The Bionic Warehouse
When using warehouse technology to improve labor productivity, combining the right tools with the right people produces super-human results.
No matter how much technology you bring into a warehouse, it takes people—working hard and smart—to make the operation succeed. Yet technology offers an important boost for businesses trying to make their warehouse workforce more productive.
Take APL Logistics, a third-party logistics services provider (3PL) that operates 25.7 million square feet of warehouse space around the world. In its quest for ever-greater productivity, APL is emphasizing labor management system (LMS) technology.
"By capturing data on individuals’ performance in the warehouse, and comparing that data against established standards for discrete tasks, an LMS can help employees work more efficiently and improve the way companies deploy human resources," says David Frentzel, vice president, global contract logistics at APL Logistics in Scottsdale, Ariz. For example, if the LMS finds that a team or individual isn’t working up to par, it gives managers information they need to make adjustments.
Data from an LMS can also support productivity incentives. "The system lets users create a gainsharing program to support a targeted level of productivity with established service and safety standards," Frentzel notes.
The task interleaving capability built into many top-tier warehouse management system (WMS) solutions can also help boost warehouse labor efficiency. The interleaving strategy might apply, for example, to forklift operators who move a pallet from a receiving dock to a putaway location. Rather than telling workers to drive straight back to the dock for a second pallet, the WMS might instruct them to pull a pallet from storage and deliver it to a replenishment area—in effect, seizing a backhaul opportunity.
"The technology plans all the different work steps based on optimization, the operator’s location in the facility, and the next priority," Frentzel says.
In some facilities where employees do a lot of case picking, APL has gained big benefits from a technology called layer picking, which uses a clamp to lift an entire layer of cartons from a stack. In the past, a worker who needed to pick less than an entire pallet had to pull the cartons one at a time. "Picking by layer saves a great deal of effort," Frentzel notes.
Another technology strategy that pays off well in worker efficiency is the practice of periodically "re-implementing" a facility’s WMS. The goal is to identify better ways to configure the system, or to find settings that need to be adjusted because the business model has changed. "Periodically, bring in an implementation team to examine how the application can improve your productivity," Frentzel says.
Also, each time the WMS vendor offers a system upgrade, management should consider the new version, looking for features that might promote greater workforce efficiency.
By judiciously deploying new technologies, and taking full advantage of technologies already in place, companies are gaining a better return on their investments in both human resources and machines. Here’s a look at how five businesses are making smart use of these tools to improve warehouse labor productivity.
An LMS in Training
In addition to providing data to support an employee incentive program, a labor management system (LMS) can spot warehouse employees who need more training and determine what kind of training they need.
"Our application’s analytical tools help identify whether the issue is procedural training, time management, or motivation," says Andy Recard, vice president at TZA, the Long Grove, Ill., technology vendor that supplies the ProTrack LMS for auto parts retailer Pep Boys.
If the technology finds, for example, that a warehouse associate works efficiently all day except for the assignment right before lunch, that employee clearly knows how to do the work. "That’s a time management issue," Recard says.
But if employees take too long on every assignment, they don’t know how to do the work correctly, or aren’t trying hard enough. "In that case, I can observe those individuals, and take notes on what they’re doing well and what they’re not, then evaluate their skill and pace," Recard says. The manager can then work with the employees on specific improvements.
Along with helping employees work more efficiently, an LMS can help a company deploy its workforce more effectively with advanced labor planning.
ProTrack, for example, captures information on how employees spend all their time—not just when they’re picking product or putting it away, but also when they’re attending meetings, changing batteries, or cleaning up spills. Such proactive analysis helps to ensure that the company gets as much return as possible on its payroll dollar.
Pep Boys: Tuned-Up Incentive Program
Incentives were the primary focus when Philadelphia-based auto parts retailer Pep Boys deployed an LMS two years ago.
Pep Boys operates distribution centers (DCs) in San Bernardino, Calif.; Mesquite, Texas; Indianapolis, Ind.; Chester, N.Y.; and McDonough, Ga. About 20 years ago, the company implemented a productivity bonus for work teams in its DCs, based on how much product they handled per hour.
But as Pep Boys started selling a wider array of products—tools, garage accessories, even kayaks, along with traditional auto parts—it grew harder to reward teams fairly based on metrics such as units, cases, or cubic feet of product moved per hour.
"The system was based on averages, and as our merchandising mix changed over the years, the averages became more of a challenge," says Stuart Rosenfeld, vice president of distribution at Pep Boys. Also, when calculating bonuses by team, the fastest and slowest workers in the group get the same reward. That’s not an effective motivator.
In 2010, Pep Boys implemented ProTrack—an LMS from TZA of Long Grove, Ill.—at the San Bernardino DC. Before installing the software, Pep Boys worked with TZA to establish engineered standards that define how long it should take to complete each task in the facility. Those standards account not only for actions such as reaching and lifting, but also for the size of the item to be handled and its precise location in the DC.
"Fifty to 60 percent of warehouse labor expense is travel," Rosenfeld says. Pep Boys’ old productivity metrics didn’t distinguish between the worker who picked 20 items from one location and the one who picked from 20 different locations across 200 feet. The new standards do.
With both the standards and the software in place, ProTrack started receiving data from Pep Boys’ voice-based data collection system. Time stamps in the data feed tell ProTrack when each employee starts and completes an assigned task. ProTrack calculates the time it takes to do the job and compares that to the time defined in the standard.
Such measurements allow Pep Boys to pinpoint which employees are working above the standard and reward them accordingly. Employees who are performing right at standard are doing fine, "but they’re not going to get a bonus," Rosenfeld says.
Productivity at Pep Boys’ San Bernardino DC rose by eight percent immediately after it installed ProTrack and launched the new incentive program. Over time, productivity rose another eight percent. The company has since introduced ProTrack and the incentive program in the Chester and McDonough DCs, and those facilities have seen similar improvements.
Pep Boys achieved those gains because under the new system, employees better understand what they must do to work more efficiently. Also, the new incentives reward good work more equitably. The best workers are getting even more done than they used to, because they know they can earn additional rewards. And workers who used to be just a little more efficient than average have bumped up their performance.
"The new incentive program is successful because management involved associates in the transformation from the start," says John Rodriguez, general manager of the San Bernardino DC.
Associates in each warehouse department participated in lean exercises to define exactly what each task involves. "The takeaway for the associate was that we truly understand what it takes to perform the work at hand," Rodriguez says.
Warehouse employees also helped develop the engineered standards. "Involving associates from start to finish added more credibility and buy-in to the program than we had with the previous program," he adds. Pep Boys plans to implement ProTrack in its Texas DC later in 2012, and is working on a strategy for bringing the system to Indianapolis.
Tracking System Makes an Impact
An impact tracking system helped increase productivity at a Georgia Pacific (GP) packaging plant in San Leandro, Calif. In September 2011, the plant implemented ShockWatch EquipManager, from TotalTrax of Newport, Del., on three new lift trucks that carry rolls of paper for making corrugated boxes. Since then, GP has also installed the system on eight new trucks that carry finished goods.
The system alerts managers any time a lift truck hits another object, creating opportunities to coach new employees.
"When impact detectors are first installed, drivers register a lot of impacts," says Bryan Bergman, process engineer at the plant. "But as time goes by, they realize what causes these situations, and they start driving better."
Fewer impacts mean less equipment damage and worker down-time. "With the old lift trucks, we often struggled to find enough equipment to run each shift," Bergman says. "The trucks were always in the shop."
With better-trained drivers, the new forklifts remain in good condition, making them available to employees with work to do.
J&B Group: Old Tools, New Solutions
Like Pep Boys, J&B Group of St. Michael, Minn., used technology to create new employee incentives. But instead of buying a new technology solution, the company relied on tools it already had in place to help it launch a fresh productivity strategy.
J&B produces and distributes food products to retail and food service customers in 11 midwestern states. It also provides third-party cold-storage services.
In 2008, company officials decided to experiment with an incentive program to improve DC efficiency. Nicole Coyle, J&B’s business unit analyst, studied historical data for third-shift order pickers and found each employee was picking an average of 120 cases per hour. She then built a model in Microsoft Excel to project the financial impact if the company offered different reward rates to order selectors who beat that average.
Company officials decided that for each dollar an associate saved J&B by picking faster, 25 cents would go to the employee.
Because accuracy, quality, and safety are just as important as speed, J&B also uses a separate gainsharing program to enforce those values.
Each day, Coyle monitors work in the warehouse to detect inaccurate picks and damages. The fewer problems selectors cause in the warehouse, the bigger the bonus they can earn. "The program guarantees workers get 100 percent of their gainsharing if the company performs at the level expected," says Paul Cincoski, J&B’s director of logistics. The keys to ensuring employees get credit for excellent performance—and take responsibility for mistakes—are the radio frequency data collection (RFDC) terminals pickers use to scan bar codes each time they perform a task.
"Our RF capabilities enable us to track errors directly to a worker," says Cincoski. "No matter how many people touched the pallet, if an error occurs, we know which worker to assign the error to."
Thanks to the gainsharing program and the new incentives, the average number of cases J&B’s night shift picked rose from 120 per hour to 150. That efficiency gain saved the company $200,000 in one year by eliminating the need for overtime work on the shift.
J&B has started a similar plan for the day shift, basing the goals on total cases moved per man-hour. Information from the RFDC terminals and from J&B’s warehouse management system (WMS) allows the company to track productivity over any time increment. "And, most importantly, it allows us to trace actions back to individuals," Cincoski says.
The tools behind J&B’s new incentive programs might be simple, but the rewards are rich. "By using technology and data, and involving our associates throughout the entire process, we successfully created a comprehensive and easy-to-understand incentive plan," says Cincoski.
Masters Gallery Foods: Damage Control
At Masters Gallery Foods, a supplier of cheese products in Plymouth, Wis., computers on forklift trucks help increase warehouse worker efficiency in several ways.
In 2009, Masters Gallery Foods implemented iWarehouse, a fleet optimization system from The Raymond Corporation of Greene, N.Y. That system collects data from the computers—called vehicle managers—on Raymond lift trucks and transmits the information over the warehouse’s wireless network. The data becomes available to application modules that, among other capabilities, monitor driver behavior, alert managers about collisions, streamline safety procedures, assist in training new employees, and help managers determine how best to deploy lift trucks and workers.
When Masters Gallery Foods introduced the new software, 50 employees operated lift trucks over three daily shifts. Driver impacts with storage racking were a serious problem, posing a danger and also slowing work completion rate.
"Equipment and products were getting damaged, and we did not have a way of tracking who damaged them," says Dan Murphy, warehouse manager at Masters Gallery Foods.
The iWarehouse solution’s iImpact module notifies managers when an onboard sensor detects an impact. The system also sounds the horn on the lift truck and, if the impact is serious, slows the truck to one mile per hour. Because the alarm calls attention to the responsible driver, employees who cause impacts quickly improve their driving. "It’s a behavior modification tool that helps train the operator," says Joe LaFergola, manager of business and information solutions at Raymond.
Masters Gallery Foods also uses Raymond’s iControl module as a training tool. The software lets Murphy create a profile for each forklift driver—for example, setting different driving and lifting speeds for new and experienced drivers. Employees swipe time cards in the onboard vehicle managers to transfer their profiles to any trucks they use.
The system lets Murphy break in new employees gradually. "Once they get more familiar with the forklift, I can increase their speed by one mile per hour," he says. Employees who perform real work, but at safe speeds, learn their jobs quickly, making them productive sooner.
Masters Gallery Foods has also gained efficiency from iWarehouse‘s on-screen checklist, which walks a driver through a federally mandated safety inspection.
Before using a truck, an employee used to spend an average of two to three minutes filling out a paper checklist and 15 minutes carrying that form to an office for filing. The onscreen checklist also takes two to three minutes, but once it’s done the employee can hop right onto the truck.
One further efficiency gain at Masters Gallery Foods comes from iMetrics, a module for analyzing lift truck fleet activity. "I found places where forklifts were idle, or not maxed out," Murphy says. Based on such information, he adjusted employees’ schedules and added a weekend shift to better match workers with available equipment.
Yeo Valley: Pinpointing Locations
Lift trucks also lie at the heart of a recent productivity initiative at Yeo Valley, a U.K. producer of organic dairy products. In this case, the technology monitors exactly where the trucks are at all times.
Yeo Valley’s operations include a three-building national distribution center (NDC) in Highbridge, Somerset, that ships finished product to customers. In October 2011, Yeo Valley started a trial of TotalTrax’s Sky-Trax vehicle tracking technology in one of the Highbridge buildings.
The company tested the system to see how well it would support its Right Pallet, Right Place, Right Time, Every Time (RPRPRTET) initiative. "We were looking for accurate data to be able to monitor truck driver performance, improved service levels due to RPRPRTET, and an increase in pick rates," says Martin Morris, Yeo Valley’s supply chain general manager.
As part of the pilot implementation, value-added reseller (VAR) Harland Simon outfitted the warehouse ceiling with a grid of two-dimensional bar-code labels. It also installed two cameras on each of two counterbalance trucks that load and unload trailers, and on three reach trucks that pick and put away pallets.
The first camera reads the overhead bar codes, each of which contains a coordinate to define its position on the grid. Sky-Trax uses this data to monitor the truck’s location.
"It also measures the rate of progress for the truck between the markers to gauge the speed and direction the truck is traveling," says Gerry Davis, head of business development at Harland Simon in Milton Keynes, U.K. A second camera installed between the truck’s forks reads the bar code on any pallet the driver lifts. The truck also sports sensors that detect when it gains or releases a load and determine the height at which the pallet is picked or put away. The system transmits this data over the facility’s RF network to a computer running the Sky-Trax software. The software gives managers a real-time view of lift truck movements and creates activity reports over time.
In the last three months of the six-month trial, lift trucks in the warehouse were completing 86 percent more work on average than when the trial began. The rate of accurate picks and putaways increased from 96 percent to 99.5 percent.
Two factors account for those improvements: drivers no longer have to pause to scan pallets with a bar-code terminal; and managers now keep better tabs on employees. "In the past, we could only manage workers by walking around," Morris says. "Now we are tracking every movement, every minute of the day."
Besides providing supervision that encourages drivers to work more conscientiously, data from the system has also helped Yeo Valley deploy the reach trucks and their drivers more efficiently. "It became clear that it was possible to operate with two trucks instead of three," Davis says.
As of April, 2012, officials at Yeo Valley were building a case for purchasing the pilot system and possibly for expanding the deployment to the NDC’s other two buildings.