Work Force Management in the Distribution Center and beyond

With contributions from Joe Vernon

In the first blog we learned that a WFM application is a tool to help drive labor savings. It provides data, visibility and a mechanism for performance feedback and planning and forecasting labor requirements. WFM includes a ‘pay for performance’ capability that aims to induce the work force to consistently exceed an average work standard. WFM is manifestly intended to have a positive economic and holistic impact on the operation. To tap into the power of WFM there are a few fundamental project tasks and guidelines associated with successful WFM projects and to the establishment of solid standards.

Technology-based projects tend to suffer from the onset of what Machiavelli describes as the “…incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it.” WFM projects greatly benefit from strong management sponsorship, which they tend to attract based on their favorable ROI pegged to labor savings. Regardless of the project’s visibility and potential impact, the execution and design of the project often falls on the shoulders of a small team. Sometimes if the WFM is packaged upfront with the WMS, the trials and tribulations of getting the WMS live can bankrupt the enthusiasm and impetus to even execute or properly follow-up with a WFM project. Best practice is to put together a strong WFM team and manage the WFM project separately from the WMS project. They can run in parallel but give WFM the proper attention and impetus for success.

A WFM project is separated into four distinct deliverables and aligned into these phases as required:

  1. Reporting
  2. Standards
  3. Planning and Forecasting
  4. Pay for Performance

You can run these individually or somewhat in parallel. Reporting and Standards can be lumped together but must precede Planning and Forecasting and Pay for Performance. Reporting can be as simple as putting in the standard activity codes and then turning the integrations on between WFM and WMS. Managers run the reports on these activities and the associated users and can start to see trends and educate the work force on the data. This is a good starting point for giving users ‘the experience of it’ and stimulating the thought process for the next step which is establishing standards.

Standards are the foundational data elements for a successful WFM project. The WFM captures all the labor movements within the three dimensional space of the warehouse and assigns a duration or time to complete that task. If most of the warehouse activity is system-driven, then the WMS ‘leads’ the work force and pushes the work to the users. This gives the operation greater predictability and span of control of where and when a task is performed. A user is ‘scored’ on how well they executed a task against the time standard. When you construct the standards follow solid IE protocols and meticulously gather and analyze the data. Take your time and measure, measure, measure.

The Planning and Forecasting aspect of WFM extends the use of the standards to forecast how much labor is required to complete some given volume of work. A download of orders, purchase orders and work orders coupled with activity like scheduled appointments and cycle counts provides the demand data for WFM to calculate the ‘work load’ for the day or shift. The demand goes through a ‘what if’ analysis that recommends the labor required to complete. This phase is best executed several months after standards have been in place and properly analyzed and adjusted.

Pay-for-Performance is the capstone activity for a WFM project. When you are sure the standards are time-tested, reliable, credible and accurate, then you can look for a level of performance that would reasonably deserve extra pay or some reward. The incentive level must have a reasonable stretch factor associated with it. You can apply the incentive to team scores as well. Take great care in formulating, testing and communicating the pay–for-performance program. And build a program that rewards work that is not only fast but accurate and safe. Standards, planning and pay incentives will mature and empower an operation and its workforce. Transparency and accountability improve any organization. An ARC survey showed that 41 percent of respondents were using WFM and incentive pay in the warehouse to increase the productivity of their associates.

A majority of the respondents who used incentive pay were satisfied with the results and had received noteworthy gains in productivity. In addition to productivity improvements, other notable benefits realized were:

  • Fewer labor grievances
  • Decreased turnover
  • Some poor employees went elsewhere
  • Employee satisfaction increased

You will hear of a wide range of results, but the combination of the potential savings and benefits are difficult to resist.

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