As a leader in the retail and supply chain space, you’re probably familiar with the tension that exists between ensuring that your operation stays competitive in your industry while also keeping your costs down. The two are often so intertwined and dependent on one another to the extent that pulling on one almost always impacts the other. Try to cut costs and your competitive edge could suffer. Focus on building up your competitive edge, and your costs could increase.
Because labor is often one of the most expensive aspects of running a competitive supply chain, it also becomes one of the first places that leaders look toward when the pressure to cut costs builds. However, part of keeping a distribution center (and the supply chain it supports) competitive is having a labor force that’s knowledgeable, well-trained and able to handle the demands of the job. Establishing that kind of labor force, one that’s equipped to keep you competitive, is often expensive, and if you decide to simply hire more entry-level workers, you will still incur costs in the long term with all the extra training that will be required to get those workers up to full operating speed.
So how do you win in a situation that feels lose-lose?
You invest in labor standards.
What is a Labor Standard?
A labor standard is a tool that you can use to set the bar for the performance expectations of your workforce. It sets the time necessary for a trained employee, working at an acceptable pace, to do a defined amount of work. In other words, labor standards help you know what you should expect from each employee for each task within your distribution center. These standards, once established, are often then tracked and managed through a Labor Management System, or LMS, giving you the ability to see which employees are performing well, which ones aren’t, and the “why” behind it all.
While there are various types of standards that can be paired with a variety of LMS options, all of them aim to achieve a similar result; enabling your DC management and front-line leaders to monitor workforce performance, productivity and utilization and, in turn, harness the data collected to improve the overall efficiency of your building. With labor standards in place, you can know, at a glance, if your workforce is performing at the level it should be. And if it isn’t, the data gathered from labor standards can highlight exactly where the pain points and challenges are in your processes.
So, do you have labor standards in place?
Despite the benefit that they provide, many DCs, even large scale operations, are still run without them. So even if you don’t have any in place, don’t panic—you can still create labor standards for your own operation no matter how young or old it is.
The Types of Labor Standards
The first place to start at with labor standards is to identify which type will work best for the operation that you have underway. You have three to choose from:
- Single Variable Standard
- Multi-Variable Standard
- Dynamic Standard
Each one has its benefits, but choosing the right one for your operation comes down to the size of your DC, the type of tasks that your employees do on a daily basis and what kind of data you want to track through the standard.
We know how important it is to choose the right type of standard for your operation, so we created an in-depth eBook to walk you through every single aspect of the single variable standard, the multi-variable standard, and the dynamic standard. We also outlined the popular methods of developing labor standards, because once you identify which type of standard you want to utilize in your operation, your next step will be to figure out how to build the standard with actual analysis of your current processes and systems. We even have a bonus tip at the end that makes all the difference when it comes to labor standards and building an efficient, profitable workforce.
Remember, the data that you get from having labor standards in place, along with an LMS to track it, not only helps you keep track of your employees, it also helps you assess obstacles and bottlenecks in your processes. You can then use this data as proof to evaluate changes so you can create a more streamlined workflow for your employees AND save your entire DC money.