Labor Management - Distribution Group extra.pdf · • Labor Productivity Improvements: ... Change...

© 2014 MHI®

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sound recordings of seminar sessions. All rights reserved.

Sponsored by:

Presented by:

Peter Schnorbach

Senior Director, Product Management

Manhattan Associates

Labor

Management: There’s More Than

One “Right Approach”

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2

Copyright 2013 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.

Agenda

• The Various Approaches to LMS

• LMS Approaches in Detail

• From Time Tracking to Incentive Pay

• Emerging Trends in LMS

3


Pay based on

performance

against engineered

standards, quality,

and safety metrics.

The Various Approaches to LMS

Track discrete

elements against

actual

performance of

each individual

against the

engineered

standard.

… and

compare

against

reasonable

static

standards.

Turn it on and

track what is

going on…

Time Tracking

& Throughput

Reasonable

Expectancies

Engineered Labor

Standards

Incentive Based

Pay and other

Advanced

Functionalities

Effort Benefit

4


Agenda





5


Time Tracking and Throughput - Effort

Effort • Least amount of effort required among the 4 different approaches.

• Requires an IT system rollout. Need to consider hardware

procurement , administration staff and the typical IT project phases.

Also need to consider if hosting is an option.

• A change management and training plan needs to be developed.

The amount of effort can vary depending on project goals. Sessions

can include Managing LMS Output/Reports, Coaching Employees and

LMS 101.

• Staffing to rollout and maintain the LMS

• 3 – 5 month is a typical project duration. IT tasks

cover most of the work.

6


Time Tracking and Throughput – Benefits

Provide Real Time Measurement and Reporting - Allow for real time visualization of

utilization and throughput metric:

• Review Direct vs. Indirect Labor Thresholds and Establish Benchmarks

• Focus on Time Utilization (reduction of Approved and Unapproved Time)

Labor Productivity Improvements

• 10% Labor Productivity Increase

7


Reasonable Expectancies – Effort

Effort • Change Management and Training:

o Identify Job Function Best Practices and document into Standard

Operating Procedures (SOPs) inclusive of system interactions

o Train Supervisors and Associates on the best practices though the use of

video and on-the-floor time

o Conduct on the floor observations to ensure adherence to SOPs and to

provide real-time feedback to Associates

o Moderate amount of effort compared to the 4 different approaches.

• IT System Rollout: Increased design, configuration, testing and go-live

complexities. Higher IT hardware expenses to support.

• Building Reasonable Expectancies: Increased staffing to support

Reasonable Expectancies (RE’s)

• 4 – 6 month project duration. IT, Change

Management and RE’s cover most of the work.

8


Reasonable Expectancies – Benefits

Benefits • Developed, Implemented, and Coached Best Practices: Identify,

document, and train supervisors and users on operational best practices with

each job function on the floor.

• Foundation Created for ELS: RE’s can be a stepping stone to Engineered

Labor Standards.

• Increased Utilization of LMS system: More bang for your buck.

• Labor Productivity Improvements: 15% labor productivity increase.

“Make All Associates Better”

9


Team Standards

• Account and Measure

Associates on Team

Supported Operations – Incorporate those

Associates into the labor

program who do not

utilize the WMS

Reflective Standards


Associates in Support

Roles – Account for the time of all

Associates in the

warehouse

Training Curves


Associate Training – Identify an Associate who

requires additional training

and/or is fully trained by job

function.

Reasonable Expectancies – Benefits

Dynamic PF&D

• Adjust PF&D via

Exceeded Threshold: – Accumulated Weight

– Accumulated Work

Hours

– Specific time of day

Quality Measurement

• Integrate accurate

overall measurement of

Associate and team

performance

Safety Measurement

• Integrate safety

measurement of

Associate and team

performance

10


Engineered Labor Standards - Effort

Effort • Significantly more effort required than RE’s.

• IT System Rollout: Considerations for High Availability and Disaster Recovery

environments – Higher IT hardware expenses.

• Standards Building and Validations: Industrial Engineering team to build and

maintain standards.

• Change Management, Change Management, Change Management…

• 6 – 10 month project duration. IT, CM, and ELS cover most of the work.

Definition of 100% of Standard:

The level of performance achievable by a trained worker,

working at a reasonable, safe pace following

a standardized set of procedures.

11


Standards Maintenance

Engineered Labor Standards

Following the completion of an LM project, the

business will be responsible for maintaining the

integrity of the standard time values.

The standard values calculated should not

warrant any change unless one of the following

occurs:

• SOP change

• Layout change (Although this is usually only an XYZ change)

• Equipment change

• Business change (ex: significant product switch from heavy

product to light product)

12


Change Management – Sponsorship

• Demonstrate leadership and set the example

• Every level aligned in purpose and communication:

– VPs → Directors → Managers → Supervisors → Associates

– If sponsorship does not cascade through each level, the change

will not be successful with Associates.

– Avoid “black holes”.

• Supervisor role is the most difficult and important:

– Must lead the change at the Associate level, while absorbing a

significant change in their own job.

“Cascading Sponsorship”

Everyone will have their doubts at some point –

raise them in the appropriate forum so that they

can be addressed.

13


Change Management – Training

Day Date Technical Training Soft Skills Training Duration LM

Ch

am

pio

n

Cli

en

t IT

Su

perv

iso

r

En

gin

eer

Lead

Asso

c

Man

hatt

an

HR

Su

perv

iso

rs

Oth

er

Notes

LM Install 60 min X Y

Installation of LM application and review of LM

installation instructions, DB maintenance processes

and application installation procedure.

Configuration Training 3 Days X X Y

Review of all Labor Management and WM

configuration requirements and configuration of LM

test environment.

Location Mapping and Machine

Timings120 min X X Y

UMT Software Setup and

Configuration60 min X X Y

Engineering Standards 101 60 min X X X X Y

60 min X Communication, not Training

Change Management (Your Role in LM) 45 min X X X X YHow the supervisor and lead roles change with DCP

in place

SOP Observation Training How to Teach Associates 90 min X X X X Y YTrain-the-trainer for supervisors and leads (tell,

show, do, review)

Practicing to Teach SOP Training to

Associates60 min X X X X Y Y Practice and applying learning in safe environment

SOP Training 30 min X X X Y By Functional Area

Holding Associates Accountable for

Performance90 min X X X X Y

Basic LM Navigation and

Procedures90 min X X X X Y Y

Engineered Standards Validation 60 Min X

Engineering Standards 201 Standard Validation Training 90 min X X X X Y Y201 Prepares Supervisors for

Go-Live; Run By Dept aligned with Go=Live dates

Engineering Standards 101 30 min X X X Y By Functional Area

Labor Productivity Measurement

and Reports

Preparation for Go-Live:

Communicating With & Observing

Associates

90 min X X X X Y Y

Go-Live 30 min X X X Y By Functional Area

Managing Labor Using LM Output 90 min X X X X Y YEnd of 1st Go-Live week; applies what was learned in

Reporting Review

Handling Conflict 45 min X X Y

* = Timing to be aligned with introduction of new performance discipline process

Leader(s) of Training

Insert Client

Logo Here

Formal Communication Update (Recommended)

LM Implementation Training Plan

Training Topic Audience

14


Change Management – Communication

Engineered

Standards General

Information

Engineered

Standards Best

Practices and Tips

for Success

HR Related

Disciplinary

Information and

FAQs

Associate EP%

Reporting Copies of

Each SOP

Sample Communication Board

15


Change Management – Branding The Program

F.R.O.G. Fair Reporting Of Goals

16


Engineered Labor Standards – Benefits

Units 15 25 10

Locations 5 1 10

Cartons 6 3 5

Replenishment Picking Receiving

Assoc 1 Assoc 2 Assoc 3

Distribution

Standard 85% 70% 110%

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• Tracks Associate time from clock-in to clock-out via integration with T&A system or LM kiosks

• Work Unit information is integrated to LM and/or entered in via kiosks

• Track ANY type of job in the system – On Standard, Off Standard, Cleaning, Maintenance, etc

• Monitors Direct Labor vs. Indirect Labor

• Records Actual vs. Estimated task time

• Reports on Labor Performance, Efficiency, Quality

• 30% Labor Productivity Increase

Maximizes Labor Efficiency Through Performance Monitoring

and Reporting

Engineered Labor Standards – Benefits

18


Incentive Based Pay

Effort

• Significantly more effort required compared to ELS.

• IT System Rollout: Increased hardware sizing and

considerations for High Availability and Disaster Recovery

environments – Higher IT hardware expenses.

• Incentive Pay and Advanced Functionalities: Designed to

meet business requirements and within business policies. HR

and executive management participation.

• 8 month – 1.5 year project duration. IT, ELS and

Change Management cover most of the work.

19


Incentive Based Pay

• Incentive Based Pay: paying an employee for his/her performance

• The harder the employee works, the more money they will receive

• The slower the employee works, the less money they will receive

• Up to 45% Labor Productivity Increase

• Functional Depth: Best-in-class LMS systems

should include…

• Employee Performance Percent

• On Standard Percent

• Utilization Percent

• Quality Audits

• Safety Incident Rate

• Overtime Incentive Pay

• Trainer, Trainee, Reflective and Team Pay

Benefits

20


Advanced Functionalities

Forecast

Schedule

Monitor

Plan

Historical Data

Production Data (WMS)

• Forecast workload and schedule

resources based on historical

information.

• Reduce Indirect, Temporary and

Overtime costs through enhanced

visibility to labor requirements.

• Reduce labor costs through optimized

allocation of resources to work.

• Validate labor capacity meets projected

throughput requirements.

• Proactively add or eliminate workforce

based on cost, qualifications and

performance.

• Manage actual workload based on real

time production information.

• Monitor progress of work against actual

performance.

• Modify labor allocation in real time

based on actual performance.

• Identify production bottlenecks through

real time visibility to changes in

performance levels, production orders or

labor shortages.

Planning Workflow Best In Class

21


Agenda





22


4 Levels of Labor Measurement

• Incentive Pay based on Labor

Standards » Pay them based on performance

against engineered standards, quality,

and safety metrics

• Engineered Labor Standards » Track discrete elements against

actual performance of each individual

against the engineered standard

• Reasonable Expectancies » Turn it on and track what is going on

» And compare against reasonable

static standards

• Historical Averages » Turn it on and track what is going on

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Historical Average

Reasonable

Expectancy

Engineered/ Discrete

Pay Incentive

Productivity Improvement

Time Utilization Process Improvement Activity Pace

Single Element

Standard

Multi Element

Standard

45 %

30 %

15 %

10 %

23


The Path to Engineered Standards Can Be Gradual

• “Crawl, Walk, Run” approach = smaller effort, less savings

• Engineered Standards up front = faster speed to benefit

Activity Reporting

(standard wms

function)

Reasonable

Expectancy

Forecasting, Planning

and Monitoring

Engineered

labor Standards

24


Agenda





25


Engagement Techniques of the 21st Century

Informational flow with minimum

hardware or application restrictions.

Information available anywhere and

anytime.

Integration of Quantitative and

Qualitative information.

Gameification capabilities for engaging

employees.

26


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Questions?

Visit us at booth 4513

Peter Schnorbach

Senior Director, Product Management

Manhattan Associates

[email protected]

mailto:[email protected]

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