Kenco Logistics, a US-based 3PL with over 80 sites in North America, recently completed the implementation of JDA Warehouse Labor Management (JDA WLM) at three of its warehouses. Adam Schlaudecker, Product Manager – LMS and Nathan Beene, Director Transportation and Supply Chain Technologies, presented at JDA Focus and provided insights about the software implementation and effective change management processes they used to drive improvements at these locations. The initial project site delivered a 30 percent productivity increase while decreasing direct labor cost by 17 percent, resulting in a $558,000 cost avoidance over a three-month period after go-live. Although the ROI results are impressive, I found the process improvement and change management practices they utilize to be the most impressive and informative. It is these practices that I consider to be the driving force behind ongoing and more widespread savings at Kenco.
Establishing a Labor Management System
The standards Kenco deploys are elemental engineered standards built to ensure that the goals are fair and achievable for an average associate following best methods and working at a good, but sustainable pace, that can be maintained throughout the shift. Appropriate details, such as cube and weight, are included to assure appropriate alignment of expectations with actual activity requirements. And direct-work performance with respect to standards is set up to be measured separately from utilization (amount of time spent on direct work), allowing overall efficiency to be monitored more effectively.
Kenco approaches change management as a continuous improvement process in which sites must be prepared for a fundamental shift in how they manage the operation. When taking engineered standards to the next-level, as they did with the JDA WLM implementations, they consider it essential to obtain buy-in from associates and management. Associates understandably want the metrics by which they are measured to accurately represent how well they perform on the job. And supervisors and managers need a thorough understanding of both the work being performed and assumptions underlying the standards. For example, there was a simple step, such as a slip sheet retrieval, added to a process after a labor standard was established at one facility. The addition of this step incorrectly created the appearance of decreased associate performance for a limited time. Management’s knowledge of the current warehouse process and the structure of the standard was necessary to identify and correct this discrepancy. Kenco believes that a system of accountability like labor management needs an accurate tracking and observation system to be effective.
JDA LMS Supports Effective Change Management
The process of activity observations is an important element in Kenco’s process improvement and change management process. Observations of warehouse worker activities are done at all levels. Involving workers from various roles provides opportunities for broad-based learnings about warehouse processes and systems in use. JDA WLM includes a Mobile Supervisor functionality-set that provides real-time performance insights and enables supervisors and others to view the activities of a worker for a given observation time (i.e. 30 minutes) and then review those activities for improvement opportunities. This process is useful for improving the activities of a given individual and for involving managers in the finer details of facility processes. But perhaps its most valuable when managers and supervisors come together and compare their observations across workers and uncover superior processes they can implement, widespread inefficiencies to correct, or even system issues to fix. For example, during one of its periodic change management meetings, Kenco realized that associates were consistently experiencing performance issues during a specific time of day. They determined that the performance was due to a lag in scan times. Management analyzed the cause of these RF scan lags and determined that background jobs scheduled in the system for that time of day were slowing things down. Kenco spread out the timing of the background jobs and the RF scan times and associate performance improved.
With JDA WLM deployed in three of its facilities, Kenco is still in the first chapter of its WLM implementation journey. Although the labor management system is a key enabling technology, I believe the corporate initiative’s ongoing success will be driven by the way in which the company develops the standards with realistic expectations and modifies them to accurately reflect performance; engages employees of various roles and responsibilities; and properly communicates throughout the process.