| A common thread to all warehouse operations is the | | | | performance rating, fatigue and delay allowance, |
| quest to manage expenses. The most critical and the | | | | control start and stop time, assessing the skill level of |
| most manageable expense item on your P&L | | | | the employee performing the task, a detailed |
| statement is labor, and managing labor efficiently will | | | | description of the activity, and identifying order(s) and |
| generate immediate results in your work to manage | | | | units. It is beneficial to draw upon benchmarking |
| expenses. | | | | information as reference to your own performance |
| Managing labor begins with capturing daily man hours | | | | measurement. |
| utilized by department or by activity in categories such | | | | The next step is to begin monitoring actual individual |
| as receiving, putaway, replenishment, pick/pack/ship, | | | | performance by day by activity or at least by core |
| inventory management, supervision, etc. Capturing the | | | | activity (the point at which the employee spends the |
| man hours utilized can be done using sophisticated | | | | most time performing work). Utilize the same type of |
| warehouse management system software or by a | | | | spreadsheet and begin posting actual performance |
| more manual approach, but no matter the method you | | | | man hours and units to standard or reasonable |
| use, you must know how many man hours are utilized | | | | expectations. One to three weeks' accumulation of |
| each day in each activity. | | | | data will clearly identify who is and who is not |
| Once you have successfully determined man hours | | | | performing to expectation, and will also confirm if your |
| utilized by activity, begin relating the man hours to a | | | | standard is valid or if it requires review and adjustment. |
| volume measurement (units, lines, orders, cases, pallets) | | | | Your first obligation to under performing employees is |
| for the activity by day. If you do not have a | | | | to assure that they are properly trained to perform the |
| sophisticated system to do the calculation, create a | | | | work effectively. Once assured they are trained you |
| spreadsheet for each activity with weeks down the | | | | can effect management control within your company |
| side and days of the week across the top headings. | | | | policies and guidelines either to improve their |
| Include subheadings for each day: volume, man hours, | | | | performance or replace them. |
| and volume per man hour. Total the horizontal | | | | With performance measurement and planning tools in |
| subheadings for the week and calculate the total | | | | place you are ready to address the most immediate |
| average week's performance. Charting this data | | | | return to labor management-eliminate or reduce |
| cumulatively by day and week not only creates a | | | | overtime or premium labor hours. Premium labor hours |
| management tool to begin monitoring and controlling | | | | are a crutch for poor performance. We have found |
| labor expense, but it also develops a historical planning | | | | that the best method of reducing overtime |
| tool for budgeting. | | | | operationally is to simply bite the bullet and advise your |
| Using your warehouse management system or your | | | | team that there will be no overtime unless you |
| manual tracking methods, you have captured the core | | | | personally approve it, and you don't plan to do so. |
| data of man hours utilized and volume by activity, the | | | | Typically, within a week or two following this direction |
| next step is to establish metrics of performance for | | | | you will find that the same work is being done with |
| each activity. Again the level of sophistication for | | | | fewer man hours, and you will realize immediate |
| developing performance metrics varies from industrially | | | | savings. The downside to prepare for is that during |
| engineered labor standards to simply establishing | | | | those two weeks customer service will slip until all |
| reasonable expectations by making three to six | | | | realize that you are serious and pick up the pace. The |
| observations of employees performing a task, | | | | key to success in managing overtime is not to waver |
| averaging units per time, and deriving an expected | | | | during those two weeks by approving exceptions to |
| performance level of units per man hour. Acceptable | | | | your rule. |
| performance levels might include work pace averaging, | | | | |