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7 myths of labor optimization debunked

With order fulfillment and replenishment activities accounting for up to 65 percent of total warehouse expenses, labor management software (LMS) proves invaluable in offsetting escalating labor costs. From increased efficiencies, accuracy and throughput to reductions in errors, training time and turnover, LMS repeatedly demonstrates its ability to transform omnichannel fulfillment operations. But despite these obvious benefits, many warehouse and operations managers have reservations about utilizing an LMS in their facilities.

Intelligrated has deep experience implementing LMS in a variety of fulfillment operations. During these engagements, we've heard many of the misperceptions that persist about the limitations of implementing an LMS. What follows are the top seven LMS myths we encounter as well as explanations to set the record straight about these incorrect assertions.

1. We don't need labor optimization because we don't have enough direct labor resources to get a reasonable ROI. Even with a smaller number of resources, LMS can often provide sufficient process improvements by getting more out of the current workforce, thus putting off the need for making capital investments or other large cash outlays. Improving a resource from 50 percent to 75 percent performance effectively adds a half-resource to the area with a minimal investment in coaching. 

2. My WMS provides me with all the productivity information I need. A WMS reports only on single metrics like cases-per-hour and doesn't account for foot travel and product attributes. Unlike an LMS, a WMS also does not enable a cultural change or ways in which to maintain a continuous increase in performance (via coaching).

3. My processes are well defined, so I don't need an LMS. The old management adage, "you can't manage what you don't measure" applies here, in that there's no way to know if processes are efficient if you are not tracking them. LMS reveals which employees are (and are not) following processes, and can uncover individual organic process changes that should be shared and added as a standard operating procedure. 

4. Real-time feedback is needed to make proper staffing decisions. The truth is, there is an opportunity cost for evaluating labor movements in real time. Staffing decisions should be based on longer (15- to 30-minute) time frame "trends" to avoid losing the time it takes to move from one area to the next.

5. LMS provides only metrics around activities that have already happened. By continually gathering key performance data and other metrics, LMS allows warehouse managers to predict with high accuracy how they will process work in the future. This provides benefits to both short term, daily plans as well as longer-term staff planning for seasonal or other high volume events. 

6. My wave process drives efficiency through planning and execution. While wave processes can drive process efficiencies, LMS also addresses the peaks and valleys as other priorities make their way into the daily product flow. 

7. Optimizing each area separately optimizes the entire facility. Without a complete view of the entire facility, operations managers are unable to see how different areas feed or starve other sections with work. LMS takes a holistic look to tune the entire facility.

In addition to solving all the above challenges, Intelligrated's GoalPost® LMS is designed to address the ever-increasing complexities associated with omnichannel and e-commerce order fulfillment. Consult with one of our labor management experts to learn how you can realize the many benefits of LMS. 

Three keys to implementing a successful zone-skipping strategy

For e-commerce companies in particular, shipping represents both a significant expense and opportunity for competitive advantage. But shipping doesn't happen in a silo. Finding an optimal strategy requires taking a holistic view that reconciles shipping with fulfillment operations in the warehouse and considers the relationship between the two.

A zone-skipping strategy might be just what the doctor (or CFO, customer service team, chief supply chain officer, etc.) ordered. When successfully implemented, having e-commerce fulfillment operations take on sortation steps traditionally reserved for the parcel carrier can reduce transportation costs and improve transit time. 

How can you translate this theoretical benefit to real results? Step one is to understand the fundamentals of zone skipping, outlined in part one of this blog series. When it's time for the rubber to hit the road, be sure to account for these critical steps to lay the foundation for success.

1. Identify opportunities for zone skipping

For starters, where is your fulfillment center in relation to parcel hubs? Operations shipping from coast-to-coast have plenty of zone-skipping opportunities, due to their shipments going through several local and regional hubs as they travel long distances. This is important because the more steps in the shipping process, the greater the opportunity for cost savings and faster delivery speed.

And secondly, how many orders are headed to the same region? A sufficient volume of shipments routed from the fulfillment center to a specific regional destination hub is what makes a zone-skipping plan cost-effective. Therefore, identifying the most common destination regions to leverage existing delivery volume is a critical step in building a zone-skipping strategy that fits operational needs.

2. Coordinate with parcel carriers

Although zone skipping takes some of the sortation and transportation burden off of parcel carriers, this does not mean that retailers and e-commerce operations totally assume the shipping process themselves. Coordinating with parcel carriers to integrate zone-skipping with their shipping operations makes the most of these efficiencies. This includes working out shipments destined to bypass local hubs and go straight to regional destination facilities, proper labeling and other practices to ensure a smooth implementation that delivers on efficiency promises.

The implementation of zone skipping should result in big operational savings from the carrier. It is important to negotiate and develop clear cost savings expectations prior to implementing a solution. 

3. Build the right sortation system

Analyzing operational characteristics helps determine what demands will be placed on the sorter and define the best-fit sortation solution. The top considerations are:

  • Throughput - The sortation solution must offer sufficient throughput capability to meet average and peak operational needs. A sweeper sorter is a simple, reliable option for lower throughput requirements in the 6,000-item-per-hour range, while other technologies like sliding shoe, cross-belt, tilt-tray, bomb bay or push-tray sorters can handle rates in excess of 20,000 items per hour. 
  • Layout flexibility - One of the key challenges of zone skipping is finding sufficient warehouse space to house the volume of diverts necessary to presort orders and keep them flowing to the right region. Destination pitch indicates how closely divert chutes can be located, with a lower pitch enabling a higher chute density. This metric is critical for operations with limited floor space, and also guides technology choice and configuration. 
  • Product handling capability - Sortation technologies can handle a wide range of package sizes and types, with these capabilities ultimately dictating what is considered "conveyable" and "non-conveyable." The greater the volume of non-conveyable items, the lower the payback on a zone-skipping sortation investment. Making this assessment upfront is critical, as is considering future demands since the variety of packaging types used by e-commerce operations can fluctuate due to a variety of external factors. 

Hungry for more zone-skipping insights? Stay tuned for the final installment of the zone-skipping blog series to see how omnichannel fulfillment operations can use it to their advantage. 

Put wall consolidation boosts DC throughput and accuracy

Put walls play an increasingly vital role as a growing number of distribution centers (DCs) take on the challenges of fulfilling e-commerce and direct-to-consumer (DTC) orders. By providing an effective way to consolidate diverse products across multiple channels within a DC, put walls make it easy to enhance efficiencies, especially when integrating manual and automated picking workflows with enabling technologies. 

Simple concept, dramatic results

A put wall is a cabinet-like structure divided into a series of compartments or "cubbies." One side is typically staffed by one or more operators who put product into assigned cubbies for their respective orders. On the other side, operators pack out the orders or place them on a takeaway conveyor that whisks them off to shipping.

Where and how put walls are integrated into the workflow can vary widely, depending on the operation. The basic idea is to consolidate demand from various upstream picking processes into the appropriate cubby. This enables efficient multichannel fulfillment of both mixed- and single-SKU orders, making put walls ideal for DCs that handle multi-line orders with regular promotions, flash sales or seasonal specials.

What's driving put wall adoption?

As consumer expectation and the number of online orders continue to rise, the pressure is on retailers to address several significant challenges:

SKU proliferation - Consumers continue to buy more online, and even infrequently ordered items must still be accounted for in the fulfillment process. Put walls make it possible for DCs to optimize upstream picking processes and take on more SKUs, while still maintaining accurate and efficient order consolidation and pack-out processes.

Changing order and product profiles - From small to large products to orders of widely varying sizes, product and order profiles are dictating ever more flexible order processing and handling requirements. The newest generation of configurable put wall technology offers a ground-breaking shift from fixed to customizable cubby sizes, delivering slotting gains of up to 35 percent just by optimizing existing rack space. 

Omnichannel diversification - To keep up with the demands of omnichannel fulfillment, many retailers are converting their existing facilities to incorporate e-commerce distribution into their supply chain operations. Retailers are integrating put walls to deal with these complexities, reduce order errors and increase throughput. 

Enabling technologies enhance put wall efficiency

Put walls can be enhanced by technologies that direct the operator to place items in the correct cubby, then confirm when an order is complete. These enabling technologies - including radio frequency (RF) scanners, and voice- and light-directed systems - deliver return on investment relatively quickly by significantly improving operator productivity and order accuracy. 

In picking and putting scenarios, these technologies enable intelligent order batching, adjustments and order allocation among wave, pick and put. Built-in slotting logic also provides ergonomic benefits to pickers, minimizing fatigue by keeping as much movement as possible inside the "golden" zone. 

To learn more about put wall solutions and the enabling technologies that enhance them, click here

Zone skipping 101: Sortation to shrink shipping costs

Zone skipping has emerged as a logistics strategy with great potential for e-commerce operations, for its ability to reduce shipping costs and increase delivery speed. But how exactly does it generate these returns?

The first step in building a successful zone skipping operation is understanding the fundamentals. This initial installment of a three-part blog series on zone skipping introduces the basics of the strategy and how it drives benefit for e-commerce fulfillment operations.

What is zone skipping?

Zone skipping is a sortation strategy that involves the retailer or e-commerce fulfillment operation taking on sortation steps traditionally reserved for the parcel carrier. Packages are pre-sorted at the fulfillment center rather than by carriers. In a traditional workflow, all shipments are picked up by a carrier, sorted at a local facility, again at a regional hub and once more at the destination facility before final delivery. Zone skipping effectively "skips" several stops between the fulfillment center and delivery to the customer. It involves pre-sorting orders at the fulfillment center, thus avoiding sortation steps by parcel carriers; routing orders directly to a later phase in the shipping process for final delivery to the customer. 

How is it a competitive asset for e-commerce operations?

Shipping operations are complex, so why would retailers want to get involved? Simply put, efficient delivery plays such a critical role in meeting customer service expectations and protecting margins that any efficiency gains are very much worth the effort. According to the 2016 UPS Pulse of the Online Shopper study, of the more than 90 percent of buyers who reported abandoning shopping carts, at least half cited unexpectedly high shipping costs as the reason for doing so. Further confirmation that in today's demanding e-commerce climate, speed and low shipping costs are critical to success. 

Therefore, every supply chain process must be conducted as efficiently as possible. Otherwise, they cost businesses time and money. Much of the cost savings driven by zone skipping come thanks to reduced transportation costs, as the pre-sorting enables orders to bypass parcel carrier sortation and the associated transportation between carrier hubs. As operations face dimensional weight (DIM) and other pricing pressures, finding ways to reduce dependence on parcel carriers can help keep shipping costs in check.

Zone skipping also saves time, simply by reducing the number of steps required to move an order from the fulfillment center to the final destination. As Amazon, Walmart and other giants battle it out over free two-day shipping and consumers become accustomed to fast and free delivery, cost-effectively saving time is critical to keeping up and protecting margins. 

ROI: How do the savings add up?

Operations can expect a savings range of 25-75 percent per parcel with zone skipping. Of course, no two operations are the same, so exact ROI figures vary but a company can completely recoup $1 million spent on a sortation system in less than a year. Assuming a conservative savings estimate of $0.20 per item in shipping costs, multiplied by 200,000 to 500,000 order per week, operations can generate between $40,000 and $100,000 in weekly savings. Furthermore, the benefits of zone skipping extend beyond shipping costs. Faster shipping times can improve customer retention and even help win new online business as consumers comparison shop for the best combination of speed and total cost. 

For tips on getting a successful zone skipping operation off the ground, stay tuned for part two of the blog series that will cover implementation. In the meantime, check out the Intelligrated white paper, Zone skipping strategies to reduce e-commerce shipping costs

Webinar recap: Making the case for business intelligence in labor management

In Intelligrated's most recent On The Move webinar, "Using business intelligence to improve your labor force," I explored the potential of marrying business intelligence's (BI) visualization and self-directed investigation capabilities with the known benefits of labor management software (LMS). Combined, these tools are helping businesses better identify labor performance and efficiency problems, and exploit opportunities to improve performance. 

To start the discussion, I explained how BI has evolved from an IT-driven pursuit to a self-service model - one where the end user performs the data investigation process and generates visualizations that help companies quickly see trends in large sets of information, as well as identify anomalies. To demonstrate the value in this concept, I presented a visualization of the traffic patterns in the greater Los Angeles metropolitan area. By briefly looking at the visualization, one can quickly determine L.A.'s traffic pattern origins and its concentration of commuter destinations. 

Then, I transitioned the focus of the discussion to the use of BI in labor, specifically about how advancements in self-service tools and their integration with LMS are enabling companies to gain new labor insights and address labor market challenges. With the integration of BI into LMS, companies can take traditional performance analytics a step further, by digging deeper into root cause analysis that often belies original assumptions.

To demonstrate the impacts of self-directed investigation in labor management, I walked through three case studies using Intelligrated's BI tool.

1. Shipping error investigation. A repeat missed shipment problem on third shift warranted further investigation by the labor manager. The initial investigation suggested that those shipping errors likely stemmed from the temporary workers on that shift. But upon further investigation, the BI tool revealed that the temps on third shift were outperforming the full-time employees (FTEs). From that insight, the manager inferred that the company's third shift temp training was producing higher performance rates than those of its FTEs. The manager could then take steps to refresh FTE training and address the performance problem. 

2. Star performer identification. Most organizations typically have one employee who regularly outperforms others. Through self-directed investigation, BI visualizations help labor managers uncover the specific work patterns that allow these individuals to excel. In this example, I demonstrated how an investigation revealed one shipping staff member who far exceeded the performance levels of his co-workers. Further digging with the BI tool uncovered that this person was especially skilled at processing cases. From a management perspective, this allows leadership to follow up with this individual, understand their processes and then pass these learnings on to other staff members. 

3. Execution monitoring. One of the primary goals of resource planning is to make sure the current labor force can execute the daily volume of work. The BI tool enables management to evaluate volume levels throughout the day and adjust the labor force as needed. Visualization clearly shows where the resources and execution plan do not line up. Management can use this tool at different points of the day to see a snapshot of performance versus execution, and then plan accordingly. 

To learn more about the potential of BI in labor management, please view this webinar in its entirety

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