DC Velocity - March 2014

techwatch

NOT SO LONG AGO, THE USE OF LABOR MANAGEMENT software (LMS) was pretty much limited to warehouses and DCs, where it managed the activities of workers who pick, pack, and ship orders. But that’s no longer the case. As more retailers begin filling Internet orders from store inventories, they’re starting to use the software to oversee those same activities within their retail outlets.

As the name suggests, labor management software is designed to
measure individual worker activity—say, case picking or putaway—
Although labor management systems have been
around since the late ’80s, their use really took
off during the economic downturn as companies
sought ways to rev up throughput without hiring
additional workers. Now, it appears these systems
are about to get a similar boost from the omni-
channel revolution—the push by retailers to sell
merchandise through multiple channels, both dig-
ital and physical.

There are a couple of reasons for that. First off, the omnichannel phenomenon has changed the game in retail DCs.

Operations that once primarily filled orders for pallet and case quantities are suddenly finding themselves picking a lot more individual items, which is significantly more labor-intensive (and thus, costly). “With the omnichannel push, companies are finding that there are increased labor requirements with the discrete order picking that is the hallmark of direct-to-consumer fulfillment,” says Jason Franklin, director of sales engineering at Knighted, an Intelligrated Company. That’s led many retailers to turn to an LMS to make their distribution operations more efficient, he says.

The other part of the story is that order fulfillment is no longer the
sole province of warehouses and DCs. With the advent of the omni-
channel revolution, more retailers are filling orders placed online
from their store stocks—which means some store workers now find
themselves picking merchandise from the back room or front of the
store and packing the orders for shipment. But
order fulfillment and shipping have proved a
huge challenge for stores, which may not be set
up to handle these tasks. A recent survey con-
ducted by DC VELOCITY in conjunction with
the ARC Advisory Group found that store ful-
fillment activities overwhelmingly lack the effi-
ciency and precision of execution found in a DC.
So it’s probably no surprise that software
vendors like Manhattan Associates and JDA
are seeing more retailers employing labor man-
agement systems within their stores to manage
in-store picking. Typically, the
LMS is linked to the store’s
order management system.
“As retailers start to perform
new processes within the
store in support of omnichan-
nel commerce—like pickup
from the store or fulfillment
from a store—a bigger per-
centage of store budget will
go to nonsales-type activities
and processes,” says Peter
Schnorbach, senior director
of product management at
Manhattan. “That’s going to
drive retailers to want to opti-
mize processes and manage them just the way
they do in the warehouse. They want to measure
how long it takes to do things. They want to put
standard processes in place across all stores in
their network.”
As retailers seek to bring their in-store fulfill-
ment operations up to DC standards, look for
more of them to invest in labor management
software to help manage store workers. “The
smart retailers are trying to figure out how to
establish a repeatable process that they can
put into every store,” says Schnorbach. “They
have to bring the discipline that exists in their
warehouse into the store if they want to do this
[omnichannel fulfillment] well.”