force across channels: Using engineered
labor standards, LMS calculates the precise amount of time
it should take to complete each task. When most workers
in a facility are performing the same type of work for most
of the day, it is easy to compare performance on an apples-
to-apples basis without sophisticated technology. However,
when multiple channels share a single building and a single
work force, the lines get blurred. An individual worker
might perform a variety of tasks across multiple channels
during the day. Labor management in an omnichannel
facility requires that the warehouse management system
(WMS) understand what an individual is working on at a
given time. It must be smart enough to equate that work to
an engineered labor task and communicate this information
to the LMS so that it can attach the correct standard values.
Many companies are upgrading their WMS technologies
to enable this. Commonwealth Supply Chain Advisors
recently conducted a poll of distribution companies to
understand what factors are driving them to upgrade their
WMS software. For companies that already had a best-in-class WMS solution, functionality gaps were cited as the
main driver, with labor management being in the top three.
• Real-time performance visibility: With a larger work
force and a greater reliance on temporary labor during the
holiday season in particular, more companies are using
real-time reporting on labor metrics to help with training.
“Visibility to individual employee performance in real time
allows for on-the-spot training and behavior correction,
which can be more effective than giving feedback after the
fact,” says Anderson of Fortna. Not long ago, real-time
performance visibility required a tightly integrated tier one
WMS/LMS combo. However, as the tier two LMS systems
have evolved, most are capable of communicating with the
WMS in frequent batches, enabling near real-time information availability.
• Labor in the store: More retailers are experimenting with
filling e-commerce orders from their stores. This is causing
stores to behave much like DCs and be concerned with pick
methodology, inventory locations, and labor productivity.
“In-store fulfillment is getting a lot of attention, and while
we’re not seeing many companies implement full-scale
LMS solutions in the store yet, we’re definitely seeing companies start to pay close attention to store labor statistics,”
says Fuerst of HighJump.
The advent of omnichannel commerce has created a
more complicated supply chain. It is becoming more
important to measure labor efficiency at the point of order
fulfillment—whether at the store or in the DC. Labor
management software will continue to be a key enabling
technology to allow retailers to operate profitably in this
new environment. c
IAN HOBKIRK IS THE FOUNDER AND MANAGING
DIRECTOR OF COMMONWEALTH SUPPLY CHAIN
ADVISORS, AS WELL AS A BLOGGER FOR DC VELOCITY.
