Automation Smooths Out Seasonal Peaks & Valleys

It’s surprising but huge warehouses with several sophisticated systems are not immune from sending their warehouse operators home in the middle of the day due of lack of work. Planning is especially hard in peak holiday seasons. Often, it seems warehouse managers have no effective tools to accurately forecast labor demands based on outstanding orders waiting fulfillment.

If you take a step back to see the historical evolution of the labor management systems, it all started with this motto “What cannot be measured cannot be managed.” Systems were primarily put in place to make measure the work of the operators against key performance indicators. For example, during one project I worked on, we were required to write “productivity transactions” in an effort to track every single movement of the operator.

The thinking behind it seemed solid: labor is the biggest cost in the distribution center and measuring and managing would naturally lead to savings.  Most organizations would collect performance metrics one day a week and post the results on a centralized notice board the next day.  The impact on the worker’s psychology, though, naturally skewed the results. Once the operators realized they were being measured on performance, their attitudes shifted.

It turned out that workers would work harder when they were being measured, even proactively asking for work. However, when they weren’t being measured they would stand around and do less. Imagine a facility with hundreds of operators during a peak season trying to fulfill holiday orders: supervisors could try to measure productivity but could only do so much. There was some impact, but it only worked to a certain extent.

In reality, operators standing around wasn’t the real problem. The real problem was a lack of optimization in the distribution center. That’s tricky—a reality which has stymied many automation projects. However, the right tools and processes can get organizations closer to the goal of automation.

Obviously, in the warehouse, product moves through various processes and facilities. The result is the throughput of the facility. Since each department has the potential to create bottlenecks, it’s important to spot those slowdown quickly and throw laborers at the issues.  In reality, tracking the productivity of the department, rather than the worker ensures that throughput is optimized.

I visited a distribution center recently that was working well, but not perfectly. The company had many different sizes of products, which is inherently challenging. Further, they periodically ran into departmental bottlenecks. This company relied on a manual system where operators would report their results on a magnetic peg board. On the board, they would report what department they had spent the hour in in order to calculate the total hours worked. Then they would divide that by the number of units shipped in order to calculate labor minutes per unit (LMPU). Then they would compute LPMU per department and for the entire facility—and from that they could decide how to allocate workers for optimal throughput.

The human element, the operators moving pegs, was problematic because it was inherently inaccurate. People would forget to move pegs. They didn’t always work in each department for exactly an hour. Plus, break times weren’t included. Now, however, technology can be applied…and make things much simpler by capturing data in a different format and automatically computing the LMPU.

With an automated tool, DC managers can clearly see LMPU within their area and commit to maintaining that level of throughput. They can also work together to see how their LMPU impacts the facility LMPU and validate if there is any reason to move workers from one department to another. It provides tracked data regularly rather than sporadically to provide a historical look at how things have gone and spot peak periods. Finally, DC managers can plan ahead for peaks and valleys in demand and avoid sending workers home.

So how do you manage throughput within your supply chain? What types of tools do you have to make sure there are no departmental bottlenecks? Let us know in the comments section below.