Best practices for successful labor management system implementation

Training, coaching and a reward system are key elements in any successful labor management system (LMS) implementation.

The adage, “no pain, no gain,” may be especially relevant when implementing a labor management system (LMS). While

experts say that LMS software tools have the potential to increase warehouse and distribution center productivity by 15% to 30%, the LMS implementation process is complex, and the cultural implications are huge.

Yet by following tried and true best practices, manufacturers can reap big gains with this important tool--without much suffering along the way.

Involve the right people. Given their complexity, LMSes require a mix of talents to ensure the implementation goes off smoothly. So be sure to consider a vendor’s consulting prowess and resources during the selection process: It’s almost a given that they will need to be involved. Experts also advise hiring industrial engineers to be part of the LMS project team, since they are highly skilled in analyzing labor processes. Finally, getting internal employees -- from warehouse managers to floor workers -- involved and providing input is also key.

“Let the workforce have a hand or role in how the performance program is put together,” said Kevin Hume, principal at Tompkins Associates Inc., a consultancy that specializes in supply chain technology applications, including labor management. “Most challenges to these programs occur when the program feels foisted on a group at the last minute.”

Make a communications plan. LMS implementation can be a huge cultural shock to an organization, and much work is required to mitigate worker concerns. It starts with a well-orchestrated communications strategy. Workers need to know that the LMS is not simply a Big Brother surveillance tool to monitor performance, but a means for the company to become more competitive and establish equal work standards across the board. Labor management system vendors and consultants advise companies to demonstrate how the LMS can deliver the visibility that workers need to improve their performance. It is also important to show how the LMS can help the firm respond more nimbly to economic recessions and labor shortages.

Employ coaching to gain worker cooperation. If workers feel the purpose of the LMS is to clamp down on them, they’re apt to resist. Experts say companies should set incremental goals for improving labor standards, constantly communicate results and progress to the warehouse staff, and employ sound coaching practices to facilitate improvements in work processes.

“Culturally, this is scary for the workers -- you have to let them know you’re not expecting them to go from working to 65% of labor standards to 100% of standards instantly,” explained Steve Banker, service director for supply chain management at ARC Advisory Group, a consulting firm.

If workers aren’t hitting the target, managers shouldn’t assume they’re slacking off, but perhaps approaching a task inefficiently. “There should really be a coaching focus rather than hitting workers over the head and telling them they’re not working fast enough,” Banker said. “The coaching style typically works better.”

Create a reward system. Many LMSes offer the ability to tie performance directly to pay. This way, workers will know that if they achieve 100% of the standard, they will be paid the standard rate, but if they perform above the standard, they are eligible for extra compensation. Monetary rewards aren’t the only carrot. Companies can create other incentives, such as listing the top performers next to the time clock or in the company newsletter, or granting time off. Whatever the reward, experts advise setting limits. “Be sure to cap the plan, because you don’t want people working at 120% of the standard all day long,” Banker said. “There can be burnout or safety issues.”

Don’t skimp on training. Beyond teaching the basics of the LMS, training sessions should also focus on how the system can benefit employees. Trainers should make it clear how having more detailed work standards, for example, will ensure that employee performance is measured more fairly, or how more efficient processes might eliminate last-minute requests for overtime work, which can interfere with personal schedules.

Training management in how to use the system is equally important to the change management process, according to Randy Woody, distribution center operations manager at Northern Tool + Equipment Co., which employs an LMS. “Using the LMS changes the way you manage your business,” Woody said, explaining that prior to acquiring the system, managers and supervisors merely looked at operations to get a feel for how well a department was doing.

With the LMS, the supervisors can see how an individual is performing at a given point in time. “But we had to get them accustomed to looking at something additional and make sure they were taking advantage of that information for coaching individuals,” Woody said.

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