The Blue Horseshoe Blog

A Roadmap to Operational Excellence through Labor Management

Posted by Blue Horseshoe on Jan 17, 2013 3:58:22 PM


In my prior posts, I’ve covered a lot on the reasons for Labor Management in distribution. At this labor-management-roadmappoint if you are still skeptical on the benefits, hopefully this roadmap will help you with achieving operational excellence and understand the cultural enhancements from focusing improving productivity through methods and measurements.

If you are still wondering, “Why Labor Management?”, let’s review the benefits:

  1. Labor Management helps operations with its greatest challenges: Productivity, Utilization, Management/HR Issues, Overtime, Safety and much more
  2. The payback (ROI) is typically 8-12 months, and often less! Industry analysts and journalists routinely call this a Gold Standard for ROI.
  3. Labor Management helps justify future MHE and automation requirements. It’s important to get all that you can from your existing assets before you replace them!
  4. Labor Management is the basis for REAL activity-based costing (ABC). Do you know what customers are most profitable? Do you know what value-added services are costing you bottom-line profits?

Typical reactions to failures, or even a simple economic downturn, gravitates companies to focus on how it’s always been done – using historical measurements as the baseline. Rarely does a company without Labor Management have the ability to look at current state and determine if they are even meeting current potential to support future state decision making. This typical solution mentality leads to typical results. If you use traditional metrics, traditional training and tradition end-of-period reporting – is there any reason to believe you are going to achieve anything more than typical results? Without individual accountability, and no real visibility into lost time, companies are going to guess at what is really the source of the lost productivity, utilization and increased costs.

There are some things you can do to make sure you achieve the results of a Labor Management system, and more importantly, sustain them. Here are the 7 habits of highly productive supply chains. Just like coaches do with players on athletic teams, managers must practice the basics – the blocking and tackling skills – in order to execute on game-day. Let’s cover the first 3 habits to ingrain into your culture for success.

The 7 Habits of Highly Productive Supply Chains

  1. Get out of the muck, but stay grounded. Establish a vision for organizational readiness, and being the process of getting grounded in the execution of excellence. Quite often companies I visit have management that is either pulling weeds, or they are dreaming up pie-in-the-sky ideas on how to improve. Yes, operational leaders need to stay close to the action and they should often lead by example. But if you are pulling weeds, you may miss the opportunity. With that said, now is not the time blue-sky strategizing. Sustainable growth, particularly during these economic times, entail small but important changes take place. By establishing a vision for organizational readiness, you begin the process of getting grounded.
  2. Clarity = Simplicity. Now that you’re out of the muck (and sky), establish a clear, simple vision. Just as your leaders need time to focus, associates that are being led need it as well. But what many companies fail to realize is that those players they have out on the playing field rarely know what to focus on at any given time. One of the best examples of this is asking people who their customer is. It’s great that we all know who the company’s customers are, but what’s important is that the receiving department realizes their customer is the put-away department. Eliminating the background noise for each department, and each individual will allow your leaders to make sure that each role is understood, and focus on eliminating the stress within each individual.
  3. Execute the game plan – always. We often talk about the right strategy and models are very important to deal with the troubles that come along, and these points are critical. But for the operational leadership, those who live in the trenches, their goal is execution. Upon establishing a simple, clear vision, develop a strategy that will deliver business results daily. One technique is to establish an organizational readiness framework that focuses on continuous measurable improvement.

For the remaining 4 habits, tune in for the next installment of my thoughts on how to achieve excellence through effective Labor Management.

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