LABOR PLANNING AND AUTOMATION IN A 3PL ENVIRONMENT
Managing your largest controllable expense
Managing your revenue with full control of pricing, rating, activity-based costing, time-dependent events, invoicing and metrics tracking.
Labor-intensive operations are the accepted trade-off for flexibility and immediacy in the concurrent storage, management and handling of multiple customers’ goods in third-party logistics warehouses. As such, they represent the 3PL provider’s largest controllable expense — as much as 70 percent of the overall cost of operations. This being the case, for a 3PL operation to continue serving its customers effectively while satisfying its own organic requirements for a fair profit, it must deploy its labor resources methodically and carefully account for them in terms of their contributions to revenue, profit and customer satisfaction.
AccellosOne Enterprise 3PL incorporates a comprehensive and easy-to-use set of features for forecasting short- and long-term labor requirements, tracking labor efficiency both facilities-wide and by specific assignments, costing by facility and by customer, and productivity by individuals and teams. It also offers resources for deploying the full spectrum of labor-saving technologies that allow workers to raise their productivity levels with the same or reduced levels of effort.
- Labor forecasting
- Labor tracking
- Employee productivity
- Facility labor costing
- Customer labor costing
- Labor saving/enhancing opportunities
SETTING THE STAGE
Optimization of labor normally should be preceded by process optimization, which characteristically involves the implementation of technology — beginning with the 3PL management software itself. Better labor management derives directly from such things as the elimination of all or most paper processes, particularly with respect to the warehouse fundamentals, instead adopting methods based on electronic communications and technology-based processes. These changes dramatically impact receipt, putaway and picking, and extend to related activities, such as kitting, and extending to shipping and reporting.
Everyone is touched in the process — the 3PL operator, the inventory owner, the carriers and the shipper — since labor effectiveness impacts everything in the supply chain continuum. AccellosOne Enterprise 3PL’s advanced labor management capabilities are designed into the software so that they are integral parts of a total warehouse solution.
While not necessarily device-dependent, these labor management features are enhanced dramatically through the use of tactical devices such as RF communications, barcode readers and pick-to-light installations. Technologies such as these not only accelerate warehouse activities with direct system-to-floor communications but can also enhance management at all levels with automated feedback and database-maintenance capabilities.
Labor forecasting is based on what you expect to happen. In AccellosOne Enterprise 3PL, forecasts are facilitated through a simple graphic tool within the software’s Active Desktop single point visibility and control center called the Operational Board. Accessing the board enables managers to analyze projected workloads and their associated tasks and thus predict the manpower needed for all of the activities scheduled for a given day, week, month or non-defined time period.
Powerful but simple to operate, the tool has filtering criteria that enable the operator to consider specific sets of information, such as company, warehouse, customer, carrier, product and more in deriving a labor force prediction. By involving the various factors, the operator can obtain an accurate view of the manpower requirements down to the task level, for the facility, and even for specific sectors of the facility.
To quote an old saying, “you can’t forecast what you can’t measure.” Standards on which to base forecasts are a necessity. In the AccellosOne Enterprise 3PL, these standards are stored in database tables. Collectively, the tables comprise the set of standards that the Operational Board accesses to formulate the forecasts.
Where do the standards come from? Some solutions utilize “engineered labor standards,” which rely on time studies that can entail prohibitive expenditures of time and money for development and implementation, and which can impact flexibility in use.
AccellosOne Enterprise 3PL labor standards are not required to be based on time studies but are designed by system administrators (or consultants) based on historical information that is captured on the job. The tables can be set up based on task analyses, physical factors within the warehouse, equipment resources, etc., remaining open to modification as experience indicates.
These labor standards are based on specific activities — picking, loading, unloading, putaway, etc. — and are referenced to specific units of measure. For example, an unloading task might be associated with a labor standard under which an operator can unload 15 pallets per hour. A standard could also be established for tiers per hour, cases per hour, packages per hour or any other unit of measure. Once established, the standard is associated with the warehouse facility and serves as the starting point for forecasting the labor requirement for this specific task for this specific customer in this specific facility.
Basic standards can be influenced by other factors as well, which is where AccellosOne Enterprise 3PL’s flexibility becomes even more apparent. For example, a certain customer may configure his product differently from established warehouse norms, resulting in productivity being reduced to perhaps 10 pallets per hour. Thus, labor requirements can be forecast under a modified, customer-based standard and in like manner, various other influences can be applied as well to further customize the standards library and enhance the precision of the individual forecasts.
Where labor forecasting is based on what you expect to happen, labor tracking is based on what actually happens.
Using handheld computers or RF devices, the performance and execution of a particular set of activities can be tracked — literally to the second — through “start” and “stop” times that are automatically input to the labor tracking module of AccellosOne Enterprise 3PL.
For example, a task may involve 10 pallets to be put into locations away from the staging area. Communicating with the labor tracking module, the RF device will accurately log the time a pallet is picked up, the travel time to the storage location, and the time the pallet is dropped in the location. These activities are considered the “direct labor.”
The RF device does the actual time stamping, scanning the pallet when it is picked up and again when it is put in place. The scanning action starts and stops the clock. The same process applies to all of the types of transactions involved in moving merchandise around the warehouse. Whether receiving, putaway or loading, all have the same labor tracking structure.
The same procedure can be followed in recording “indirect labor,” such as the time spent returning to the staging area to pick up another pallet, recording the time between the last scan and the next active task scan, or in calculating the amount of time spent on a set of tasks.
Where the warehouse has no RF capability, the start and stop times are simply entered manually at the beginning and end of the set of tasks using “clock-in, clock-out activity tracking.” Obviously it does not associate every move, but it allows the accurate logging of a block of time, and the specific labor standards can be applied within that block.
Case in point: the assignment is the assembly of a shipment of kits from a group of components the inventory owner stores in the warehouse. The task involves a person or a group of persons creating kits by stuffing the component sin boxes, but not scanning each item as it goes into the box. The entire task may take three hours: at the beginning of the process the workers clock in and at the end they clock out. The entire period can be associated with whatever you wish to call the task: for example “Kit-Build X.”
Often, deployment and management of the workforce can be enhanced by setting up a system of alerts that indicate who is doing what, what they should be doing and whether they are doing it.
With the information captured in the database, such alerts can keep supervisors and managers apprised of the tasks and activities currently being performed by specific individuals throughout the facility.
By customer: AccellosOne Enterprise 3PL does not set up unique labor costs by individual inventory owners; rather, it applies defined labor rates per hour per employee. The tracking capabilities detailed above furnish the actual hours spent in executing the various tasks. With these inputs, the system can generate a granular view of the total labor expenditure. Applying the employee rate(s) against total hours captured produces the direct costs for the billing period. These costs can be contrasted with the customer revenue stream and used to measure overall profitability of the customer relationship.
By facility: Similarly, AccellosOne Enterprise 3PL can capture the total time expenditures for the tasks performed on behalf of all of the inventory owners within a facility. Applying the labor rates of the individual warehouse personnel to these tasks, the 3PL operator can obtain a global view of activities vs. revenue and thus, a clear picture of the overall profitability of the facility.
Productivity: AccellosOne Enterprise 3PL can identify all of the tasks each employee has undertaken, the amount of time spent on them, and if it involves moving product, such as picking or putaway; it can capture unit quantities handled as well. Thus, it correlates both time and work effort, down to whatever unit of measure — cases, pieces, or pallets — is appropriate.
VALUE OF ACCELLOS ONE 3PL LABOR MANAGEMENT
One of the most significant advantages of the AccellosOne Enterprise 3PL labor management resource is that its standards are “real world” — based not on theoretical projections and/or studies, but on precise empirical data that is captured in the actual execution of tasks. The tables comprising the data can be continuously updated, allowing them to grow in detail and refinement with continued use.
These data tables are instantly accessible through the graphical Operational Dashboard, enabling operators to quickly and easily develop forecasts for the labor requirements of any anticipated project or group of projects.
The benefits accrue not only to the 3PL provider but also to its inventory owner clientele.
While the most immediate benefit is better management of labor deployment and personnel costs, the process also provides an excellent gauge of the true costs of specific activities after the fact, contributing still further to more effective management.
Correspondingly, inventory owners can review the detail of their charges and gain an accurate representation of the amount of work it takes to handle their inventory. This provides a solid basis on which to negotiate the most equitable business arrangement. Moreover, inventory owners can use the information to identify possible proactive ways in which to build-in efficiencies that can transfer to the warehouse — for example by making packing or packaging adjustments that reduce the amount of time required to execute a given process.