Today’s highly competitive omni-channel environment requires supply chain leaders to have real-time visibility into labor performance metrics. After all, a company’s most significant asset is its employees, and often a supply chain’s most significant cost is labor.
A labor management system (LMS) reports daily productivity by compiling employee data to help managers make informed decisions and optimize labor resources even during peak times.
What are the benefits of an LMS?
Although LMS got its footing in grocery retailing, all verticals can benefit from implementing an LMS. The benefits of an LMS include:
- data collection and reporting;
- employee upskilling;
- simplified time tracking and attendance;
- ensured labor law compliance;
- positive company culture;
- employee retention;
- productivity improvements;
- labor savings; and
- improved management decision-making.
How does an LMS work?
At its core, an LMS replaces paper-based time tracking and schedules. Managers can track and evaluate warehouse teammates’ performance and create incentive-based compensation programs to improve employee engagement. Employees benefit from increased transparency, convenience, and flexibility when understanding how to perform a task and the duration the task should take.
An LMS uses daily reports to display picks per hour and units per hour metrics on dashboards, which calculates the employee performance percentage (EPP) used to reward the most productive employees (should an employer chose to implement incentives) or identify areas for improvement.
Incentive pay can be calculated based on group performance, task, experience, quality, etc. RF devices can also be used to record individual or departmental labor activities such as travel distance and worker fatigue. LMS drives organizational culture to focus on continuous improvement, mentoring, and coaching to ensure employees understand the expected level of effort.
An LMS can be integrated into a warehouse management system (WMS), enterprise resource planning (ERP), time and attendance systems, or a payroll application. A basic LMS allows warehouse managers to track employee time and attendance and create schedules. An advanced or rules-based approach LMS can predict how many employees you’ll need to staff a future shift.
Managing a workforce is not easy, especially in a labor-constrained environment. Poor labor management can negatively affect your bottom line, increase costs, reduce productivity, and potentially increase turnover rates.
Supply chain leaders require real-time visibility into labor performance metrics to ensure productivity and profitability targets. The goal of an LMS is to help managers measure and motivate their workforce by simplifying daily work tasks. With increased productivity, return on investment (ROI) can be less than 16 months.
When choosing the right LMS platform, consider the following:
- What are your specific needs and challenges?
- What is your current workforce size?
- How complex are your operations?
- How are you currently managing your workforce?
- Are there any criteria unique to your business?
- Are you seeking an LMS module or standalone?
- Do you prefer on-premise or cloud-based LMS?
- Do you require predictive analytics?
- Do you require engineered labor standards (ELS)?
The duration of an LMS implementation depends on the size of the company, scope, and complexity. Typically, LMS implementations are completed within six weeks to 28 weeks. Proper change management is an important factor.
It’s important to have frequent communication with warehouse staff articulating the benefits of an LMS that can be achieved through newsletters, infographics, town hall meetings, or small group meetings.
Ashley Rhodes is a project manager, Supply Chain Systems for St. Onge Company. She leverages more than 14 years of professional experience successfully guiding business strategy with established and emerging technologies to achieve maximum operational impacts. Her professional history includes experience in supply chain optimization, distribution center layout/design, and leveraging supply chain execution systems.
