The downtrodden economy has forced many business owners to take a step back and examine where they should better allocate their funds. In the case of distributors across the United States, many are finding labor productivity to be an area that is crippling their profitability.

With labor costs accounting for more than 50 percent of their total operating costs, distribution centers, including some jan/san distributors, are finding that investing in labor management software is helping to improve their bottom lines — especially when it comes to picking and shipping inventory.

Warehouse Staffing

While a distributor's warehouse management system helps direct operators in a warehouse, it doesn't determine how many employees will be needed or where they should be deployed for a certain task — that role, according to distributors, is best accomplished with labor management software.

Labor management software plans, manages, measures and reports on the performance levels of warehouse personnel by comparing the work that has to be done in a distribution center against a set of engineered labor standards. That data is then used to determine the number of employees needed for a shift.

Further, the software interacts in real time with a distributor's warehouse management and warehouse control systems to collect data on what associates are doing, how many locations they have visited, what inventory they have handled, what equipment they used, and even the paths they traveled to pick or re-stock inventory. The software then takes all this information, calculates it and determines how much time and labor it takes to fill orders in the most efficient way, says Jon Schreibfeder, president of Effective Inventory Management Inc., a distribution consulting firm located in Coppell, Texas.

"It tracks the productivity of warehouse employees during certain tasks," he says. "It will define how long it takes to fill an order. It will determine if one order picker is more productive than another order picker. It can vary by the type of order pricing so we can see what kinds of materials take longer to pick. It also determines how long it takes to receive and stock inventory."

One of the true benefits of labor management software is that it enables distribution managers to forecast the number of warehouse employees required to perform estimated work down to the day, shift and job level, says Andy Baltzell, general manager for Dade Paper's Miami branch. Because established standards for each day and every task performed are stored in the software's database, warehouse managers are able to determine the actual time it should take to complete a specific task for each employee.

This proves to be a cost saving measure for distributors as often they schedule too many workers for a shift, resulting in unproductive workers sitting around because there isn't enough work to be done. It is also beneficial for the reverse when too few employees are scheduled to work a given shift, often resulting in employees working overtime.

Reporting is an important piece of labor management software, but it's not the only piece distributors can find beneficial.

Warehouse managers also have the capability to view a dashboard of who is responsible for what products to be picked. If an employee is behind and another is available, the warehouse manager can quickly allocate the work to the available employee. In fact, at Santa Fe Springs, Calif.-based Royal Corp., the company's warehouse manager is able to view all orders pending to be picked and assign them to specific warehouse employees' scanners based on workload or priorities, says Jonathan Soon, vice president of operations.

Other capabilities include task interleaving, which ensures that lift-truck drivers don't leave storage areas or docks empty-handed. The software allows managers to assign drivers tasks that retrieve or put away inventory that is nearby.


A major component of labor management software allows distributors to identify employees who may need training or other inconsistencies in the warehouse.

With labor management systems, the time it takes a worker to accomplish a given task can be compared to the software's standards. With this information, managers can give immediate feedback on their performance. In fact, labor management software gives warehouse supervisors visibility into their operations so they can identify labor performance problems and other barriers to productivity and take corrective action, says Schreibfeder.

If employees are under-performing, managers can view where the potential problem lies and if additional training or reprimanding is needed. Plus, with this software distributors are able to better hold employees accountable for their work, says Eric Cohen, vice president of logistics for WAXIE Sanitary Supply in San Diego.

"That's the value of it because you can say, 'You only have 'x' amount of errors per pick rate and you have to maintain this pick rate. And if you fall below it, you get counseling, maybe you don't get pay raises, but if you go above it, then you get a merit increase,"' he says.

Traditionally, warehouse managers often had to watch over employees to make sure tasks were being fulfilled. But with labor management software to do that job, employees are actually more motivated to work harder because they have set labor standards to meet, says Schreibfeder.

The software can identify those employees who are working below the standard, either during a shift or an on-going basis. Once a distributor knows who's not working up to par, they can investigate to see if there's an equipment problem or if an employee needs training in procedural methods. Whatever the case, distributors can take steps to rectify the problem before it exacerbates. The software also tracks whether an associate's performance has improved as a result of coaching or mentoring.

Not For All

Software providers tout that implementing labor management software into a warehouse often results in a labor productivity increase because employees are now being tracked every step in the warehouse. But distributors should be mindful that the software isn't suited for all. According to software providers, facilities with 15 or more associates often benefit most from labor management software. That's because most smaller distributors often have less than five people on a given day in their warehouses, so it's difficult to truly track productivity because warehouse employees are doing multiple tasks, says Schreibfeder.

"For the majority of jan/san distributors, the people out in the warehouse are doing a ton of different jobs, not at the same time, but they go from one to a completely unrelated task," says Schreibfeder. "And to record when they start and stop would be very difficult. Labor management is tailored to larger warehouses. It would be wise to implement it in a warehouse where you have dedicated people picking, dedicated people stocking, and where it's much easier to track people by specific tasks."

But as smaller distributors continue to grow, they should keep this software in mind.

The success of any labor management program relies on whether workers have the proper tools to properly accomplish their goals. It's a distribution manager's job to provide proper training, a method for tracking workers' progress, a method for providing feedback to workers about their performance, and an incentive program for rewarding high performance. Labor management software gives managers these tools.