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Managing the Most Important Part of Your Supply Chain. The People (Labor)

Posted by Blue Horseshoe on Sep 18, 2012 11:49:46 AM

Supply Chain Logistics Series: Labor Management

As an industrial engineer who has worked in a variety of industries and verticals, my focus has always been how to get more out of what you’ve already got. And more often than not, in the supply chain of companies, it’s about labor. Labor management is one of those topics that has been around for a long time, but doesn’t seem to go away. While there are companies that have had fantastic results year after year, there have also been companies that have gone away from using the tool like they did before. Often the reason is that they claim that they have no embraced LEAN or some other continuous improvement initiative – but to say thatLabor Management is not a part of LEAN is going to be something we discuss in other conversation.

The one thing I’ve learned in looking at the successes – and failures – of Labor Management implementations is that you get what you “P” for. And “P” could mean “pay”, but also “praise”, “practice”, among others.

So let’s look at why it’s important to manage labor, how you can set the right foundation to support continuous improvement, and ultimately understand how to effective plan, monitor and measure the results of your improvement.

  1. You cannot manage what you do not measure.

    My father was also an Industrial Engineer, and as a professor emeritus he stressed this to his students (and his three boys). There are a lot of measurements out there in the Supply Chain: Perfect Order, On-Time Delivery, Fill Rate, Units Per Hour, but in the end, what are you managing? PEOPLE. So if you are not measuring people, how do you expect to manage them properly?

  2. At the same time, you cannot manage all that you measure.

    The advancement in technology has created an easy means for companies to get into information overload. Reports, dashboards, KPIs, and alerts are just a few of the items that every company is proud to display. However, what is more important when you are driving, the rear view mirror or the windshield? Too often we get wrapped up in what reports show, but that’s only going to show you where you’ve been, and the key is looking for metrics and measurements that can help you navigate to a future (better) state.

  3. Understand what motivates your most important asset.

    I’m not going to say that Labor Management programs are going to point this out. But if you understand how to interpret the information Labor Management provides you, then you can equip your leadership team with the necessary tools to foster continuous improvement and operational excellence.

In the next supply chain segment, we’ll look at the cornerstones to Labor Management – Planning, Monitoring and Measuring.


TransTech Consulting, A Blue Horseshoe Company is a privately held management consulting firm that has been providing expert supply chain consulting solutions to Fortune 500 and mid-market businesses throughout the world since 1983. Based in North America, TransTech assesses business needs and applies world-class business applications to improve profitability and increase efficiency. For more about TransTech,

Tags: Strategy, Supply Chain

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