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Is It Time for a Labor Management System? 3 Cornerstones for Getting Ahead

by Bridget McCrea
Contributing Writer,

Few would argue the fact that labor costs eat up a good portion of any company's annual budget. Knowing this, monitoring and tracking workforce efficiency would logically be a top concern for companies looking to operate smarter, better, and faster - but that's not the case. In fact, labor management often falls by the wayside - and then stays there - during enterprise implementations.

In his recent blog, Plan, Monitor and Measure - The Cornerstones of Supply Chain Labor Management, strategic supply chain consultant Brian Lindenmeyer said, "It's surprising how many companies have not yet considered labor management as their next initiative. Especially since most companies would agree that you first need to measure what the current state is to understand if the future state is an improvement, right?"

Companies are bridging that gap with solutions known as Labor Management Systems (LMS), many of which integrate directly with Microsoft Dynamics and enable the management and tracking of labor activities for distribution-based operations. They typically incorporate real-time interaction with warehouse systems and are generally deployed within the four walls of the warehouse. Once the data is collected, the LMS reports on labor activity and then benchmarks that information against the firm's internal, historical data and established labor standards.

Some companies are catching on to the value of automated labor management. A mature market by supply chain software standards, the LMS sector's market penetration currently stands at around 45 percent (compared to 80 percent for Warehouse Management Systems, for example), according to Gartner, Inc.'s research vice president Dwight Klappich. He says 23 percent of companies currently have a "fully deployed" LMS while 22 percent have "partially deployed" systems. Another 10 percent of shippers say they are currently exploring their LMS options, per Gartner's internal research.

To companies looking to get ahead in the labor management game, Lindenmeyer highlights the three cornerstones as planning, monitoring, and measuring. A labor management program should be designed to support all three of those and each of them require one another to be effective. "You cannot plan or monitor what you do not measure, just as you should not try and measure what you do not need to plan or monitor," Lindenmeyer points out. "For example, if you have one person handling returns out of 100 people, is it necessary to measure that returns process with five variables and discrete handling and traveling characteristics?"

With labor costs continuing to rise and LMS vendors developing more sophisticated solutions that blend well with Microsoft Dynamic's capabilities, expect to see more firms exploring their automated labor management options as a way to save time and money.

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Image credit: kadmy / 123RF Stock Photo

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About Bridget McCrea

Bridget McCrea covers business and technology topics for various publications. She can be reached at bridgetmc@earthlink.net.

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