Monday 5th Dec 2016 - Logistics Manager

What about the workers?

The growth of multi-channel operations has increased the level of labour intensive operations for many companies. But workforce management systems can deliver significant cost savings in a relatively short time.

This article appears in the February 2016 issue of Logistics Manager

This article appears in the February 2016 issue of Logistics Manager

Parcels carrier Hermes helped put the spotlight on the issue of workforce management late last year when it revealed that it was implementing Nice’s cloud-based workforce management (WFM) system to improve operational efficiency.

Hermes has a network of more than 10,000 lifestyle couriers and 4,500 ParcelShops, handling more than 210 million parcels last year. It wanted a system that would provide a common system and real-time adherence for on-site and remote agents; scalability and elasticity for seasonal usage peaks; efficient forecasting and planning of multichannel contacts including calls and emails, and integration with Oracle Right Now, enabling interoperability in the cloud.

Dawn Redman, head of customer service at Hermes, said: “Since it is cloud-based, Nice WFM enables remote access to WFM for off-site agents, and it ensures rapid scalability for seasonal usage spikes.”

But it is not just the parcels sector where managing the workforce is a significant issue. Modern logistics centres are major employers. A large site can easily employ several hundred full-time staff – and at peak that could rise to over 1,000. Craig Sears-Black, managing director of Manhattan Associates, points out that the proliferation of new shopping and fulfilment channels such as buy online/pick-up in store, buy online/return to store, and buy online/fulfil in store are forcing retailers and manufacturers to design greater flexibility into their extended supply chains to respond to the new normal of “Everywhere Commerce” that is today’s commerce landscape.

Sear-Black argues that retailers that have added the flexibility to fulfil demand whenever and wherever the consumer wants – in dynamic real time – must also evolve their labour management processes to ensure they have the right number of people at the right place at the right time.

“The key functions of Labour Management that will enable this are the ability to measure employee productivity against granular standards, the ability to provide supervisors with real time information regarding productivity, the ability to provide coaching tools that enable objective and meaningful feedback and a system that promotes rewards for work that is exceptional.”

Workforce management systems can cover a lot of areas: compliance; overtime, labour costs; productivity; payroll, budget control and so on. But Nick Curran, strategic services director at JDA Software point out that: “Traditionally, the use of workforce management solutions in grocery stores had been confined to the checkout because of the data-rich nature of the position.”

However, he says that retailers are starting to use them across departments to facilitate employee multi-skilling across the store.

“Omni-channel retailing has diminished the traditional supply chain silos between online and in-store shopping. Consequently, it has given rise to new processes, such as in-store picking, ‘Click & Collect’ and online/in-store returns. This has created more pressure on retailers to ensure that they always have the right staff, in the right place, at the right time, to meet these new service requests as they come in.

“At the same time, store managers must also do this without increasing operating costs within the workforce. The latest workforce management solutions can enable retailers to do just this,” says Curran.

Sears-Black points out that virtually any activity within a warehouse operation can benefit from the application of a labour management system. From receiving to put-away, pick pack and ship, all areas within a warehouse have been shown to benefit greatly form labour management.

“At a high level, Workforce Management Systems drive productivity improvements and reduce labour costs while decreasing employee turnover by rewarding efficiency, quality and safety. The most advanced systems enable labour scheduling and tracking so companies can take a more flexible approach to Workforce Management and meet increasing demands for omni-channel operations planning. Manhattan’s Labour Management solution does all of this and more while our mobile Distribution Management solution can additionally help move supervisors in a distribution centre environment out onto the warehouse floor where they can better interact with their teams.”

He adds that integrating the Workforce or Labour Management System with the WMS provides a comprehensive workforce management and planning solution. “The key is for retailers to predict when the peaks and valleys will occur and establish appropriate staffing levels to minimise the use, and associated costs, of temporary and overtime workers. Throughput, is a moving target affected by a myriad of forces including: network changes, order size, promotions, seasonality and SKU range.

“Workforce optimisation must account for these variables and having the Workforce Management system synchronised with the Warehouse Management System makes this possible. To do so requires a hierarchy of processes that ensures the synchronisation and correct balance of labour (full time, temporary and overtime) to handle the peaks and valleys in day-to-day throughput levels and get the most work done at the lowest possible price while delivering the highest level of service, says Sear-Black.

Curran also point out that workforce management tools are also now being used by retailers to transmit requests, such as range changes and planograms, from head office to individual stores. “Using mobile technology, stores can verify changes by simply sending images back to HQ from their mobile devices, instead of having regional managers visit to confirm them.

With modern logistics operations employing so many people, labour typically accounts for a substantial chunk of the operational costs, so the potential return on investment is good.

Sears-Black says many companies believe productivity gains in areas such as case or piece picking of 15-25 per cent just aren’t possible, but “in our experience working with customers who operate labour intensive areas, 20 per cent or greater gains are fairly typical.”

Historically, the distribution workforce has been a full time fixed shift operation that has been largely treated as a fixed annual cost, he says. Because in most distribution centres labour makes up nearly 55 per cent of total costs, if inventory levels are adjusted based on fluctuating demand, workforce costs need to be adjusted in the same manner to reduce costs and increase efficiency.

“Synchronising actual throughput to needed labour levels is the challenge facing most employers. Too much labour and the total cost to serve will be excessive, resulting in being unprofitable or non-competitive. Too little labour and service levels are sacrificed and sales are lost. Neither scenario is acceptable in today’s highly competitive marketplace where retailers are fighting for every customer,” says Sears-Black.

“By establishing well defined, repeatable and consistent processes and building standards to measure productivity against those standards we can provide an accurate and objective baseline for establishing the appropriate amount of labour required based on the projected work. Case studies have shown that by measuring work and providing real time feedback a company with a Labour Management program can see savings in the 15-25 per cent range.”

Case study: Six-month return on investment for HEMA

European retailer HEMA reckons it achieved a full return on its investment in a workforce management system in six months.

HEMA, which has some 650 stores across Europe specialising in housewares, home furnishings, apparel and food, implemented JDA’s WFM system, which includes modules for time & attendance, scheduling and task management.

“We quickly improved the productivity of our employees by three per cent with JDA Workforce Management, and we lowered our costs by €3 million,” says Mischa Gijrath, efficiency manager at HEMA. “If you look at the workforce management solution as a cost reduction program, then we’ve succeeded by more than 200 per cent.”

The scheduling system enables HEMA to match associates’ time and skills to actual store traffic. “We’ve improved our accuracy on scheduling according to demand by about 18 percentage points, which enables us to provide better service to our customers,” says Gijrath.

At the same time, HEMA has been able to reduce its overall employee hours. “We reduced approximately 200,000 hours, without reducing our service level, in just the first six months of our JDA implementation. We noticed that our associates were not scheduled at the right time and in the right place. Using the JDA solution, we have succeeded in improving our efficiency by looking at demand and adjusting our schedule accordingly, without lowering our service level,” says Gijrath.

In addition, the Time & Attendance function has helped HEMA achieve better visibility into productivity.

Technology: Kronos in Google tie-up

Kronos, the workforce management software specialist, has formed a software development relationship with Google for Work to integrate Google Apps for Work with the Kronos Workforce Ready cloud suite for small and mid-size companies.

Google for Work and Kronos customers will be able to integrate Google Apps with Workforce Ready to enhance mobile, collaboration, data collection, storage, and reporting capabilities with tools their employees use every day – such as Gmail, Drive, Sheets, Forms, Sites, and Calendar.

Planned initial integrations with Workforce Ready and Google Apps for Work include:

l Google Calendar – Employee work schedules created in Workforce Ready will automatically and instantly be synced to their personal calendars. This means team members will not have to wait until the schedule is posted to see their assigned shifts and any changes will rapidly be communicated without confusion;

l Google Drive – HR reports, timesheet data, payroll information, and other pertinent workforce management and human capital management documents from Workforce Ready will be safely and securely saved to Google Drive, allowing for simple sharing of key data anywhere, at any time, with the stakeholders who need it;

l Google Sheets – To save time, spreadsheets will be seamlessly shared between Workforce Ready and Google Sheets without having to convert file formats. This will allow SMBs to collaborate faster and more easily view data from any device; and

l Google Maps – To enhance recruiting and hiring, a job applicant will be able to view the proximity of their home address to the job location to calculate potential commute times. SMBs can list job openings with company-specific information on the Google Map pin, as well as identify geographic talent pools to help fill the candidate pipeline.