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Dave Foxall 5 Ways to Optimize Labor Management System Software Spend

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 By Dave Foxall

Maximizing the Benefits of Labor Management System Software

As most organizations are well aware, the state of flux the economy is experiencing (both in the U.S. and globally) has urged the sort of caution that often puts business improvement projects like HR software deployment on the backburner. However, some HR automation projects carry such implementation benefits that delayed deployment is ill-advised. Due to the potential cost savings that can be realized, optimizing Labor Management System (LMS) software is just such a tactic; and should seriously be considered regardless of the macro-economic environment.

By the looks of things, it appears that organizations are heeding this advice, and a recent Aberdeen Group report (Warehouse Management Excellence) has found that top companies are increasing utilization of their resources and are leveraging both warehouse and labor management system software to improve the efficiency of their operations. However, maximizing this business software is where the bulk of benefits lie and where your organization's energy should be spent. Here are the top 5 ways to maximize your cost savings and payback with labor management system software.

Labor Management Software Strategy #1: Engineered labor standards

The key to labor management applications is the use of engineered labor standards; the 'should-take' times and procedures against which employee activity is measured in order to arrive at productivity efficiencies.

In Modern Materials Handling (MMH) magazine's 2010 reader survey of labor management systems, 76% of respondents had implemented labor standards based on, "time and motion studies, along with preferred methods for performing a task." The key is for an organization to take the time to configure and apply standards, with operational variables if they apply (i.e. seasonal flux), specific to their operation.

LMS Maximization Strategy #2: Efficient labor scheduling

Scheduling is a fundamental function of any Labor Management Software solution. The MMH survey found "70% use the systems to plan and schedule the amount of labor required for a given period of time, whether that is a shift, a week, a month or a quarter." Efficiencies go beyond warehouse staff. The CedarCrestone 2011 Systems Survey cites the impact on administrative/clerical staff: "organizations need fewer time and labor staff with the adoption of workforce management automation... those productivity improvements translate to reduced labor costs, which in turn contribute to a reduction in operational costs." Furthermore, MMH found, "77% are using the reporting functions to analyze labor performance and for future planning." More strategic users are able to use LMS-derived data to feed into their HR analytics and strategic decision-making.

LMS Maximization Strategy #3: Improved performance

The Labor Management Software data and information can be used for varying levels of performance management. The MMH survey found "62% are using the data to identify under-performing employees for coaching or performance improvement." With real-time monitoring, performance feedback can be timely and act as an instant solution to bottlenecks and other productivity-reducing problems.

LMS Maximization Strategy #4: Monitoring indirect time

Not all employee time is directly productive and while 100% productivity is unrealistic, Labor Management System solutions can help keep unproductive time to a minimum. The HighJump Software 2011 white paper, 5 Reasons You Can't Afford to Postpone Your Labor Management Project states, "A labor management system will help you pinpoint unproductive time in your warehouse. Identifying areas of 'indirect labor' – unproductive time that is not directly related to completing assigned tasks – will help you improve the utilization of your workforce and make money-saving changes." Additionally, as points out, with biometric components, a labour management system can also eliminate the costly practice of employees clocking in for one another or 'buddy punching'.

LMS Maximization Strategy #5: Include contingent labor

With the uncertain economy combined with the changing aspirations of a new generation of workers, the use of contingent labor is on the rise. Leaving contingent employees out of the labor software equation reduces the software's scope, efficiency and ultimately cost-effectiveness. The Aberdeen Group's 2010 report, Improving Cost and Quality Control within Contingent Labor Management found that organizations utilizing a workforce scheduling solution reduced their overtime costs by an additional 3% compared to those without such business software. However, when applied to contingent labor, the differential widened to 8% year on year.

The Labor Management Cost Saving Bottom Line

A fully-leveraged labor management system creates a more efficient use of resources, leading to reduced staffing costs compared to output and therefore a measurable increase in profit. Of MMH's readers, "91% said they had experienced productivity improvements as a result of implementing a labor management system. Of those, 60% said they had productivity improvements of between 10 and 24% and 22% reported improvements of more than 25%, including 7% who had improvements of more than 35%." A 'down' economy may be just the time to consider such a solution. End

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A fully-leveraged labor management system creates a more efficient use of resources, leading to reduced staffing costs compared to output and therefore a measurable increase in profit."


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