Build a Culture of Safety and Productivity With Labor Management Software Optimization

If we’ve learned anything from the unexpected events of 2020, it’s that the concept of “business as usual” no longer applies to distribution and fulfillment (D&F) operations. Before the onset of the global pandemic in March, the inability to attract and retain a qualified hourly workforce was often cited as the leading collective challenge facing distribution center (DC) operators. These resourcing issues became even more acute after March, as competition for available labor increased exponentially with the inevitable spikes in e-commerce adoption.

At the same time, many companies suddenly found themselves running their DCs in a perpetual state of peak productivity — a scenario previously reserved only for seasonal fulfillment demands — which typically requires overstaffing by as much as 20 percent to keep pace. And with the threat of rolling employee outages due to illness outbreaks, DC operators also faced implementing new workplace best practices and safety protocols to mitigate potential risks to workers’ health and limit productivity disruptions.

Labor Trends and Pandemic Impacts

Prior to the onset of the global coronavirus pandemic, labor represented the greatest challenges and costs to DC operations.

20% Overstaffing During Peak Times

Research shows that labor accounts for 50–60% of all distribution center costs

Turnover Rates in DCs

20–40%

Inability to Attract and Retain Qualified Hourly Workforce

55% of respondents cite as a major industry issue

Competition for Labor:

In March 2020 Amazon announced plan to hire 175,000 new workers

lnstacart announced plan to hire 300,000 new workers

Aging Workforce

Decreased productivity, decreased stability

Costs per New Hire

$4,425 plus OT and temporary staffing costs

As the D&F industry navigates this pandemic-driven reality, labor challenges have taken on greater urgency. New labor considerations include the needs to:

Operate at continuous peak levels

Keep employees engaged, safe and productive

Avoid productivity disruptions due to rolling illness outages

Pivoting from Productivity to Safety

Labor management software (LMS) platforms have a long history of driving labor productivity and providing necessary workforce cost control in D&F operations. LMS delivers labor cost optimization, visibility and predictive planning by incentivizing employee engagement, lowering attrition rates, shortening fulfillment time frames, and reducing direct labor spend. With respect to emerging 2020 labor challenges, LMS has also proven effective in expanding its role to address employee safety and well-being concerns.

To sustain the productivity levels needed to meet current demands, DC managers must empower their workforce with the confidence of knowing that their workplace is as safe as possible. But building a culture of safety also requires implementing new safety policies, understanding their impacts on productivity, and managing the various exceptions that may arise.

An LMS can help DC managers address these new world safety challenges by leveraging three fundamental capabilities that have been traditionally focused on productivity: influencing employee behaviors, tracking results, and driving employee engagement. Let’s examine each of these strategies more closely.

Influencing Employee Behaviors

The effectiveness of monetary incentives for driving productivity are well-known. The most common example is when an employee strives to meet a performance benchmark to earn an additional bonus to their hourly salary. An LMS can be leveraged to also drive other key performance indicators (KPIs) by factoring in additional variables in the bonus calculation, such as picking accuracy rates. Thus, if an employee meets their productivity target but has accuracy issues, then their bonus calculation may be reduced by a certain percentage.

Considering the present focus on safety protocols, DC managers can also use their LMS to layer on other performance factors related to enhancing employee wellness. For example, these factors could be tied specifically to user-defined safety infractions, such as: insufficient distance between pick locations; not allowing enough time between shift transitions; or improper use of personal protective equipment (PPE), such as masks, gloves or safety glasses. As these infractions accumulate, an individual worker’s bonus may be reduced proportionately or potentially removed altogether.

The underlying benefit of incentivization is clear: the specific employee behaviors a DC manager wants to reinforce can be tied to an incentive calculation or performance improvement program. LMS provides a framework for driving a variety of KPIs and assigning variables that help determine bonus calculations. Over time, these incentives can help to engrain desired behaviors into the workplace culture, providing a self-regulating mechanism for continuous productivity and safety improvements.

Tracking Results

Peter Drucker — who is widely considered the father of modern management strategies — is often quoted as saying: “You can’t manage what you don’t measure.” An LMS is designed with this principle in mind. Modern LMS platforms are based on engineered standards that provide a performance baseline upon which DC managers can monitor and measure KPIs and become better equipped to make informed management decisions.

Today, we know that workers must incorporate a variety of safety protocols into their standard processes that could potentially detract from their productivity targets. With an LMS, DC managers can make adjustments which account for these emerging factors to ensure that both productivity and safety levels are being met — such as scheduling additional personnel or allowing more time to complete specific tasks. Simply put, engineered standards help DC managers understand the impacts of safety protocols on individual performances, while giving employees performance goals that are realistic and achievable.

LMS performance data also helps DC managers achieve an ideal balance of resources and safety precautions. One strategy may be to adapt traditional work schedules by staggering additional, smaller shifts with resources that have performance profiles which are most favorably suited for each shift. Essentially, an LMS gives managers the insights to staff each shift with the proficiency and skill levels needed to meet anticipated demand expectations — all while ensuring that workers can comply with requisite safety protocols.

Resource planning is another key management function that has become even more critical in today’s uncertain environment. Using an LMS, DC managers can proactively develop staffing models that address the potential for labor outages and make contingency plans for a variety of scenarios. While it may be impossible to plan for every uncertainty, LMS can help DC managers better predict, prepare and understand the impacts of different staffing models.

In the event of an illness outbreak, LMS can even serve as an alternative contact tracing data source. With the appropriate data connections between the mobile enablement technology and the host system, LMS is potentially capable of keeping a comprehensive record of individual movements and activities throughout a facility. While it may not replace a formal contact tracing system, it may serve as a first line of defense for DC managers trying to mitigate an outbreak.

Driving Employee Engagement

Contrary to the perception that LMS platforms can be detrimental to employee satisfaction, LMS ensures that employees are treated fairly and given achievable performance expectations. With an LMS, employees understand that their performance ratings are based solely on their efforts. And when they put forth extra time or effort to exceed performance standards, they will be rewarded commensurately. Employees also know that LMS will account for the new safety requirements and adjust its performance evaluations accordingly.

As a result, employees can work with the confidence of knowing that they are:

1. Achieving their bonus goals
2. Contributing to productivity and profitability
3. Helping to build a culture of safety

In addition, LMS can help DC managers discover when specific individuals are having difficulty meeting any of their performance targets or adapting to new safety measures. This allows them to quickly intervene and initiate coaching sessions that may help remove any barriers to employee productivity or safety. And by opening this dialogue and working through these challenges, they can identify opportunities to promote continuous performance improvements and drive engagement among all the employees.

A confident, healthy and empowered workforce is essential for creating a DC culture that is both productive and resilient to today’s market uncertainties. GoalPost® LMS by Honeywell Intelligrated is designed to achieve the benefits and incorporate all the best practices discussed herein. Our labor management experts are ready to show you how GoalPost LMS can help your DC operations maintain peak productivity levels while fostering a culture of engagement in which your employees can thrive today and in the future.  

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