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of 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 pro-
cess 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 changing the
reasons why retailers need labor
management and in many cases,
magnifying the need for it.”
Retailers that had used rudi-
mentary standards without the
help of an LMS find themselves
needing a more formal program
and system. Those companies already
using a sophisticated approach and sys-
tem for labor management are realizing
the need to change and expand how they use it.
Below are a few examples of how the omnichannel
distribution center concept is changing how retailers
use labor management software:
; Tighter controls on quality and accuracy: Without
the store as a middleman, the omnichannel distri-
bution center has a bigger role to play in the devel-
opment and preservation of a retailer’s brand. Thus,
quality has joined speed as an important key perfor-
mance 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 stan-
dards to encompass quality and accuracy or using
factored performance standards, which deduct from
an individual’s overall productivity score for errors.”
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. ;
Ian Hobkirk is the founder and managing director of Commonwealth Supply
Chain Advisors, as well as a blogger for DC VELOCITY. His blog, “Getting
it right in the distribution center,” can be found at http://blogs.dcvelocity.
com/distribution_center/.
