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Your Labor Management Shelfware Is Costing Your Business

Feb 13, 2018

Does this sound familiar? When you purchased your Warehouse Management System (WMS), your vendor threw in their Labor Management System (LMS) as a perk. You worked for many months on your WMS project, planning the implementation and then testing until you thought you could test no more. By the time the go-live came around, everyone had implementation fatigue. Ensuring a stable system was all you could think about, even if the efficiency improvements weren’t quite what you’d expected or been promised. You just wanted to achieve pre-implementation productivity levels. And once the system was stable, everyone needed a break, and the LMS capabilities were relegated to shelfware. Month after month, they sat there untouched, languishing in the hustle and bustle of your warehouse.

But at what cost? 

Unfortunately, many organizations go through the exact scenario just described: The opportunity and cost savings their LMS can generate goes unrecognized. In fact, some go years without doing anything about their forgotten LMS, which is hard to fathom in light of the fact that these systems typically generate ROI in less than a year, often within six months of implementation.

That means every month your LMS is shelfware, you’re pouring money out the window.

Why Does This Happen?
Sometimes this occurs because the operations team is laser focused on meeting service levels and getting product out the door on time. They may not have time or incentive to consider other ways to drive efficiency beyond the new WMS unless leadership stipulates a need to reduce overhead by a certain percentage. It’s also certainly possible that companies are happy to generate only marginal improvements from the new WMS. Many are just glad to be through the project even if they’re not yet meeting business goals developed to encourage increased efficiency.

WMS and LMS Implementations – the Differences
The main difference between implementing an LMS and a WMS is that an LMS is driven by your operations team and focuses on the people and process aspect of your operations. It looks at why things are done and how to do them more efficiently. For example, you may look at your pallet shrink-wrapping and determine an associate can get off the lift truck twice instead of three times if shrink-wrapping happens at the end of the task versus in the aisle.

By contrast, WMS implementations are typically driven by IT teams and focus on how to replicate functionality for existing processes. For WMS implementations, operations and end users get involved toward the end of the project, which unfortunately can mean key exceptions or task-handling steps are missed. As anyone who has been through a full WMS install knows, it’s a big-bang project. There are months of mapping out the rationale, plan, and associated activities; integrations to consider; and considerable testing and training that need to occur before the cutover from a test to a production environment.

An LMS project is different because you don’t need it to ship product and deliver on customer service expectations (a reality which actually makes these projects easier to delay). This makes it less daunting, particularly because it can be implemented in a phased approach. You can select the activity with the largest labor pool first, such as picking, and then waterfall the rollout into areas such as replenishment or receiving once you’ve succeeded. This method builds positive morale among the workforce about the project and the benefits. Your team can continue to cascade the new functionality throughout the warehouse until it’s used in all areas. Just be careful not to cause bottlenecks by improving task handling so much in one area that it impedes workflow in another.

Now that we’ve got you thinking about your LMS, let’s look at when an implementation can happen in relation to your WMS project.

Approach 1: Your LMS Is Officially Shelfware
Even if your WMS has long been in place, you can always get moving on your LMS project. Particularly if your leadership team is requiring reductions in overhead costs, you’ve got a built-in method to achieve them. As mentioned previously, you can ease in slowly by just doing one area at a time without disrupting the whole warehouse. 

Approach 2: Implement the LMS Two to Four Months After WMS Go-Live
If you’re too far along in your WMS implementation to think about the LMS, try to earmark the project to occur a few months after the WMS is up and running. Despite implementation fatigue, you’ll still be able to fast-track cost savings with this approach. You also take advantage of not dealing with modifying the WMS and having to incorporate LMS capabilities which are a few versions behind.

Approach 3: A Joint WMS-LMS Implementation
Although this option means a little more work up front, it will pay dividends down the road. Remember, the longer you delay the implementation of the LMS, the longer you delay the savings it will generate.

The ideal time to work in the LMS plan is during the future state design phase of the WMS project. As you develop your best practices, be sure to incorporate Lean processes that reduce the incidence of wasteful steps or motion. It’s also important to include transactional data to track labor effectively. This is a good time to bring in an industrial engineer or consultant like 4SIGHT to guide your efforts.

Benefits of a Joint WMS-LMS Project
When WMS and LMS projects are in lock-step, everyone wins because the operations and IT teams need to work together for an optimized result. The most effective way to develop best practices is for the industrial engineer to work directly with floor associates to understand and confirm how they do their jobs every day. The engineer can work these processes into the documentation, factoring in opportunities to Lean out processes if associates feel the suggested change would work. The hourly associates and their supervisors are the ones who truly own these processes and can give the best insights into what works and how things could be done better—not their managers or the WMS designers. The industrial engineer or consultant guiding your project can develop these best practices as part of the future state planning phase.

Model Expected Results
By creating best practices and talking with operators, you’ll be able to establish a baseline for the results you should be able to achieve for inventory moves spanning both the WMS and LMS. This prevents situations down the road where you’re looking for labor data only to discover that what you need wasn’t included in the WMS modifications. WMS modifications can’t fully support or reflect the LMS piece if they’re not developed in tandem. Developers don’t assume anything about labor standards, and they need to have a full picture of the labor element to write WMS modifications correctly.

Validate Preferred Methods
Completing day-in-the-life testing prior to go-live is an opportunity to validate best practices. The LMS project engineer can also collect data to set a multi-variable reasonable expectation of the amount of time it will take to do a job, so you know what your starting throughput should be at go-live. If you expect throughput of 40/hour and your day-in-the-life testing only shows 20/hour, you know you may need to alter your staffing plan. Validating best practices in this way enables operations to achieve stability sooner and primes your operations team to complete engineered labor standards more quickly when they’re ready.

Leverage 4SIGHT to Unlock the Cost Savings of Your LMS
If you change your WMS technology but not the people processes, why would you expect to get different results? This is something 4SIGHT encourages our clients to think about when they delay their LMS projects. Ultimately, driving productivity and performance improvements is the responsibility of the warehouse operations team, and leaving your LMS to become shelfware is just leaving money on the table. No one wants to do that. Contact 4SIGHT today to learn more about how you can start planning your LMS implementation—and start the countdown to cost savings.

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