Engineered Labor Standards

Engineered Labor Standards

Aug 05, 2015
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Blog, Supply Chain, Thought Leadership, Engineered Labor Standards, Labor

Flexibility is the Key to Achieving the Highest Level of Labor Efficiency. Read more...

Flexibility is the Key to Achieving the Highest Level of Labor Efficiency

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Today, industry research shows that many companies are using labor standards based on units per hour to improve labor performance. After a labor assessment is performed of these operations, many times it is found that they can boost the units per hour by at least 20%. The first question that is often asked is “Can’t we just take those units per hour and just raise them by 20% to set the new standard?” That approach could work, but the problem is that a units-per-hour standard doesn’t flex well as your business and products change – or as your associates have to walk further on some days to get all of their picks. It doesn’t take into account all the possible differences in order makeup or pack changes. When any of those variables change, a units-per-hour standard blows up, because it can’t bend very well.

What a standard does is take the work content that you do and builds out time expectations. So instead of asking “How many picks do I have to do today?”, you know that you have to do 400 minutes worth of work. It takes all those determinants and builds out the amount of time it should take to do the work.

If you’re in a grocery store, how long does it take you to ‘pick’ your shopping list? Well, that depends on what’s on that list. How far do you have to walk to get to the milk case? Is the bread aisle nearby or across the store? So, the further you need to walk, the more time you’re going spend completing your list. Similarly in the warehouse, case, cube, weight, slot height, distance traveled, number of orders, number of totes completed, etc. all affect work time. For put-away, number of pallets handled and the amount of vertical time all must be taken into account and processed by the labor management system to determine exactly how long it should take to do that work. Then people work against time versus working against units.

The reason that “bendable” labor standards are so important is two-fold. First, you’re going to coach and possibly discipline people if they fall below it. But also, you’re basing your incentive program on the standards. By moving to a dynamic engineered labor standard you can use your baseline to effectively manage your workforce. This prevents a units-per-hour expectation from becoming a negative experience for your employees (including all those who are doing a good job).