Last year, I wrote about how DSC Logistics implemented a labor management system (LMS) and how it helped the company improve labor productivity at its warehouses. Regular readers of Logistics Viewpoints know that I am a big fan of LMS because of its robust ROI. DSC Logistics got a 20 percent improvement in warehouse labor productivity, which is not uncommon. But at RedPrairie’s RedShift 2011 User Conference (DSC uses RedPrairie’s LMS solution), DSC spoke about how it took LMS to the next level by mining the data generated by the system. There is gold in that data.
For example, DSC uses the data to improve its bidding process when it prices out a new contract. Because DSC has developed standards for how long various activities will take, it can produce a bid with a greater degree of confidence about what the actual costs will be to perform the requested tasks. In particular, Jim Chamberlain, the head of Industrial Engineering at DSC and the main speaker on this subject, said that LMS data has helped the company better understand what it will cost them to perform a variety of tasks for which they will charge accessorial fees.
If DSC wins the contract, the data from the LMS also helps the company ramp up warehouse productivity more quickly. In ramping up a warehouse, the percentage of trainees versus experienced employees is a key metric. The LMS allows DSC to better understand how long it will take its trainees to fully come up to speed. With this data DSC can project for a customer, “We will achieve this level of throughput and productivity in week one, this level in week two,” and so forth.
LMS also helps DSC keep its customers happy. One form of value-added analytics service the company performs for its customers is cost to serve – not what it costs DSC to serve the customer, but what it costs its customer to serve their customers. DSC produces a diagram that shows the cost to ship a case on the X axis and the volume of cases shipped on the Y axis. DSC then plots this out for all of its client’s customers.
Finally, the LMS data helps DSC run its business more efficiently. The company uses it for budgeting, for comparing the productivity of its warehouses against each other, and to drive company-wide best practices.
I give DSC a lot of credit. Supply chain solutions can generate incredible data. Rules of thumb and intuition can have a role in business, but if you have the data, you should really compete on analytics. I’ve heard too few stories of companies that have implemented supply chain solutions and then made a real effort to use the data to mine for gold.
(Note: RedPrairie is an ARC client)
To me your insights are right on target. I will add that another reason to “mine” this data is to put together a list of “Utilization Issues” that need to be addressed. A lot of people mistakenly believe that LMS products make people work faster. It has been my experience that this is not always the case. In certain instances it is true, but the majority of the benefit seems to come from keeping them working.
There are a myriad of reasons why someone isnt staying busy; it is not that they are running out and taking a smoke break. When you start looking at the LMS data and start mining the transactions that underly poor performance all kinds of stuff start popping up that point to why people are not working. When we have done this we have found things like:
1. Not starting the shift quickly enough
2. Shortages in the pick face that cause people to wait around for replens
3. Too many people in an area relative to the work to be done there
4. Meetings called by supervisors that were not planned
A lot of these point at MANAGEMENT and not necessarily the ASSOCIATE. The data mined from the LMS can identify a series of initiatives that management needs to fix in order to get utilization up to an acceptable level. This is not always widely appreciated by “buyers” of LMS products, but it is pretty well understood by users.