We recently sat down with enVista’s Vice President of Technology, Tom Stretar, to hear some of the most frequently asked questions he and his team receive about Labour Management Systems (LMS).
What is a Labour Management System (LMS)?
An LMS is a supply chain execution system that:
- Defines the best way to perform a task using Lean principles
- Calculates the expected time a task should take
- Provides real-time feedback
- Measures and reports effectiveness
Why should companies consider an LMS project?
Distribution centers and retail stores typically operate at 60 to 70 percent of their potential without an LMS. This can be for a number of reasons:
- Metrics are unaligned with company expectations
- There is a lack of clear expectations for the supervisors and employees
- Performance feedback is not timely, which prevents immediate corrective action
- There is a lack of formal employee and supervisor change management training
A labour management system can address each of the above issues, enabling organisations to operate at a much higher level of efficiency, accuracy and cost-effectiveness.
What are the main components of a labour management project?
Every labour management project should consist of preferred work methods, work standards, program training and LMS software.
- Preferred Work Methods (PWM) – While standard operating procedures (SOPs) define what to do for a particular task, PWMs describe in detail how to best perform a task. The PWM is the basis for the employee training program.
- Work standards – These are the expectations, or goals, that are developed in conjunction with the PWMs. Work standards are determined in one of three ways:
- Reasonable expectations – Based on the historical average of the volume of units divided by the total number of hours to produce the work
- Multi-variable standards – An engineered approach that takes into consideration multiple factors such as lines, units, cube and weight to determine the time necessary to complete a task
- Discrete engineering standards – This is the most accurate form of an engineered labour standard, considering equipment used, actual travel distances and actual product sizes
- Program Training: This typically consists of change management training, employee observation training in the usage of preferred methods, employee coaching and counseling and LMS software application end user training. This component of the LMS program is the most crucial in ensuring project success and ongoing sustainability.
- LMS Software: The LMS software provides visibility to the opportunity through the following means:
- Calculation of the expected goal time based on the quantity of work to be performed and the engineered labour standards
- Provides near real-time feedback of comparison of the actual time to the calculated time
- Standardised labour reporting at the facility, team, task and individual user levels
- Cost to Serve Metrics
What is the typical Return on Investment (ROI) of an LMS Project?
The ROI on an LMS project depends on the type of engineered standards that are implemented.
The following table represents the three ranges of savings opportunities.
The typical improvement opportunity by DC and store task types are shown in the tables below.
What is typical profile of a company that should consider an LMS?
Organisations with a payroll of $2 million or more and/or a minimum of 50 full time employees should consider implementing an LMS.
This type of organisation will benefit from improved productivity and reduced overall supply chain costs. Other common factors include:
- High seasonal workforce usage (i.e., temporary workers for peak holiday season)
- High turnover
- An inexperienced workforce
- A greenfield facility
- Large investments in material handling equipment (forklifts, pallets jacks, turret trucks, or order/stock pickers)
- Considering an incentive plan
How long does it take to implement an LMS?
The time to implement an LMS depends on the type of standards that are developed and the vertical market of the company.
For facilities that want to begin with labour reporting based on transactional history and no labour standards, the typical duration would be six to ten weeks, depending on the complexity of the outbound shipping profile. For example, a facility that handles pallets would be on the lower end of the expected duration, while a facility that handles pallets, cases and eaches would be on the higher end.
Get enVista’s Labour Management System Support
Whether you’re just starting to build your labour management program or you’re ready to start implementing an LMS, enVista is here to help. Reach out to us to speak with a labour expert who can get you the support you need.
