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Five Labor Management System Mistakes to Avoid

Jun 13, 2018

For every successful Labor Management System (LMS) implementation, there are five others poorly handled from the get-go. Get the most out of your system by reviewing the five common mistakes organizations make as they embark on these important projects. Knowing the hurdles will enable you to avoid the pitfalls as you improve employee productivity and generate savings quickly and effectively.  

Mistake 1: Overlooking the Need for a Dedicated Project Owner
Like any software implementation project, your LMS will take time and resources that can be difficult to allocate from an already-busy operation. Many organizations make the mistake of thinking two people can devote part of their time to the project—but this is shortsighted at best. Overseeing an effective LMS implementation project is a full-time job for one of your trusted team members. Two people spending half-days on the project doesn’t cut it. Why? Because these associates will always be pulled into the pressing situations that inevitably happen in fast-paced distribution operations. If they still maintain a foot in the world of getting customer orders out on time, that will become priority number one, pushing your LMS project to the wayside. 

Once your systems is live, the dedicated full-time resource can return to regular activities. Time requirements during the post-implementation maintenance phase should reduce to four to six hours each week. Make sure your LMS project lead, who is likely someone well-versed in your operations, doesn’t get poached by another team during your project. Others in your organization may become aware of the high-value knowledge this resource has gained across your operations and could try to lure them into a new role to support other parts of the business. This happens frequently and leaves a knowledge gap that can affect the timeline of your overall project. Protect your full-time resource throughout the duration of the implementation to keep everything on track.

Mistake 2: Handing Project Ownership Over to IT
Operations teams are often so busy trying to keep up with everyday distribution activities that they can’t imagine finding the time to work on an LMS implementation. So they will hand this task off to the IT team, which has experience in overseeing software projects. This is a big mistake. Although your IT team is likely well versed in technology, software, and project management, their goals will be completely different than what the operations team would have for defining project success.

An LMS is a people and process project with technology underpinnings. It isn’t simply a technology buy. IT will focus on getting the project completed on time and on budget, but they won’t be as invested in realizing the true benefits the system can derive. The benefits and the overall project rationale should always be owned by operations. In fact, the dedicated resource you select to lead the project should also be an operations staff member who will be enthusiastic about success because they really understand how the LMS can improve your everyday processes.

Finally, associates often revert to pre-system routines in IT-led LMS projects. This is because operations management may be less involved in the changes and just want people to complete assignments regardless of new processes. This naturally encourages workers to “do it like they always did” without spending the time needed to learn the new behaviors that will improve performance. The operations team should own the project’s desired results, best practices, and a need to implement a continuous improvement cycle.

Mistake 3: Assuming Corporate Benefits Translate to End Users
When C-level leaders think about the benefits of new supply chain software, they think in broad terms—blended averages for key metrics that may be used across multiple DCs. This is not the true value of the LMS. While these averages are good for managing the business overall (and many can be derived from the WMS), they aren’t effective for managing the individuals whose day in and day out performance levels will ultimately generate the ROI and ultimate value of the LMS. A CFO may want to see 20 percent productivity gains by improving the number of cases handled per hour. But they don’t understand the in-depth work that goes into calculating these blended averages.

Warehouse supervisors and managers do. They know each order is unique, which translates into a lot of variability in the actions required to complete it. Because of this, using cases per hour to hold an individual accountable is questionable because there are a lot of “excuses” as to why the metric wasn’t met. Employees could say the technology was slow, they had to travel all over the warehouse just to complete the task, etc. Supervisors and managers have to work through the small details to optimize each person’s activity against the standard to get the best results. 

Mistake 4: Misunderstanding the Role of the LMS
Many business leaders mistakenly believe their LMS will help them plan workforce and resource distribution. Initially it doesn’t. An LMS is designed to give near real-time feedback on an employee’s performance based on the tasks they’ve been assigned. It’s a tactical tool that helps supervisors determine where to focus their limited hours to drive higher throughput. It also gives supervisors and managers a cumulative view of area and direct performance.

Once the LMS is stable, it will begin to deliver its true value related to individual performance. Data will become increasingly reliable over time the longer the system is used. Operations will gain a better understanding of capacity and the variability that affects capacity. The tool also evaluates individual performance against engineered labor standard (ELS) in near real time, but it’s always good to review this information periodically with associates. If a supervisor can see an associate completed 120 assignments and should have done 130 according to the LMS, they can identify and discuss any issues and ways to improve. Perhaps the employee had to perform letdown replenishments that affected his picking time. This helps supervisors see who’s struggling and also which activity they maybe struggling with. From this information they can determine what adjustments need to be made.

Mistake 5: Underestimating the Amount of Data Needed to Build Standards
Companies often grossly underestimate the sheer volume of data they will need to build a reliable performance standard. But the data truly matters. You must have a detailed analysis of all processes and collect data to determine where to focus. Find the exceptions that waste time and see how often they happen. Cutting out a few seconds here and there per location visited across dozens of associates turns into hours saved every day. This translates into measurable improvements that can impact the bottom line and strengthen customer service levels. Essentially, this is the rationale for installing an LMS.

But achieving this nirvana takes work. Remember that having a small number of samples will result in greater variation. You can start with industry expectations for labor standards, but they may not be valid in your environment. These are simply a jumping off point and should not be used to hold individuals accountable. No two warehouses are identical, even if they are part of the same company. There are variations in layout and customer order profiles to name just a few examples.

Take the time to get as many data points as you can by studying and tracking associate tasks. Small time investments across associates, supervisors, and managers will support your data collection efforts tremendously. Thinking you’re too busy is just shooting yourself in the foot. As the old adage goes, garbage in, equals garbage out. With good data samples you can definitively say an average of occurrence is rooted in metrics rather than someone’s educated guess, even if that guess is based on their experience. This helps minimize excuses when holding people accountable.

How 4SIGHT Can Support Your LMS Efforts
4SIGHT has worked with many fast-paced organizations to evaluate and roll out their LMS. We have developed proven strategies to help mitigate each of the mistakes just described. Our engineers can guide you through what needs to be observed and what has little effect based on our experience, so you can collect the right data that provides you with the best value. We’ll focus on building the standards, so your team can focus on the people and processes.

We also understand the software and can be a neutral voice when it comes to the capabilities and limitations of the system. Our goal is to ensure you can achieve new levels of employee productivity and generate an ROI on your new LMS.

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