There are several definitions and applications of “Labor Management”. The most basic description is the process and methodology an organization utilizes to manage their labor dollars.
Most Warehouse Management Systems have an application included within their system, but many companies operate without a formal WMS. Although some process is employed it is seemingly rare that an organization has a comprehensive methodology that includes and connects all aspects of managing labor costs.
All components of work need to be measured and standards need to be calculated for each process. A standard can be defined as the average amount of time it takes to complete the body of work. This is the starting point in calculating the cumulative labor hours needed to complete a work function. The measurement is also the first step in identifying waste and developing a culture of continuous improvement. “If you can’t measure it you can’t manage it. “
Standards enable an organization to measure individual and team productivity. Variance from the standard, both positive and negative, needs to be measured and a process needs to be in place to address both sides of the bell curve. Frequently organizations measure things but have no follow up in place to drive desired results. Accountability needs to be balanced with incentives, disciplinary actions and improvement opportunities (training)
“Everyone wants to know the score”. Metrics need to be visible and updated throughout the day to show individual performance and how the team is progressing towards the goal. This can be done on a white board or ideally on a monitor that is continuously updating.
An effective Labor Management process needs to include a comprehensive planning and re-planning component that ties back to the P&L. Standards drive a productivity rate that can be coupled with forecasted volumes to calculate variable labor hours. Variable hours combined with a fixed component drives total forecasted labor needs. These forecasts are measured against actual to create a long-term scheduling process and a daily reconciliation methodology. This is critical to ensure labor hours are in- sync with demand to guarantee service and financial targets are achieved.