Once a compelling marketing promise, “Guaranteed One-Day Delivery” has now become a crucial operational requirement for e-commerce companies. As consumer expectations push the boundaries toward faster and same-day deliveries, businesses are grappling with the dynamic and complex challenges of logistics management. With labor costs soaring, often accounting for up to 70% of operating expenses, the pressure to deliver products faster while controlling expenses has become intense. In some cases, companies even execute and ship orders at a loss to meet the demand for rapid delivery.
To remain competitive and address these rising costs, businesses must adopt innovative labor management solutions in their supply chain management. These solutions not only optimize workforce productivity but also streamline operations, helping to negate the impact of high labor costs on the bottom line.
In this blog, we will explore effective models for enhancing workforce productivity and managing the financial strain of labor expenses.
Why Labor Productivity Matters in the Last Mile
Today, labor availability is scarce, and logistics deadlines are becoming tighter than ever.
As consumer expectations rise and people increasingly order just a few items at a time, we’re transitioning from managing large containers to handling smaller, individual orders. Instead of bulk shipments, we’re now dealing with single packages, which adds a new level of complexity. This is particularly true in operating fulfillment centers (FCs) and delivery centers, where handling these “eaches” is critical.
Additionally, as the unit of measure decreases from pallets to cartons to eaches, every step in the process—picking, packing, and sorting, must be executed with very little room for inefficiency. The process rates must be adhered to and sustainable day over day, making labor productivity more crucial than ever. Each step directly impacts the overall efficiency and cost-effectiveness of the delivery process. That’s why optimizing labor productivity at the last mile is paramount for staying competitive and profitable.
Unfortunately, labor planning at distribution, fulfillment, sortation, or delivery centers hasn’t always received the attention it deserves. Traditionally, planners have relied on historical data to forecast labor needs, but this approach often falls short in a dynamic business world. Critical nuances such as forecast variation, labor availability, SLA dynamics, etc., are not always factored into the traditional model.
This is where a Labor Management System (LMS) comes into play.
An LMS is a digital solution (software, platform, or module) designed to enhance workforce productivity and efficiency. It helps warehouses by offering insights into employee performance, task allocation, and workflow optimization. With an LMS, businesses can manage workforce scheduling, track time, and handle payroll more effectively. This system aligns labor resources with operational needs, boosts employee productivity, ensures businesses can adapt to dynamic demands, maintains operational efficiency, and helps cut costs, all essential for thriving in a competitive environment.
Labor Management Models to Improve Productivity
Workforce Planning
Workforce planning solutions are essential for organizations to manage their workforce effectively and align it with business goals. These solutions utilize data analytics and scenario planning to forecast staffing requirements, identify skill gaps, and develop recruitment and employee development strategies. By gaining insights into current and future workforce needs, companies can optimize their workforce structure, improve resource allocation, and enhance productivity.
With workforce planning solutions, organizations can proactively address challenges such as workforce turnover, changing market conditions, and evolving industry trends. This enables them to make informed decisions, reduce labor costs, improve workforce efficiency, and ensure they have the right talent available at the right time to drive business success.
Labor Optimization
Labor optimization solutions streamline workforce management processes to improve productivity, reduce costs, and enhance operational efficiency. These solutions leverage data analysis, automation, and workforce scheduling tools to allocate resources effectively based on demand, employee skill sets, and performance metrics.
Organizations can minimize employee overtime by optimizing labor utilization, reducing underutilization, and enhancing overall productivity.
Time Management
Time-tracking solutions streamline the monitoring and recording employee work hours, providing businesses with accurate data for payroll, project costing, and compliance. These tools offer a range of features, such as clocking in and out, timesheet management, and absence tracking, often accessible through web or mobile applications.
Additionally, time-tracking solutions in labor management systems empower management to analyze productivity trends, identify inefficiencies, and make data-driven decisions to optimize workforce performance and operational efficiency.
Performance Tracking
Performance tracking in a labor-management system involves systematically monitoring and evaluating employees’ productivity, efficiency, and quality of work. This includes measuring the workforce on key performance indicators, assessing adherence to work standards, and analyzing output against predefined goals. Through performance tracking, organizations gain insights into individual and team performance, enabling them to identify areas for improvement, provide targeted feedback, and allocate resources effectively.
It also facilitates objective performance reviews, supports data-driven decision-making, and fosters a culture of continuous improvement and accountability, eventually optimizing workforce productivity.
Analytics and Reporting
Analytics and reporting in labor management systems are crucial in helping organizations analyze labor data and uncover trends, allowing them to identify inefficiencies and seize opportunities for improvement. Data visualization tools enhance this overall process by presenting labor data through intuitive dashboards and visualizations, making interpretation more straightforward and accessible. Trend analysis further supports this by highlighting patterns in labor metrics, enabling businesses to address emerging issues before they escalate proactively.
Custom reports can be generated, facilitating targeted analysis and clear communication, effectively addressing stakeholder needs and queries. By leveraging these insights, organizations can become data-driven and make informed decisions on strategies and planning, optimize workforce management, and ultimately foster continuous improvement as areas for operational enhancement are identified.
How SRM Tech’s Supply Chain Labor Management Solutions Boosts Workforce Productivity
SRM Tech offers a comprehensive suite of solutions designed to drive efficiency, reduce labor costs, and boost operational agility. Often, companies start with existing processes and attempt to increase efficiency through strict adherence to standards and tight control of labor utilization. This approach ignores inefficiencies that exist in the upstream steps. SRM Tech takes a holistic approach that starts all the way from the facility design and steps through the different processes to deliver an optimized outcome that balances the space, equipment, and labor resources. Our solutions include
Facility Layout Optimization:
SRM Tech’s team of supply chain and operational excellence team will review the current layout, analyze shortcomings, and recommend an effective re-layout plan.
Labor Engineering:
We review the current process and develop the labor standards based on the complexity of the process. The study methods include both indirect and direct and consist of historical data, synthesis, pre-determined, time study, and work sampling.
Throughput Modeling:
We develop efficient models that maximize labor output while minimizing labor hours using existing capital resources. This model provides a what-if analysis feature that allows balancing output vs. speed vs. cost so the most optimal scenario can be utilized depending on the operational need.
Labor Planning:
Starting with refining the forecast, our labor planning considers process rates, available staffing, and planned TPH (throughput per labor hour) and provides the hourly labor needs.
Staffing Tools:
This tool solves resource hiring challenges and minimizes excessive hiring by arriving at the optimal PT and FT shifts for the staff based on labor variance across the week.
Connect with us to discover how SRM Tech’s supply chain labor management solutions can transform your operations and ensure peak labor productivity for sustained success.
