Labor management has proven to be a successful supply chain tool for managing costs related to labor. This is especially critical as labor is reportedly the largest cost center in any SCM facility. This also means that it provides the most significant cost savings opportunity. Labor management systems constantly evaluate, measure and adapt day to day labor tasks with the main goal of achieving the highest level of productivity and cost savings. Its’ functional counterpart, slotting, helps to identify SKU placement throughout your warehouse facility to reduce travel times, increase picking accuracy and increase asset utilization – all of which are key factors in optimizing workforce productivity. Slotting alone has saved companies upwards of $500,000 annually and can prove even more useful when used in conjunction with LMS software. Selecting a labor management system that is built into warehouse management software can make optimization efforts even more fruitful as it allows your team to pull data from one system to anther with little to no manual data entry (where many inventory errors occur) and test slotting plans while receiving measurable results. This can help to improve the success of your labor optimization efforts. Many SCM decision makers are hesitant to implement labor management software suites as there are common misconceptions or myths about their success and usefulness. Some of these myths include: full LMS functionality is available if I have a WMS, employee morale will be negatively impacted, LMS implementation requires significant IT resources and more. If your team can get past these concerns, find a functionally robust labor management system and implement it in a way that will help you meet your specific goals it is well worth the investment. To learn more about LMS and slotting contact Datex experts today at marketing@datexcorp.com or 800.933.2839 ext 243.

1. SUPPLY CHAIN
MANAGEMENT
BASICS:
LABOR
MANAGEMENT &
SLOTTING
BY: ANGELA CARVER

2. Why is Labor Such a Large Focus?
• Labor is reportedly the largest cost center in any supply
chain facility. For this reason it also provides the largest
opportunity for cost savings.
• Bad working habits, manual workarounds and errors in
reporting are just some of the day-to-day labor
challenges increasing supply chain labor costs.

3. What is Labor Management?
• Labor management is the constant evaluation,
measurement and adaptation of day-to-day labor with the
goal of achieving the highest level of productivity and
cost savings possible.
• In a recent SupplyChain247 article it was noted that the
average number of employees in the distribution center
increased to 278 people, up from 236 four years prior.

4. What is Slotting?
• Slotting is the process of determining the best place to
store each SKU in a facility based on a variety of factors
specific to each operation. The objective of slotting, or re-
slotting, is to reduce travel time, increase picking
accuracy and increase asset utilization of both labor and
warehouse space.
• MMH quoted TZA Consulting saying that strategic
slotting can average an 8% to 15% improvement in
picking and replenishment labor. For some of their larger
companies this equates to up to $500,000 annually.

5. Factors Considered in Slotting
• Slotting processes should take into consideration a
variety of operational factors. Some of the top
considerations should include:
– Unit and slot characteristics
– Replenishment requirements
– Families of items
– Velocity of movement
– Storage capabilities
• Slotting should be regularly evaluated to meet changes in
seasonal demand.

6. Slotting and LMS Working Together

7. Slotting and LMS Working Together
• These systems, when directly integrated and working in
unison perform two key functions for supply chain
operations:
– Labor metrics recorded can help determine if a reslot is
necessary
– LMS may be used to test the cost and benefits of a reslot plan

8. WMS with Labor Management/Slotting
• Not all WMS software is created equally. Some systems
have built in labor management functionality while others
simply integrate with third-party LMS systems.
• Selecting a warehouse management software suite with
a built-in LMS can allow your warehouse team to:
– Easily pull data from one solution to another with little to no
manual data entry
– Test slotting plans more easily while receiving more measurable
results

9. Overcome Top LMS Myths
1. If I have a WMS, I am getting full Labor
Management functionality
As mentioned earlier, not all WMS are created equal, which
means that not all of their LMS functionality are the same. It
is critical to evaluate whether they offer only traditional
labor productivity tracking or more robust features and
reporting capabilities.

10. Overcome Top LMS Myths
2. Employee morale will be negatively
impacted
Many management teams are often concerned that the
implementation of LMS will be poorly accepted by staff, but
the added tracking capabilities provide the capacity to
implement incentive programs. This not only encourages
staff to work harder, but also can help to identify those that
already do and felt as if it was not previously appreciated.

11. Overcome Top LMS Myths
3. LMS implementation will require a lot of IT
resources
Selecting a WMS with a built in labor management system
can help to reduce the IT resources required to implement a
traditional LMS software suite. A project of this type often
requires little to no implementation hours and limits IT
resources to simply the ongoing maintenance of the LMS
system.

12. Overcome Top LMS Myths
4. Labor management is primarily for retail-
related DCs
Labor management, while rooted in the retail distribution
industry, has proven to be a useful tool for many other
business sectors such as consumer packaged goods, third-
party logistics and industrial manufacturing. These facilities
are often just as complex and have as many, if not more
employees, making LMS a valuable cost savings tool.

13. Overcome Top LMS Myths
5. LMS results are over rated
Companies often think that reported or “promised”
improvements are not realistic or achievable in their
operation, but productivity gains of even 20% can result in
significant dollar savings that would not be possible
otherwise.

14. Top Functions of LMS/Slotting Software
• Planning and scheduling
– With the implementation of LMS warehouse managers have had
a more granular view of their labor. Productivity measures can
now be broken down by department, zone or employee.
– This more granular view helps to answer not only how productive
the workforce is, but how many people are needed at any given
time throughout the day.
– Functionally robust labor management software can evaluate a
variety of variables to identify what workforce mix is the most
efficient and cost effective.

15. Top Functions of LMS/Slotting Software
• Multi-task interleaving
– With staff spending nearly 50% of their day travelling throughout
your facility, significant labor resources can be wasted. Multi-task
interleaving directs users to perform multiple tasks in order to
make the most of each trip.
– The LMS will assign tasks based on operations in the warehouse
as a whole, task proximity and task priority. The software should
adjust task assignments as priorities and conditions change to
avoid bottlenecks due to congestion.

16. Top Functions of LMS/Slotting Software
• Multi-task interleaving

17. Top Functions of LMS/Slotting Software
• Intra-day labor adjustments
– While a best-fit labor management solution will help your
operation to forecast labor needs and develop the best schedule
to fit your needs, it must also address these factors as your daily
operations progress.
– Identification of bottlenecks and areas in distress can help your
management team to shift staff throughout the facility to ensure
delivery deadlines are met.

18. Top Functions of LMS/Slotting Software
• Connecting the store to the DC for omni-channel
fulfillment
– As more retailers adopt omni-channel strategies, more
responsibility is being shifted from the traditional distribution
center environment and into the brick and mortar stores.
– Having the ability to track in-store employee performance is a
must for these operations in order to determine what fulfillment
method is the fastest and cheapest.

19. Benefits of LMS/Slotting Implementation
• Workforce Visibility:
– Provides real time data to better manage and monitor your workforce
– Enables tracking and monitoring of each warehouse worker
• Labor Cost and Time Savings:
– Can help to reduce labor costs
– Saves processing and response time
– Helps to reduce wasted time and “deadheads”
• Improve Workforce Productivity:
– Helps to maximize the productivity of each warehouse worker
– Can help to identify productivity gaps, including those for workers whose
effort involves multiple steps
– Streamline operations by automatically assigning tasks to mobile (RF)
users
* https://www.datexcorp.com/solutions/wms/labor-management-system

20. Benefits of LMS/Slotting Implementation
• Make Better Decisions:
– Use real time data for improved decision-making
– Identify key trends so that you can plan and react accordingly
• Measure Workforce Performance:
– Objectively measures the performance of each warehouse worker
– Can help identify underperforming shifts or workers
• Plan and react effectively:
– Helps you to plan your workload
– Provides alerts and notifications enable you to react more quickly
– Enables you to identify, identify and react to trends
* https://www.datexcorp.com/solutions/wms/labor-management-system

21. Conclusion
• Labor management software is often overlooked as many
warehouse operators think their team is running at peak
performance. What they do not realize is that manual optimization
can only do so much and automation technology can evaluate a
significantly higher quantity of variables and make necessary
adjustments.
• While a 20% workforce productivity improvement may not sound
impressive, when this is spread across all staff throughout the entire
supply chain this can result in hundreds of thousands of dollars
saved each year.
http://www.mmh.com/article/labor_management_systems_the_very_near_future_of_lms
http://www.inboundlogistics.com/cms/article/putting-labor-management-systems-to-work/
http://www.scdigest.com/ONTARGET/12-01-25-4_LMS_Myths.php?cid=5431&ctype=content
http://www.mmh.com/article/resolve_to_reslot_your_warehouse
http://www.supplychain247.com/article/double_up_on_labor_efficiencies/news

22. Keep Up to Date on Supply Chain Issues
Follow Us on LinkedIn
Subscribe to Our Newsletter