I’ve been writing a lot lately about labor in logistics.  In fact, “maximizing the productivity of available labor” was one of the six attributes for success that I highlighted in my recent postings (“Attributes of Tomorrow’s Industry Leaders” and “Technologies to Maximize Labor Productivity in Logistics“).  At the risk of beating a topic to death, I’m focusing on this topic again today, prompted by two announcements this week.

Yesterday, enVista announced at ProMat 2009 that it hired Al Gagnon to lead its labor management and lean logistics practices.  Gagnon is synonymous with labor management.  Al’s father, Gene Gagnon, founded Gagnon & Associates in 1961, a consulting firm focused on serving clients with labor-intensive operations, such as the grocery and retail industries.  As the enVista press release states, “Gagnon & Associates introduced the industry’s first commercial labor management software application, and was also the first to implement a performance improvement approach based on preferred methods, training and discrete engineered standards.”  Gene passed away in 2005, and his son Al ultimately sold the company to RedPrairie, where he continued on for several years.

Interestingly enough, the second announcement this week comes from RedPrairie.  The company announced that Loblaw, Canada’s largest food distributor and a leading provider of general merchandise products, drugstore and financial products and services, has purchased RedPrairie’s Workforce Management (WFM) application for its stores across Canada.  The system will manage over 120,000 colleagues.

Of course, it’s too early to tell how well labor management solutions (LMS) and consulting services will fare this year, but my bet is that demand will be strong, at least relative to other types of logistics offerings.  Simply stated, unemployment is on the rise and companies will look for ways to “do more with less.”  A couple of years ago, ARC surveyed over 200 companies on how they were using Labor Management Systems (based on engineered labor standards) to implement incentive pay programs in the warehouse.  More than 63 percent of the respondents achieved productivity gains of between 10 and 30 percent over a two year period, while another 13 percent achieved productivity gains of over 30 percent in that time period.  These incentive programs also resulted in other benefits, such as increased employee satisfaction, which leads to improved retention.

Only a few of the survey respondents reported negative consequences.  Interestingly, one of the main negatives reported (by 5 percent of the respondents) was increased labor grievances or other problems with a unionized work force.  It’s quite possible that unionization will increase in the near term if the Employee Free Choice Act passes (Hilda Solis, Obama’s pick for Labor Secretary, refused to state her opinion on EFCA during her Senate hearing last week).  Could EFCA dampen demand for labor management systems and consulting services if it passes?  My colleague Steve Banker, who leads our research on labor management and conducted the survey, tells me that LMS are implemented successfully in unionized environments, and that unions are generally receptive to LMS because they view standards as a fair and consistent way to evaluate work performance.  If anything, the possibility of EFCA passing (along with the state of the economy) is serving as a catalyst for companies to invest in labor management technologies and services. 

Okay, I think I’ve said as much as I can at this point about labor in logistics.  I’m sure I’ll return to this topic again this year, as new developments occur.  Tomorrow I’ll move on to something new, I promise.